As 2020 draws to a close, Binance shared some trends and highlights from the crypto and blockchain industry for this year.
The exchange notes that the total market capitalization of all digital currencies increased more than 3.3 times in 2020 alone, significantly expanding the crypto-asset market. Binance pointed out that the number of institutional clients on its platform has increased by almost 50% since the end of last year. Institutions are entering the digital asset industry at a “historic pace,” the exchange claims.
While sharing other important developments, Binance revealed that total trading volumes on its platforms “reached $ 3 trillion USDT, our highest level to date.” The Binance report added that interest in Bitcoin (BTC) increased after its recent price rally in Q4 2020, and that it “remains the single most viewed crypto asset” on the biggest platform. form of crypto trading in the world. The main spot and futures trading pairs on Binance were BTC / USDT and ETH / USDT, the exchange confirmed.
The report adds:
“DeFi innovations such as liquidity mining, yield farming, and crypto lending have provided new ways to earn passive income, with Binance Savings attracting the highest number of users among all of the financial management products of Binance. ”
This year, global financial markets have faced “unprecedented” volatility, while “the economic recovery in many countries has been K-shaped, dealing a financial blow to already vulnerable communities,” the report notes. He also mentioned that “With traditional financial systems under strain, retail users and institutions have turned to cryptocurrency en masse, pushing crypto markets to new heights.
A separate report from Parts measurements notes that on March 12, 2020, the world “suddenly changed”. He pointed out that “amid growing concerns over the COVID-19 pandemic, Bitcoin suffered one of its biggest day-long price drops in history.” The rest of the digital asset market followed, with most of the major cryptocurrencies falling more than 30% that week, the Coin Metrics report confirmed.
The report further noted:
“The crash [in March 2020] was exacerbated by a BitMEX liquidation spiral that temporarily sent Bitcoin below $ 4,500. From March 12 at 9:00 a.m. to March 13 at 6:00 a.m. UTC, long positions worth 1.1 billion contracts (one contract represents a $ 1 position) were closed. As the liquidations mounted and liquidity dwindled, BitMEX’s automatic deleveraging engine kicked in, causing the price of Bitcoin to fall below $ 4,500. The price continued to fall until BitMEX suffered a reported DDOS attack which made trading on the stock exchange almost impossible. Looking back, March 13 marked the bottom for the price of BTC in 2020. ”
Unlike many other digital asset market crashes, this particular crash was directly associated or linked to “changing global conditions,” the Coin Metrics report noted.
The report also mentioned that markets around the world collapsed along with the cryptocurrency markets as investors frantically began withdrawing funds in a “rapid rush for security.” As a result of these moves, the correlation between BTC and the S&P 500 “has reached historic highs.” It was a major historical turning point during which “the perception of the Bitcoin world would also change,” notes the Coin Metrics report.
The start of the second quarter of 2020 also saw the introduction of the CARES Act, which committed $ 2 trillion in the COVID-19 response, including stimulus checks that were paid to many U.S. households. As a result of this massive printing of money, America’s M2 money supply has grown from around $ 15 trillion to around $ 19 trillion in that year, the report confirmed.
In May 2020, Bitcoin (BTC) underwent its third halving. According to Coin Metrics, the timing “could not have been better”. The report noted that after fiat currencies began to experience the “great inflation”, bitcoin’s supply issuance effectively began to decline, “towards less annual inflation.” However, halving BTC was not “a decided response by the Bitcoin community or a central bank,” the report said. He claimed that “the wheels had been set in motion several years earlier and built into the heart of Bitcoin.”
In addition to the rise in the price of Bitcoin, the decentralized finance (DeFi) ecosystem has grown significantly this year (from just $ 1 billion in total value locked in DeFi contracts to over $ 10 billion). The Coin Metrics report pointed out that “after hitting a low in October 2020, DeFi started to rebound and is back to similar levels through September 2020.” The report further noted that DeFi “continues to grow and mutate as experimentation continues.” He added that “with new funds flowing into BTC and ETH, new DeFi tokens and applications could soon follow.”
While sharing other key Bitcoin-related developments, Coin Metrics noted:
“On October 8, Square announced a $ 50 million investment in bitcoin, stating that ‘we believe bitcoin has the potential to become a more ubiquitous currency in the future.’ Square joined MicroStrategy and others to allocate a portion of their corporate cash flow to Bitcoin. On October 21, PayPal officially announced that it was introducing “a way for customers to buy, hold and sell certain cryptocurrencies in the PayPal wallet.”
In November 2020, billionaire investors Bill Miller and Stanley druckenmiller also joined, publicly confirming that they “own and recommend” Bitcoin as an investment. The two investors compared the flagship cryptocurrency to gold, with Miller noting that he believed “inflation was coming back due to the Federal Reserve pulling on the money supply.” A Citibank analyst also predicted BTC could reach $ 300,000 + and called the digital asset “21st century gold” in a note leaked to clients.
The Coin Metrics report added:
“Ethereum took a big step forward on December 1. After years of manufacturing, the first phase of Ethereum 2.0 has been successfully launched. Over the coming years, Ethereum will continue its transition to Ethereum 2.0, which will introduce proof of stake and allow investors to earn returns by staking their ETH to secure the network. With over $ 1 billion already stuck in the Ethereum 2.0 depository contract, Ethereum could start to gain more institutional attention by 2021. “