Many people have come to own and embrace crypto-assets because of a powerful sense of mission that includes: fairness and efficiency meaning a desire to see transferring money more like sending a text message — “instantaneous and low cost to all, and not something that often takes days and costs greater than 10% in middleman fees for those who can least afford it.”
As noted in a report from Blockchain.com, people value privacy and it seems “not a day goes by that yet another privacy destroying cyber exploit or revelation of an abuse of trust is revealed.” Blockchain tech may help with protecting individuals from predatory practices and “help us take control of our personal data and financial information.”
Cryptocurrencies also enable open access: “over a billion people around the world do not have a bank account, including a significant percentage of citizens in developed countries (over 5% of Americans lack a bank account).” To use bitcoin you “do not need to first apply and gain approval from a gatekeeper like you do to open a bank account.” Anyone “with a computer and internet connection can access crypto,” the team at Blockchain.com wrote in a blog post.
Virtual currencies also support the democratization of finance: “small investors in many countries have traditionally lacked access to financial services and opportunities available to the wealthy (e.g. overly restrictive accredited investor rules).” Crypto is helping “to level the playing field. In a world of rapidly rising consumer prices and seemingly out-of-reach homeownership, we believe strongly that crypto can help address the sense of despair many younger people, in particular, feel around their financial future.”
In the US, crypto has always been an “easy sell,” as it were, to the end of the political spectrum that “favors a more deregulatory and free-market approach, but recent legislation in both the Senate and House had support from both Democrats and Republicans at introduction, a surefire sign that any perceived partisan gaps around crypto are beginning to close.”
Even some officials within the Biden Administration (which many perceive as anti-crypto) have started “to draw subtle but important distinctions, with Deputy Secretary of the Treasury Wally Adeyemo saying that his agency’s focus is on “the illicit use of” cryptocurrencies, not debates about the legitimacy cryptocurrencies themselves.:
The report from Blockchain.com, a crypto wallet provider, block explorer service, and digital asset exchange, further noted that he also told a November conference that “digital assets are yet another innovation with the potential to be transformative…they offer the potential to unlock new opportunities,” and that Treasury’s aim is to “…create a regulatory environment that fosters responsible innovation.”
According to Blockchain.com:
“In sum, increased fairness and transparency of our money and financial system is a goal that is shared by more people, and not surprisingly more policymakers across the political spectrum are coming to support crypto.”
The report also mentioned that the January crypto sold-off alongside other asset classes, “with Bitcoin (BTC) down -17% and Ethereum (ETH) down -27%.”
Blockchain.com also noted that crypto has “rallied strongly to start February, with bitcoin recouping almost all of its January loss.” There is “some evidence that the frost that set on crypto markets these past few months is abating,” the report noted.
As mentioned in the update:
“The continuing increase in bitcoin’s estimated hash rate despite another monthly bitcoin price decline speaks to the medium-term price confidence of bitcoin miners and the availability of economically attractive sources of energy. Overall bitcoin on-chain payments, transaction activity, and fees continued decreasing in the month of January.”
The report added:
“Our view is crypto possesses unique characteristics, and market participants should observe and trade on crypto’s own fundamentals over time versus simply correlating with what’s happening with tech equities.”
The report also noted:
“More significantly, we continue to see strong fundamentals across a number of dimensions, including significant fundraising by blockchain networks (eg a large Sequoia-led $450m fundraise by Polygon (MATIC)).”
The further support the team at Blockchain.com sees for Bitcoin adoption by certain US states and legislators is also “fueling a view that it is only a matter of time before more sovereign entities follow El Salvador in embracing bitcoin in some way.”
Past major crypto sell-offs have also typically “brought a silver lining: brand new crypto investors that missed the prior run-up.” According to Blockchain.com, if such new investors are arriving in meaningful numbers this “should help support current price levels.”
In January, the only BTC on-chain metric to show a gain across our selected statistics is “the estimated mining hash rate, which increased 8.2% for the month.” The continuing increase in bitcoin’s estimated hash rate despite “another monthly bitcoin price decline speaks to the medium-term price confidence of bitcoin miners and the availability of economically attractive sources of energy.”
The report added that the average number of daily transactions (-4.6%) and payments (-3.8%) “declined in January.” In addition, the average daily active addresses “fell -7.3% from December to January.”
The report further revealed:
“Reduced bitcoin transaction activity typically results in a decline in average daily fees per transaction, which dropped from $2.42 per transaction in December to $1.80 per transaction in January.”
It added that the total BTC transactions and payments made using the Blockchain.com platform in January “were down -4.1% and -5.0%, respectively compared to December.