Bitcoin moves into five-digit range on new institutional flows, massive adoption


Bitcoin has shown some highest levels of volatility in late June with best trading volumes year-to-date. The crypto currency market benchmark has reinstated its top role in the sector as “market dominance” climbed over 60% again and prices broke $10,000 in a blink.

The market as a whole has been demonstrating positive signs for quite some time already. After hitting its $3,200-sh lows in late December 2018, Bitcoin bounced back and kept growing ever since facing only mild and short-living corrections. Short-sellers didn’t put up with this scenario and kept increasing their positions — a bet that resulted in massive short-covering as BTC marched through $10,000 and went nearly 40% higher.

Some of the liquidations seem to be rather painful and loss-making: one of the leaders in BTC derivatives reported over $0.5bn of short positions closed within 24 hours on June 26/27. Other exchanges had similar size flips as the bull run continued.

Now, we’ve been watching the battlefield closely and keep our cautious attitude. As Bitcoin touched it’s local highs of nearly $14,000, there is obviously some room for correction, and we anticipate that we may see high four-digit figures again anytime soon. Nevertheless, it is fair to say that this growth cycle has more fundamental grounds, both in terms of capital flow and technology adoption.

Cryptocurrencies have faced some acclaim from regulators over the last year and a half with several notable regulated exchanges being launched in the United States, Europe and Asia. There industry has seen about $1.5bn inflows of venture capital both from dedicated fund and general interest tech organizations.

Velvet.Exchange founder Vlad Smirnov notes that providing full regulatory and licensing coverage is an essential move these days as the market is migrating towards legality and transparent business practices. That is why Velvet decided to obtain a full package of licenses residing in Estonia and Singapore to ensure a differentiated legal structure that separates management from financial assets.

Some “working” parts of the crypto community and DLT ecosystem indicate more use cases being implemented, namely, Ethereum broke 1mn transaction per day in June again (first time since before the “crytowinter”), EOS and Tron report project after project being run on their capacity, some DEX solutions look stable enough to perform operations and DeFi ecosystem stats show availability of depositing and funding.

All those are internal tiny bits and pieces, anyway. The big thing is adoption. Last year has brought new long awaited institutional players with sizeable resources, and it is them who are driving overall demand and lure in new thousands of amateur crypto users creating marginal demand.

Through 2018, the crypto market welcomed four new USD backed stablecoins (Circle, Gemini, Paxos and TrueUSD) that started eating Tether’s share slowly but steadily. More to come with promising project based on full resource collateral from gold (Digix) to diamonds (DGems). This increases liquidity, mobility and general level of trust for investors who care about liquidity and use fiat benchmarks.

Development of the stablecoins segment will act as a major catalyst for the crypto industry coming months and years. “Regular users want an alternative to existing trading pairs, that is why we simultaneously introduced USDT and USDC, and will be looking for more names to be represented on the platform,” Vlad Smirnov of Velvel.Exchange adds.

Many strong moves were made in terms of new asset tokenizations (this, however, hasn’t resulted in that big reshuffling of the general picture).

The last but definitely not the least are two global elephants: TON and Libra. Both projects that will come into effect coming 6-9 month, bring in hundreds of millions of new users allowing for truly international money and value transferring, inexpensive remittance and, most importantly, serving as a gateway to the investment world of crypto and digital assets.

Facebook’s Libra managed to get together nearly 30 inaugural member size of Visa and MasterCard, and the project will definitely run in billions USD once it is commissioned. It is clear that $1mn transactions won’t be affected by the new system. On the other hand, each of FB’s 1.4bn users throwing in $10 will lead to the biggest inflow the digital money ever witnessed. Some of those funds will inevitably move into “core” crypto creating extra demand and pushing prices even higher.

Thus, we believe that correction the market is witnessing these days is a temporary thing. There are good chances that, once Bitcoins find its local bottom, prices may resume an upward move to refresh local this year highs or even trying for all-time records.