November’s crypto crash was undeniably painful, and cryptos stayed down for the count through December…
But if you look deeper than the price charts, there’s been plenty of encouraging news for “bitcoin maxis” and Web3 dreamers alike.
NFTs Can’t Stop, Won’t Stop
As prices stabilized around $47,000 for Bitcoin (CCC:BTC-USD) and $4,000 for Ethereum (CCC:ETH-USD), trading volume on marketplaces like OpenSea suggests that people are “BTFD”… with NFTs! The chart below shows how NFT trading quickly bounced back to October levels:
Source: The Block
Ninety percent of this NFT trading happens on the Ethereum network, which has in turn fueled demand for Polygon (CCC:MATIC-USD), a platform with “scaling solutions” so you can transact on Ethereum more quickly, with lower gas fees.
So, how does 2022 look? According to the crypto data community Dune Analytics, people seem to be returning from their holidays and storming the NFT market. Below we see the spike in activity on OpenSea here in January:
Source: Dune Analytics user @rchen8
With volume of roughly $250 million each day, OpenSea is pushing back towards its all-time high of $323 million. That milestone was set in August, as Bored Apes and CryptoPunks had finally made the mainstream news, and even Visa (NYSE:V) got in on the action.
The appetite for NFTs is only growing. Meanwhile, in bitcoin…
The Price of BTC May Be Stalled Out – But The Bitcoin Network Is Better Than Ever
Historically, a lot of that network activity happened in China: 50%, even 75%! When the Chinese government banned crypto mining this June, miners simply moved shop to Central Asia or the United States, reports CoinDesk, and today bitcoin’s enjoying a record hashrate.
Hashrate simply measures the level of computer power mining all this bitcoin and thus allowing transactions to go through. And because each member of the blockchain records every bitcoin transaction, more computers translate to more protection from fraud and abuse. When China pulled the rug, bitcoin’s hashrate plummeted, but on Jan. 2 it hit a new record of 203.5 exahashes per second, at which point the Bitcoin network was more secure than ever.
Some other signs of bitcoin’s maturity that are popping up:
- Talk of bitcoin as a better “store of value” than gold from the likes of Goldman Sachs
- Bitcoin is outperforming tech stocks in the Nasdaq leading up to the Fed’s policy announcement: possibly the first of four rate hikes
- “Paper hands” moving out of bitcoin
- Even the haters over at JPMorgan are giving a $73,000 median price target for BTC
BTCS was the first pure “crypto stock” and bitcoin miner available on the Nasdaq. It’s been overshadowed by bigger legacy tech companies who’ve moved into bitcoin – MicroStrategy (NASDAQ:MSTR) and Overstock (NASDAQ:OSTK) come to mind – but dividends could push BTCS into the spotlight.
Dividends in bitcoin could certainly make it more boomer-friendly. Up until now, baby boomers and Gen X have been vastly less likely to own bitcoin than millennials.
Just as noteworthy is this idea of paper-handed retail investors shifting away from bitcoin – just as Wall Street gets more interested.
That shift starts to sound just like the “FAANG stocks” we’ve all heard about so much on CNBC for the past eight years. At this point, pretty much everyone who is going to invest directly in Facebook, Netflix, or Amazon probably already has. And yet, their presence in the large-cap indexes is a virtuous cycle, where investing in your 401(k) means you’re also boosting the FAANG stocks, month after month. That institutional cash makes the stocks unstoppable, long-term. And it could do the same for bitcoin.
Less drama in bitcoin could feel less exciting. But what would be more exciting than amassing long-term gains?
On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.