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Not just a fad
Wake up, baby, a new crypto nation has just been born.
No, but in fact, a16z’s latest report is full of interesting pieces covering the entire industry.
Yesterday I wrote about the main points, but this morning I wanted to focus on some data points. That’s what the team discovered when researching stablecoins.
“We have seen stablecoins fit into commodity markets, and I think the main reason for that is lower transaction fees. Stablecoins work best when fees are low. And we’re really seeing early signs that infrastructure improvements are starting to unlock such applications,” said a16z Crypto CTO Eddy Lazzarin.
In addition to that, as previously discussed, stablecoins are contributing to the appreciation of the US dollar.
Source: a16z crypto
And despite only being founded a decade ago, the stablecoin issuer is climbing the global ranks of U.S. debt holders.
Heck, they even outperform other countries like Germany.
Source: a16z crypto
For a16z data scientist Darren Matsuoka, one of the most surprising findings in the report is actually the number of stablecoin sending addresses each month, as you can see in the graph below.
“This is a pure, clean, linear, ‘sloping to the right’ graph, showing a consistent increase in the number of stablecoin senders,” Matsuoka said.
“The report doesn’t mention it, but when it comes to stablecoin trading volume, people are trying to identify payment amounts and other types of non-spam transfers, but that graph is not in the crypto cycle, macro Economic cycles, interest rates continue to increase despite changes in interest rates, which have clearly changed significantly. ”
“There are so many things happening, big macroeconomic changes, infrastructure changes, that line is almost a pure sweep to the right. This is because people want to send stablecoins and , it’s telling that we’re finding more ways to send stablecoins…”
One of the most interesting aspects of all this is that the investments in infrastructure are actually evident in the data collated by a16z.
The chart above is one of those “chef’s kiss” moments for cryptocurrencies, making it easy to show the non-crypto people in your life a great use case for cryptocurrencies.
Hey, mom? Cryptography is not a fad. Or a fluke.
— Katherine Ross
data center
Over the past day, BTC and ETH each fell 1% to $66,900 and $2,600, respectively. Bitcoin dominance is 58.8%, the highest since April 2021, according to TradingView. According to The Tie, stablecoin supply fell by more than $1 billion in October and now stands at less than $169 billion. ($186 billion is a record set before Terra exploded in May 2022.) Solana moves closer to switching Tron to TVL for the first time in over 2 years: Solana DeFi in the past week After rising 22%, it now stands at $7.439 billion, up from $7.31 billion. Over the past week, 12,622 ETH ($32.9 million at current prices) was burned, the highest amount of ETH denominated since April.
We’ve already been slicing the cryptocurrency market cycle in all sorts of ways on Empire.
Here’s another one!
You probably know that this bull market is missing an altcoin season where cryptocurrencies other than Bitcoin really appreciate over an extended period of time.
However, Bitcoin has been growing at a much faster pace than the altcoin market since the cycle bottom in November 2022.
There is no exact definition of when the altcoin season begins or ends, but it will probably be established when altcoin growth outpaces Bitcoin growth. The last time it happened was over 1,000 days ago.
It sounds like a dire story, but there is some optimism. Historically, cryptocurrencies have always caught up with Bitcoin. The deadline for return has not yet passed.
The graph below plots the market value of Bitcoin (orange) versus the rest of the cryptocurrencies (purple) over the past seven years.
This includes three major bull markets and two bear markets. Bitcoin’s halving is indicated by two orange dotted lines.
Bitcoin’s advantage is expressed in another way: when the two lines overlap, BTC’s advantage is approximately 50%.
(The data actually goes back even further to 2014, when the market for cryptocurrencies other than Bitcoin was much smaller and only really caught up with Bitcoin in mid-2017.)
Notice the purple shaded area. These are two different periods during which the cryptocurrency appreciated more than Bitcoin, separated by the halving.
The first “crypto era” began shortly after Bitcoin hit a high of nearly $20,000 in December 2017. Altcoins continued to rise for several more weeks before beginning a major correction of their own, with the “cryptocurrency” now worth more than Bitcoin for eight months. Bitcoin.
Bitcoin will start to move further ahead from April 2019 to April 2021. This was probably the strongest altcoin season in history, as the purple line was able to catch up with the orange line.
Even at the beginning of this year, just before Bitcoin peaked in March, the two were essentially equivalent. Since then, cryptocurrencies have lost more value than Bitcoin, but have historically always come back to meet Bitcoin, and then Bitcoin.
First, for the acuture-minded: Yes, it is foolish to look for concrete historical trends from relatively little market data.
That shouldn’t get in the way of having a good time, especially in service to a four-year-and-a-half cycle church. Amen.
— David Kanellis
the work
According to Bloomberg, Stripe is considering acquiring stablecoin-focused company Bridge. Kraken announced plans on Thursday to join the rap BTC club and launch its own service called kBTC. Robinhood has launched a desktop platform and added a Bitcoin option to its app. Former FTX executive Nishad Singh has asked for no jail time before sentencing. Jump Trading is accused of a pump-and-dump scheme in a lawsuit filed by a video game developer.
The Riff
Q: What will widespread active use of cryptocurrencies look like?
Crypto utopia. All solarpunk is about: the end of scarcity and the rise of social collectivism. Open source technology that brings us closer to and protects the nature around us.
But really, it all depends on how you define “active use.”
A16z found an estimated 30 million to 60 million active crypto users. This represents 5% to 10% of the 617 million crypto holders that Crypto.com suggested existed earlier this year.
The methodology filters out non-trading addresses and addresses with near-zero balances from the entire set of active addresses, leaving only those that actually send and receive at least some cryptocurrency.
That makes sense. But at the same time, buying and holding cryptocurrency can also be “using” it.
Bitcoin holders who store their value in BTC may not be using Bitcoin in real life, but they are still actively using the technology.
— David Kanellis
For me, it’s about incorporating cryptocurrencies into everyday life in ways that are so commonplace that we don’t even think about them. So far, I think stablecoins are a good example of that, mostly for non-Americans.
Mr. Lazzarin and Mr. Matsuoka from a16z Crypto emphasized to me the importance of bringing people on-chain to increase engagement. To be honest, I don’t know the answer.
Bull market? Great, we’re technically in one state, and yes, we’re seeing more engagement, but there’s still room for growth. Would infrastructure be better? It’s growing too. Meme coin mania? Well, that doesn’t mean a lot of norms will be pushed into this space (and let’s be real, it takes a certain kind of temperament to get to the top in meme coins).
I’m skeptical that there’s one right or good answer, but I think it’s a great time to think about it and do some research. Keep experimenting and see what sticks.
— Katherine Ross
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