For many users in the encrypted financial market, March 12, 2020, was a perfect coexistence of danger and opportunity. On this day, encrypted assets plummeted, and the market was full of pessimistic predictions; the same day made that March an excellent time for encrypted asset allocation. As for Amber Group, because of its rich experience in security risk control and active and orderly strategic adjustments, 312 was able to survive smoothly.
One year flies by and the crypto financial market has emerged from the ashes of this global liquidity crisis. As a leading encrypted financial intelligence service provider, Amber Group has witnessed that encrypted finance has entered a magnificent road to rectification during this period. Based on Amber Groups focus and research on the industry, this article sorts out the key changes in the market this year from three aspects.
Cornerstones, Crypto Central Banks and Newcomers
As a bridge connecting the value of the real world and the encrypted world, stablecoins are the cornerstone of building the entire encrypted financial market. We can perceive changes in the encrypted financial market through the development trend of stablecoins. Amber Group research shows that in March last year, the overall market size of stablecoins remained at 4.5 billion US dollars, of which USDT accounted for about 71%. Today, the corresponding values are 37.8 billion US dollars and 54% respectively. Based on the assumption of 100% full reserves, the amount of dollars locked in stablecoins is eight times that of the same period in 2020. While the scale is expanding rapidly, the market structure of stablecoins has begun to change. Tether, as the central bank of the encrypted world, still occupies half of the country, but its horns have emerged. USDC, BUSD, PAX, HUSD, etc. are gradually gaining the favor of incremental funds due to their more compliant, more transparent and multi-chain features. In terms of stablecoins, Amber Group has seen that large-scale funds have begun to enter the construction of the encrypted financial ecosystem in a more compliant and transparent manner.
The struggle between DeFi and CeFi
The period from May to August 2020 is known as the Summer of DeFi in the industry. The endless innovations and iterations in the DeFi field make it a force that cannot be ignored and stopped in the financial system. The financial and technological innovations demonstrated in projects such as Chainlink, Compound, Uniswap, Yearn.Finance, and Synthetix continue to bring inspiration and practice to the development of future finance. In the past year, the impact of DeFi on the existing financial system has been truly felt by more people. At the same time, the lack of a clear definition, the rapid development and other issues make the original regulatory paradigm inapplicable to DeFi, which has also aroused the attention and worries of the government and regulatory agencies on DeFi. Based on this background, the game and coexistence of DeFi and CeFi will continue.
Institutional and Value Reconstruction of FOMO
When the Federal Reserves 2.2 trillion economic stimulus took effect, the loose global monetary policy brought excellent liquidity support to financial assets. Under the background of the Internet of Everything, in the choice between cryptocurrency and gold, major institutions have gradually turned their taps to cryptocurrency. Institutions including Greyscale, Microstrategy, Square, MassMutual, Tesla, etc. continue to buy or increase their holdings of Bitcoin, gradually reshaping the right to speak in the market. The entry of traditional institutions has continuously reduced the volatility of Bitcoin. Even in December 2020, the number of Bitcoins bought by institutions was almost three times the number mined by miners during the same period. A large amount of Bitcoin flows from retail investors to institutions, and its value storage and anti-inflation characteristics are perfectly displayed. At the same time, in addition to institutions actively holding positions, many giants have also begun to build bridges between traditional finance and encrypted finance—Visa and Mastercard are expected to connect encrypted digital currencies to the global clearing and settlement network; Financial opening of payment gateways and so on - the entire encrypted financial system has been continuously extended from the early transaction-oriented state, constantly reconstructed, and constantly integrated into everyones daily life.
The opinions in the article do not constitute investment advice, please pay attention to investment risks.
