Ignore the doomsayers – Coin Metrics’ new report on 2019 shows surprisingly positive figures for the overall health of crypto going into 2020.
Short term price declines tend to have an outsized impact on perceptions in the crypto space.
But Coin Metrics just released its annual “State of the Network 2019 Year in Review“ which shows improvements on most of the important measures in the crypto space.
Despite what many think, that even includes price.
“Despite the downturn at the end of the year, most of the major crypto assets actually finished significantly up on the year in terms of price,” the report notes.
Coin Metrics also found general increases in usage and transaction counts, decreases in volatility, and very low fees for most major crypto assets which it concludes “are positive signs heading into 2020.”
Some of the best performers in terms of price include Bitcoin which finished the year up 90%, Chainlink increased 513% over 2019 and Basic Attention Token was up 45%. After Tezos staking was released on Coinbase Pro and Binance, XTZ finished up 182%.
Some finished flat like Ethereum (down 6%) while XRP (-47%), Stellar (-60%) and Zcash (-52%).
Those last three aren’t looking that healthy on many other measures either.
Stablecoins get more popular, become mediums of exchange
While market cap is closely tied to price for most coins, that’s not true for stablecoins.
2019 saw a whopping 3700% increase in Tether’s Ethereum version (UDST_ETH) while the USDT Omni version fell 39%. Stablecoin PAX increased by 65% and USDC doubled.
We can see the change in the narrative around cryptocurrencies being born out in the metrics with the amount of Bitcoin active in the past 30 days decreased from 14% to 9% while ETH declined from 32% to 24%. This is seen as a sign that assets are being used as a store of value.
However, the active supply of stablecoins ranged between 50-75% showing these are fast becoming the preferred mediums of exchange.
Hodlers be hodling
In terms of ‘realized cap’ (which looks at the value of each coin the last time it was transferred between addresses), Bitcoin’s realized cap increased 28% over the year.
As its market cap grew 98%, this means most BTC investors held onto their coins rather than realize profits. Realized caps grew from LTC, XTZ, BSV, and LINK.
Market cap to realized value (MVRV) is a way of determining how many investors are in profit, with a low figure suggest investors are minimally in profit (or they’re underwater if the figure is negative).
For Bitcoin, the figure of 1.33 indicates hodlers were increasingly in profit over the year.
For ETH, the figure was 0.61 suggested investors were increasingly underwater.
BSV dropped during the year but recovered to 1.7 by the end suggested they finished well into profit.
As a note to help you decided when to sell, this is a metric worth keeping an eye on during a bull run – all of the post bull run price declines have occurred when Bitcoin hit an MVRV greater than 4.
No excitement no more
Volatility decreased over the course of the year to 2.6% for Bitcoin and 3.3% for ETH – meaning little excitement but also no major gains or losses.
While daily active addresses aren’t an exact proxy for daily active users (as one user might have a bunch of addresses) it’s a useful rough yardstick.
2019 saw big increases for LINK and XTZ while XRP, XLM, and ZEC all saw big declines (led by XLM’s whopping decrease by two thirds).
The number of addresses with a balance greater than $10 (a proxy for retail investors) increased for most of the major crypto assets, which is a very encouraging sign for adoption.
XTZ and LINK addresses with more than a tenner doubled over the course of the year while BSV, XRP and ZEC declined.
The big boys are way out in front: Ethereum has 2X more addresses than any other crypto asset except Bitcoin – which has 4X as many as ETH.
It’ll come as no great surprise that the greatly anticipated institutional investors didn’t arrive in 2019.
If we take the number of addresses with more than $1m as a guide there are just 11,000 or so such addressed for BTC and around 1800 for ETH.
None of the other assets had more than 700 addresses holding $1m or more. LINK did increase its number by 538% however, while USDT_ETH shot up 5817%.
Transaction counts increased for most major assets, with BSV leading the way up 20,688% (three-quarters of which were non-economic transactions to store data on-chain). XRP averaged nearly 1m transactions.
Inflation of supply decreased or held steady for most assets – BTC (3.72%), ETH (3.5%), BCH (3.69%), LTC (4.15%), and BSV (3.7%).
Daily median fees on blockchain networks are also very cheap with only Bitcoin (10c) and Ethereum (4c) having fees worth talking about.
Bitcoin raked in $427,000 a day from fees on average, while Ethereum took $95,000.
No other network had daily average fee revenue higher than $1200 – which probably isn’t surprising given BCH, LTC, BSV, ZEC all had average transaction fees below 1c.
Bitcoin’s hash rate (a proxy for network security) grew 130% over 2019, BCH’s hash grew 63%, BSV (26%) ZEC (81%) while Ethereum’s fell 13.2% and Litecoin fell (14%).