Cryptocurrency Q2 summary: From peak to trough, this is the most dramatic quarter in crypto history

The higher you fly, the harder you fall. April is the peak and May is the trough.

After a strong start to the year, the headlines of the second quarter of 2021 began to be dominated by news of the cryptocurrency market crash. However, despite the crash, many assets still ended in green during the quarter. In this article, we reviewed the brightest points in the second quarter of 2021.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

April prosperity

For Ethereum (ETH), this is an important quarter, with a rise of 13.2%. On May 11, ETH surged to a record high of $4,155 with an opening price of $1,971, after which the market crashed.

ETH has benefited from a renewed surge in retail interest, partly due to the rapid rise of NFTs. Although NFT media attention reached its peak in March, it has brought unprecedented mainstream attention to Ethereum, which has led to an influx of new users.

Although the volume of crypto art transactions has cooled, the broader NFT ecosystem continued to grow in the second quarter. OpenSea, the NFT market, set its largest month ever (in terms of sales) in June, thanks to the prosperity of projects such as NFT avatars and Art Blocks.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Google Search Trends

Due to the surge in retail investors, the number of addresses holding at least 0.1 ETH increased from 4.58 million to more than 5.2 million in the second quarter.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Network data chart

Many tokens in the ETH ecosystem also performed well in the second quarter. MATIC is the native token of Polygon, the expansion solution of Ethereum, which rose 227% this quarter. Ethereum competitors such as Cardano (ADA) and Solana (SOL) also ended the quarter in green. Ethereum Classic (ETC) is even among them, rising 297% this quarter.

In addition to ETH, Dogecoin (DOGE) and other meme coins also peaked on May 11. Driven by Elon Musk’s tweets, DOGE will shine in the second quarter of 2021, with an increase of 391% in the quarter. This rapid growth is also reflected in the chain. The number of addresses holding at least 1 DOGE increased from 3.09 million on April 1 to over 3.7 million on June 30.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Network data chart

In general, small assets reached a new peak in May. As a result, Bitcoin’s dominance fell to its lowest level since July 2018.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Network data chart

May crash

Then, on May 12, things suddenly changed.

First, Tesla announced that they will no longer accept BTC as payment. Although the news initially frightened the market, as reports that China was cracking down on Bitcoin mining and trading began to surface, more destructive news soon followed. Although China has a long history of encryption regulations, these new regulations appear to be stricter than before. On May 19, after the price unexpectedly fell below $40,000, BTC collapsed all the way, causing the price to plummet to nearly $30,000.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Reference Exchange Rate

Supported by record high leverage, the market was in an unstable state before the crash. In late April, the open BTC contracts of Binance, BitMEX, Kraken, Deribit, FTX, Huobi, and OKex exceeded US$4 billion, indicating that there may be a large amount of leverage in the system. To make matters more complicated, a huge difference between this cycle and the operation in 2017 is the ability to use leverage on projects outside the top 10. Due to the emerging derivatives infrastructure, some small-cap assets have relatively high open interest, which may have contributed to the sudden collapse.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics market data

Miner migration

China’s attack on miners has begun an unprecedented migration of Bitcoin computing power. Faced with a sudden ban, Chinese miners are moving their operations to overseas regions that are more friendly to cryptocurrencies. Although the exact location of their final settlement remains to be seen, it is reported that interest in North American mining has flooded in, especially in places with cheap renewable energy sources such as Texas. Other miners are looking for locations closer to China, such as Kazakhstan or other destinations in Eastern Europe or Central Asia.

On May 18, when the number of BTC sent by miners soared to the highest level since March 2020, signs of the outflow of miners became obvious on the chain. With the news of the upcoming crackdown, many miners may transfer their BTC for sale or self-custodial.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Network data chart

This migration of miners has caused Bitcoin’s computing power to decline in the short term. Bitcoin’s computing power dropped by 50% in the second quarter, falling to its lowest level since the end of 2019. The figure below (created by @TakensTheorem) shows the computing power during the Chinese regulatory event. Due to the uncertain regulatory environment and the departure of miners, Ethereum’s computing power has also declined.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: TakensTheorem

Once miners start to restore power to the new mine, the computing power should eventually recover. However, this will not happen overnight, because it takes time to build and set up enough facilities to accommodate the sudden influx of new demands.

Despite the decline in computing power, the Bitcoin network is designed to withstand a sudden drop in computing power. The difficulty of Bitcoin is automatically adjusted every two weeks, with the goal of continuing to produce Bitcoin blocks every 10 minutes. On July 3, Bitcoin’s difficulty dropped by about 28%, which was the biggest difficulty reduction in Bitcoin’s history.

Coin World-Cryptocurrency Q2 Summary: From the peak to the bottom, this is the most dramatic quarter in the history of crypto

Source: Coin Metrics Network data chart

In the long run, this large-scale migration should be beneficial to a large extent, because it will help Bitcoin’s computing power to be further dispersed around the world and eliminate the previous centralization in China. It can also help improve Bitcoin’s environmental impact, as miners in certain areas of China rely on coal for power generation.

change the world

The move of miners and investors out of China will significantly reshape the global dynamics of Bitcoin, but this is not the only place in the world where the relationship with BTC has changed.

In June, the Salvadoran Congress passed a bill to officially make Bitcoin legal tender. As a historical moment in Bitcoin and cryptocurrency, El Salvador is now the first country to recognize BTC as a satisfactory payment method for any form of monetary debt. Although the Bitcoin experiment in El Salvador will take some time to complete, Bitcoin adoption around the world is undergoing one of the biggest shifts to date. As El Salvador begins to adopt BTC on a larger scale, there will undoubtedly be more resistance and challenges. But if the experiment in El Salvador goes well, this may be a turning point for the large-scale adoption of BTC globally.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/cryptocurrency-q2-summary-from-peak-to-trough-this-is-the-most-dramatic-quarter-in-crypto-history/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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