Cryptocurrency prices were mostly higher at press time, as the total coin market cap fell to US$205 billion, compared to a peak of US$209 billion on Thursday.
Bitcoin (BTC) rose fractionally (0.29%) to US$6,417.10 on the Einstein Exchange, while Ethereum (ETH), increased 1.48% to $200.61. Litecoin (LTC) was at $50.80, up 2.31%, while XRP (the native currency of the Ripple network) rose 0.66% to $0.481.
CLICK BELOW FOR LIVE CRYPTOCURRENCY PRICE INDEXES:
In a recent Bloomberg interview, Coin Metrics co-founder Nic Carter stated that the noticeable decline in the user activity of Bitcoin demonstrates the market is still in recession. Less new investors have entered the market since late 2017.
“It tells me we are still in a Bitcoin recession,” Carter said, adding that a dip in user activity enables the evaluation of the actual liquidity of the asset. “I think it helps us assess ‘true liquidity’ in the idealized, global order book sense. To some degree, I think it lets you roughly calibrate the effect of future inflows.”
Throughout 2018, during a 69% correction, only 25% of Bitcoin were moved between addresses, suggesting that 75% of BTC had not changed hands.
That is nearly a 58% decline in Bitcoin user activity since 2017, a period in which BTC surged to a new all-time high at US$20,000 and the cryptocurrency market reached a valuation of US$800 billion.
Crypto analysts expected a higher percentage of Bitcoin in circulation to change hands throughout the past 11 months despite the bear market, given that many new investors have entered the market through alternative platforms such as the CBOE and CME BTC futures markets.
The launch of the Bakkt Bitcoin futures market in December and the release of the Goldman Sachs and Morgan Stanley cryptocurrency derivative products are also expected to increase the user activity of crypto, growing the liquidity of the stagnant cryptocurrency market.
In 2018, Bitcoin suffered one of its worst correction in recent years – its fourth worst crash in the past nine years.
The decision of many investors in the market to hold onto their Bitcoin investments regardless of a 69% drop in price demonstrates confidence towards the long-term price trend of the dominant cryptocurrency, and perhaps more significantly, that investors are considering crypto as a long-term investment rather than a short-term position.