Catching up with CoinGecko

Having some time away from Cable TV and a good internet connection has allowed me to catch up on a number of articles, reports and books that I have been accumulating over the last couple of months. I normally take them on travel where I am often able to read through them to help me continue to assess the current market environments and consider my future moves in allocation and changes to my portfolios. The market always moves without waiting for anyone so I often find myself catching up after the fact. Luckily, I have found a number of great resources that I could often depend on to help me through that process; for my cryptocurrency investments, that resource is @coingecko.

@coingecko releases the best Quarterly Report I have seen as it is full of great information which includes metrics, research and analysis from around the ecosystems. I have been reading through their Q2 2019 report (late but still valuable information) and found it interesting to see all the moving pieces that made the second quarter see strength. Although we have not seen the followthrough in this quarter, I believe the report provides some light as to exactly why that has been the case. I thought it would be good to provide some of my perspectives on some of the highlights they shared.

Top 5

In what seems to be a forgotten performance given our Q3 so far, Q2 market capitalization in increased 125%! This was after a good performance to start the year as well! These are returns that are never seen in any asset class which is why we should acknowledge that this comes with not only the volatility we often see but also the negative returns as well. What I found interesting is that the Top 5 in the asset class averaged 108% returns which demonstrates the leadership of the large projects and their importance to the asset class. I think it also shows that the majority of projects will still fail as communities and developers stick with those that have history and can deliver on roadmaps as they consolidate power to move their projects forward and incorporate the ideas of others that have failed.

Even within the Top 5 we continue to see how bitcoin continues to dominate the market capitalization as it went from 55% to 65% in the quarter and has recently seen almost 70% in Q3. The only other that has somewhat held up is Ether despite the continued challenges it has with scaling and transaction fees and the heated competition from the likes of EOS. As stated in the report, by the end of Q2 2019 the top 5 assets made up about 86% of the total market capitalization! This leads to question whether there will ever be another altcoin season and if so, to what extent will the altcoins participate as there continues to be thousands of assets in the space.

Libra

Being honest, I have not been very enticed to learning about Libra given its centralized focus and being a creation of Facebook. However, after seeing the report, it has intrigued me more than I thought in would as I begin to see the potential of not only the asset itself but what it could mean for further development and adoption in the asset class. Although I knew about the prospective list of member of the Libra Association, when you see it on paper it really gets the perspective of its potential and the underlying nature of what they are seeking to achieve. It also shows why the traditional segments of the financial systems, including the regulators, seem to be concerned with the potential of billions on boarding to a new monetary system.

The Libra has the potential to become the main currency of the world as no other currency could cater to almost a fourth of the world’s population given that Facebook has 2.7 billion users within its ecosystem of platforms. At the same time, it seems that Facebook purposely excluded a number of current key members of the current system dominated by traditional financial institutions. Not even the other tech powerhouses were included which also drives the potential for competition from them in the future.

While the use of its blockchain is truly a great opportunity for the technology to be proven, what most excites me is the way that the protocol will be opened to incentivize the operators that seek consensus for the blockchain. While it will take $10 million to run a node, it seems as though there will also be a Libra Investment Token that will have dividends based on the Libra Reserve earnings. In addition, they will have voting rights which will make it interesting given that it could potentially become more decentralized that originally thought. The project has definitely caught my interest now!

Dapps

While most of the report had a lot oriented toward the positive sides of the markets, one section that caught my attention which I follow carefully was that of the Dapps. Specifically, I was surprised to see that the trends of Dapps and their activity has seen declining trends for the quarter. I believe this was the first time since the metrics had been collected that we have seen this. While it could be understandable that dollar volumes decrease, to see active users down was disappointing. This could be the fallout of a continued bear market in most projects as adoption has not been as much as expected.

While the potential of platform based blockchain continues to be huge, it feels as if they have begun to cannabilize each other which could be a problem for some looking to keep both developers and users engaged. I would have thought that lower prices would have been a catalyst to get more involved but we have yet to see it. I still think that user interface and their experience continues to be the challenge in the space, which includes our beloved Steem which continues to struggle in maintaining growth and retention.

I think that the report was great to put reasoning behind the positive performance of the second quarter but also why this quarter has been challenging. After moving over 100%, any asset will be met with resistance and some selling as profits are taken and value continues to “catch up” with price. Also, some of the exciting news like Libra was met with resistance and negative rhetoric which has paused the demand for some time. However, development continues to build and while some projects are at their last days, others continue to gather support from the mainstream which could lead to the adoption needed for a great future!

Q2 Report from CoinGecko Website

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