The Inevitable Flight to Stability—BTC/USDT, BTC/USD Flow Spike

 
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Weekly Wrap Up–Nov 20

Coin of the Week: Bitcoin Cash Hash War and Bitcoin Slump

Mining is no longer a hobbyist game. Margins are tight and the ROI is now in years as the market slump continues. At the moment, this is best exemplified by the Bitcoin Cash ABC—SV drama. Even if the hash rate wielded by each side is rented, it has come at the expense of every day, simple investor. For all we can see and know, the plunge has been unforgiving and as value drains, both networks are now as illiquid as ever.

As it is, both camps cannot risk liquidating their BCH or SV in that case for fear of worse prices despite ballooning losses. Research from BitMex indicates that the total cost of their unnecessary, egocentric hash war is now at the tune of $8 million and that is costs from renting hash power alone.

Including capital losses, losses are in their hundreds of millions and that is not only disillusioning for investors but disastrous for the long-term stability—read hash, of the network since it means low yield for miners always seeking for profit.

All in all, BCH is down 62 percent in the last week, 20 percent in the last day and 10 percent in the last hour at $200 helping drag the whole market to new lows—BTC is at $4,500 at the time of press.

Total Market Cap and Bitcoin Dominance

The destabilization of the Bitcoin Cash network coupled with other factors as SEC involvement and “crack-down” of ICOs seem to fuel price meltdowns.

At spot rates, the double-digit losses of Bitcoin and altcoin prices were enough for the total market cap to drain from $212 billion to $144 billion in the last week alone. That is a 32 percent drop that ensured most coins are trading well below their key support levels and printing new all-time lows. At the same time, there is an apparent capital flight from altcoins to Bitcoin—dominance is up two percent to 53 percent and to stable coins as Tether—USDT, TrueUSD and Paxos Standard—are relatively stable but available at a premium.

Meanwhile, the ETH dominance dropped from 10 percent to roughly nine percent while XRP rose from nine percent to 12 percent. The rise of XRP dominance is mostly because of its stability as it now the second most valuable coin in the space.

On the other side of valuation, the total market cap of altcoin slumped from $101 billion to $66 billion. That’s a 34 percent drop and considering their direct couple with BTC prices, we might see further drops until prices stabilize. From there we could see a recovery that would help steady the crypto ship.

Trading Volume

As expected, this massive sell-off did trigger market wide market sells and the increasing volumes from 6.1 billion of last week to 9.5 billion are best visuals. A large chunk of this trading volumes is from Binance with 24-hour average volumes of $1.478 billion, OkEx–$1.039 billion and BitFinex at $905.613 million.

Now, the flight to stability is evident at USDT dominated exchange as Binance.

Here, BTC/USDT related trading made up 29 percent of trading while XRP/USDT and XRP/BTC trading made up nine percent each. It also seems like investors are shifting their coins to TrueUSD as it up the ranks days after listing contributing two percent or $31.123 million worth of trading volumes in the last day.

At OkEx, the tune is the same. XRP, ETH, EOS and BTC coin holders are shifting their stash to USDT as they shield themselves from worsening market conditions. BTC/USDT related trades make up a whopping 30 percent of the total trading volume as EOS/USDT occupy second place at 15 percent relegating both XRP and ETH at seven percent and 13 percent respectively.

Money Flow

In response to dropping asset prices, USDT related trading dominates. USDT/BTC made up $1.73 billion which is more than twice that of ETH/USDT at $670 million, EOS/USDT at $305 million and XRP/USDT at $198 million. As the flight continues, USD volumes spiked usurping KRW with most still flowing from Bitcoin–$861 million and from ETH–$169 million.

Meanwhile, KRW trades flew from Bitcoin Gold–$348 million, OmiseGo–$271 million and Bitcoin–$112 million. In Japan, XRP related trades stood at $180 million while Euro related volumes were mostly from Bitcoin–$250 million and ETH–$69 million.

Conclusion

The market is extremely volatile and as long as BTC slump, the bleeding will continue. The best move right now is to protect the investment by loading up stables—as USDT, TrueUSD for the conservation of value. Otherwise, as the bleeding continues, BTC prices might end up testing $3,000 if not $1,500 in the coming days.