Bitcoin Daily Confirmed Transactions at 2-Year Low
Mar 07, 2018
The height of the cryptocurrency craze in December of last year saw prices soar, causing both aggressive and conservative investors alike to take note. During this rapid growth period, there were whispers of an eventual “crypto bubble” that grew louder as prices increased. While there has been no “burst”, cryptos certainly seem to have lost some of their luster. This came to a head in February and can be seen in the frontrunner of the cryptocurrency markets, Bitcoin. Not only has the price of Bitcoin dipped significantly, but so too has the number of daily transactions revolving around it. Average daily transaction figures are one of the key metrics for valuing cryptocurrencies, so large scale movements are worth monitoring.
At its peak, Bitcoin had a price of nearly $20,000 and reached an all-time high volume of 350,000 daily transactions on December 16th. Bitcoin’s performance since then has been less than optimal. Bitcoin’s price briefly slid below $6000 and although it has since recovered, the current price point of $11,526 (according to Coin Market Cap) is significantly off of the currency’s highs. What is also worth considering is the number of transactions conducted involving Bitcoin. In February, Bitcoin transaction volume averaged 150,000 transactions daily, less than half of what took place two months prior. In combination, these factors certainly seem concerning for Bitcoin’s prospects. The question now becomes whether this is truly a bubble, or simply a bear cryptocurrency market?
A qualitative analysis would point to the latter being the case. Prices during the end of last year seemed to be reaching unsustainable levels, causing the market to quickly overheat as Bitcoin prices escaped the reach of the average investor. A price correction, given how rapidly prices rose, was an outcome many elite investors foresaw. As prices fell, more capital poor investors were once again able to invest, creating a foundation of support for Bitcoin. Bitcoin’s utility as a benchmark cryptocurrency as well as the blockchain technology underlying Bitcoin are also encouraging factors. Blockchain technology is still in its infancy and yet has been adopted by numerous sizable organizations. This bodes well for the long-term sustainability of many cryptocurrencies, not just Bitcoin.
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