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The turnover of securities associated with cryptocurrency grew by 314%; bitcoin halving will drop inflation rate and coins offer in the market. Calibra and Twins consensus protocol.
According to TokenInsight analytic company, the first quarter of 2020 showed an increase in the volume of cryptocurrency derivative instruments trading by 314% as compared to the average data for 2019. In comparison with the first quarter of 2019, the turnover has become even greater. The dynamics speaks of eight-time increase: $ 2.64 trillion to $ 21.048 trillion. Throughout the entire period, investors increased purchases and sales and only the fourth quarter of 2019 showed a slight decrease.
Derivatives are derivative financial instruments, which include futures, options, swaps, forwards and warrants. In case of their trading on the cryptocurrency market, there is no physical exchange of tokens for fiat or cryptocurrency money. Therefore, sometimes there is a significant discrepancy in price between the derivatives and futures markets. Moreover, it increased to 0.31 points in 2020.
Over 90% of the cryptocurrency derivatives market turnover was accounted for BTC, ETH and EOS. Investors are wary of dealing with other assets due to the high risk of price manipulation and general uncertainty. It is noteworthy that this was happening against the background of increased level of cryptocurrency price fluctuations. Bitcoin started the year at $ 7,100, showed a maximum of $ 10,200 and then dropped to $ 5,000. After that, the demand began to grow again, and now the BTC/USD pair is trading at $ 8,650.
Turnover growth is uneven for trading platforms. For example, BitMEX reports a significant drop in this indicator: bitcoin amount on exchange wallets decreased by 25%, while the trade turnover fell to its minimum over the past year and a half. At the same time, Huobi, Binance and OKEx report an influx of new traders.
Another fact is also remarkable. Mati Greenspan, the founder of Quantum Economics, reports that now the correlation between S&P500 index and bitcoin exchange rate is at its highest value for 9 years. This suggests that the assets are used by the same market players. Said otherwise, large investors recognized cryptocurrencies as a full-fledged financial asset.
PlanB cryptocurrency analyst is confident that the market may face a shortage of bitcoins pretty soon. He made this conclusion by comparing two factors. The first one is oncoming bitcoin halving, which will halve the rate of inflation. If now it is mined about 1,800 BTC daily, then in a few weeks this figure will halve.
The second factor is the massive cryptocurrency outflow from the market. A survey conducted by PlanB showed that 80% of buyers take cryptocurrency for the long-term keeping. This asset is perfect for this intention, since its placing in the wallet bears no risk. Transactions anonymity in combination with blockchain technology allows protecting savings as long as desired.
Mati Greenspan fully supports his colleague. He reports that bitcoin inflation rate after halving will drop from current 3.65% to 1.8%, which is almost half the rate of global inflation. Moreover, unlike dollar or euro, no one will issue additional coins. To overcome the crisis, US authorities printed about $ 4 trillion, which sooner or later will have an effect on dollar rate. Today, the country's national debt is an astronomical figure of $ 24.721 trillion, which is more than $ 50,000 per inhabitant.
An increased cryptocurrency demand is already observed in a number of countries. For instance, local residents of Argentina buy this currency in order to protect their savings from a possible default. This is due to the fact that the government was unable to pay interest on government bonds, thereby the demand for purchase of bitcoin increased by more than 1,000% and trading volume rose by 138%. In conditions of limited supply of coins, this can cause an exponential increase in price of bitcoin as well as other digital currencies.
Market supply may be cut for another reason. About 4 million coins of the entire array of bitcoin mined since the launch of blockchain have been idle for more than five years. That is, almost 22% of the total mass of the asset is withdrawn from circulation.
Despite the American authorities’ claims, the work on the Facebook Libra project development continues. Thus, the team working on creating Calibra wallet announced the creation of a Twins consensus testing method. It will help testing the BFT algorithm in quick time. It also allows maximal protection of funds from outside interference and quick identifying of vulnerabilities. However, the project attacks by the financial elite continue.
Barry Eichengreen, former senior policy advisor to the International Monetary Fund, stated the insufficiency of anti-crisis measures outlined in the Libra White Paper. In particular, the situation of the project stablecoin dominance over the state’s real currency is described. In case users prefer storing funds in cryptocurrency, the monetary authorities will lose control over the monetary and financial policy.
While the US politicians and financiers are holding back Facebook Libra initiative, the Chinese authorities are actively embodying the idea of digital yuan. This week, it became known that they have partnered with SenseTime startup. This company from Hong Kong is developing projects based on artificial intelligence. It has been cooperating with Xiaomi, Huawei, Alibaba and Weibo for a while and now it will execute the order of the Digital Currency Research Institute of the People's Bank of China. After the agreement conclusion, SenseTime together with the institute will be involved in risk assessment of financial companies studying the way how to introduce artificial intelligence in the field of finance.
Two weeks ago, one of the project participants, Agricultural Bank of China (ABC), began testing the payment system interface. Using it, the buyers will be able to acquire, sell and exchange digital yuan. Moreover, the coronavirus epidemic and subsequent world economic difficulties did not affect the plans for launching the state currency of China.