Q2 2019: Bitcoin dominates, IEOs gain traction and Libra stumbles

A quarterly report published by recognised crypto aggregator CoinGecko has revealed fresh insights on the cryptocurrency ecosystem as traditional actors engage in rampant pearl clutching.

Indeed, while authorities and financial dinosaurs bicker over how to contain the inevitable, analysts at the research outlet reported an expansion of the crypto market during the last six months, showing a 125% increase in market capitalisation — largely as a consequence of Bitcoin’s continued success and nod of approval from the market at large.

The best performing asset

In addition to Bitcoin being one of the best performing assets this year, surpassing oil, the S&P 500 and all traditional financial vehicles under the sun, the number one cryptocurrency saw a 165% increase in value during the second quarter, blasting from $4,103 to $10,888 in a matter of weeks. At the same time, Bitcoin’s dominance reached levels not seen since January of 2018, with its market cap expanding from 54.6% to 65%. In comparison, Ethereum and Litecoin saw a 107% and 103% increase in value respectively.

As per the report, 87% of all 302 exchanges that CoinGecko is currently tracking were added in the last 18 months, which is to say that the space has been consistently growing despite exceptionally volatile boom and bust cycles. Given the expanding market, however, crypto hacks became more sophisticated, with a total of $83 million being siphoned off from exchanges this year.

Coingeek analysts also touched on Bitcoin’s performance on Google trends, noting that it surpassed “stocks” within the finance search category with a large margin for the first time in two years. They go on to say:

The last time such a trend was observed was during Bitcoin’s run up to ~$20k, raising hopes for a resurgence of mainstream interest in Bitcoin.

IEOs gain traction

Tokenised fundraising has also come back into the crypto limelight after Binance started the frenzy with Bittorent in January 2019. Shortly after, exchanges began launching their IEOs on their own platforms as well. In fact, Initial Exchange Offerings (IEOs) have grown considerably in the last quarter. According to the report, this was by far the most popular period of IEOs, with 66 out of 72 IEOs taking place during that time. IEOs generated $262 million in the first half of 2019, in part indicating a market recovery from the 2017 bubble and subsequent exit scams in 2018.

Libra gets an unwelcoming reception

Meanwhile, Facebook’s announcement of Libra coin — which has yet to hit the markets — received a largely negative response from world governments. Most notably, the U.S. House of representatives called for a moratorium on the development of the currency, raising issues such as “serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.” A similar critical response could be found across world authorities, with the ECB’s executive board saying: “It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous.” Unsurprisingly, the Chinese government was also sceptical of Facebook’s announcements, saying: “If [Libra] is widely used for payments, would it be able to have a large influence on monetary policy, financial stability and the international monetary system?”

In response to this looming crackdown, perma-Bitcoin-bull and venture capitalist Tim Draper said in a recent interview on CNBC that “our (U.S.) government has a lot of heavy regulators trying to get involved. Why is Libra in Switzerland, why did these cryptocurrencies get started in Gibraltar or Malta or somewhere else — it’s because we have so many people getting involved before we’re able to innovate. All these innovations with Bitcoin, smart-contracts, Open-node are going to go to other countries if we don’t open up.”

Putting it all together

When compared to privatised digital assets that either utilise or leverage blockchain to some extent (even if it’s in name only), Bitcoin is clearly the front-runner by orders of magnitude. That said, while investors are clearly more enthusiastic about Bitcoin, there is also increasing room for retail and institutional-fuelled growth for startups which need to raise capital outside traditional models with endless red tape. Meanwhile, the somewhat shaky introduction of Libra speaks to an evolving scene that pits today’s world currencies against each other: fiat-backed government money, fiat-backed private money, and Bitcoin — which for all intents and purposes is the only true resurgence of libertarian currency since the abolition of the gold standard (or any other monetary standard for that matter).

The stage is set and the pieces are moving.

Are you moving with them?

This is not financial advice.



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