Hi
I am a long time lurker and holder. I generally keep one eye open for activity in the BTS markets but recently I noticed this huge growth in circulation of the BitAssets - particularly BitUSD and BitCNY. I've been expecting this for a long time (in fact I expected it would happen a couple of years ago and then went to sleep when it didn't).
Now I've woken up again.
I realise that $30 Million is a drop in the ocean (for BitUSD for example) but from a strategic point of view I think this is huge. I've been wracking my brain over 3 things:
1. why it so suddenly took off back in April
2. why it is now accelerating
and
3. why the BTC ratio is not as spikey as it was in June despite a far larger BitAsset growth (requiring proportionally more collateral).
Well 3 is easily explainable by BTC's massive growth against the dollar, so that's fine. My own theory for 2 is that with the Bitfinex/Tether adverse publicity, the advantages of a pure crypto, trustless pegged blockchain asset over a bank-backed one are starting to dawn on the market (lightbulbs going on).
I still have no clue to the suddenness of point 1 though. (By the way BitCNY is the same - off the charts growth in the last month so I didn't bother showing it separately).
*********** Market Observations ***********There are some very interesting observations to be made from the last 8 months - namely, it's quite beautiful IMO the way that the BTS price perfectly correlates with the BitAsset supply (BitAsset marketcap can be used as a proxy for supply since the dollar price is constant). This indicates that the network and economics of the system is actually working as intended and that BTS isn't just being used as a speculative bottle-top asset like, say, Litecoin is. (That's why I invested in this in the first place).
Second observation is regarding the BTS/BTC ratio. We can see that despite BTC's massive 700% growth since last June, BTS is starting to recover its value even against BTC. What this tells me is that BTS is excellently decoupled in the sense that the more BitUSD et al get used as cash pairs for crypto markets, the better BTS can perform BOTH in times of BTC growth and especially during corrections (when increasing numbers cash out to BitUSD instead of the toxic Tether).
Third observation should be stark and slightly humbling: Tether has a circulating supply of 1.4 billion and is created by a single company, not a real crypto, not trustless and already toxic. The whole point of a blockchain is that you hold what you have in your wallet. i.e. it isn't a promissory note (as Tether is). Meanwhile BitUSD's circulation is approx 30 million. The BitAssets are bound to grow to at least the marketcap of Tether as understanding proliferates IMO.
The implication is a 1400% growth just to that level alone. If we confine the growth to only the USD cash market currently occupied by Tether then that would represent a 46 times growth in BitUSD. Given the close correlation shown in the traces below between BitUSD circulation and BTS dollar price, than would mean BTS at a Bitcoin ratio of 0.022 (currently 0.000042) if BTC were to stay at current $USD exchange rate.
Lets say that BTC grows to $40,000 this year though and BitUSD only captures 10% of the Tether market. That would still represent a doubling of the BTS price in bitcoin and a 460% increase in the BTS dollar price. The reason I'm becoming increasingly bullish now is that the growth in BitAsset circulation seems to be finally taking off after years of laying the groundwork. Confidence in the network, calamities in competing "pseudo pegged-assets" and a general explosion of capital arriving in the sector as a whole seem to have lit the touchpaper.
All to play for !