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We haven’t written about bitcoin and crypto currencies since late August, so here is an update:

#1. There is little momentum in the 2 key indicators we watch to predict future price moves:

  • US Google searches for “bitcoin” are at their lows for the year just now, down 93% from their December 2017 highs.
  • Worldwide searches are at similarly low levels, down 91% from their highs.
  • September bitcoin wallet count will come in at about a 2.3% growth rate. This is slower than August’s 4.1% growth rate and July’s 4.7% rate.
  • Takeaway: there is little interest in the space just now, which explains the recent difficult performance across most cryptos. 

#2. Even with that decline in engagement, bitcoin is still by far the most recognized crypto currency:

  • Worldwide Google searches for “bitcoin” outnumber those for “ethereum” by 8:1. Ethereum is the second largest crypto currency by market cap with a $22 billion valuation to bitcoin’s $111 billion total value.
  • Searches for bitcoin run 4x the number of queries for “XRP/Ripple”, the third largest crypto by total value ($19 billion).
  • Among US searches, XRP/Ripple does slightly better (bitcoin only outpaces it by 3x) but ethereum search counts look the same as the worldwide numbers.
  • Takeaway: this is why bitcoin has held up modestly better than most other cryptos this year. 

#3. To give you a sense of scale between global crypto currencies and a market you likely know well – US listed ETFs – here are a few comparisons:

  • There are now almost as many crypto currencies as there are ETFs trading in US markets: 1,993 cryptos versus 2,136 ETFs. 
  • The largest ETF (SPY) is larger than the entire crypto currency ecosystem, with a market cap of $280 billion versus $209 billion in value for all crypto currencies. 
  • While the SPY represents 8% of all US ETF assets, bitcoin is 53% of the value of all crypto currencies. Recall that both were the “first movers” in their respective spaces (SPY launched in 1993, bitcoin in 2009).
  • Takeaway: this is why every bitcoin investor dreams about an ETF. 

#4. “Stable coins” – those that seek to tie the value of a crypto currency to the dollar and other fiats – are one “next big thing” in the space:

  • Takeaway: stable coins make sense to us as a way to harness the security and efficiency of the blockchain while mitigating price volatility. 

Bottom line: we remain cautious on bitcoin and crypto currencies generally. Many technologies go through a “winter” – a phase in between the initial flush of enthusiasm and real-world impact. That’s where we are now. Still, there is plenty of investment from smart money still flowing into the space. Spring will come. 

This article was contributed and distributed with the consent of datatrekresearch.com.

Bitcoin