2016 Canadian Bitcoin Index Year in Review

Bitcoin hits an all time high against the Canadian Dollar as record demand drives prices up 119%.

If 2015 were a good year for Bitcoin then 2016 was exceptional. Bitcoin made a new all-time high exceeding the prior high of $1136.86 made in December 2013, reaching a peak of $1340.43 closing the year just off that mark at $1317.33.

Bitcoin opened the year at $601.34 and after dropping to a low of around $500 it consolidated for several months reaching a record low in volatility before a sharp rise to $1000 in June. After a precipitous decline from those highs back to just below $700 in early August Bitcoin began its latest run-up to the current levels of over $1300 ending 2016 up 119%.

The best day for the Index was on June 12th where there was a gain of 12.7%. The worst day saw a similar move in the other direction with a -15.7% slide on 2nd August which was the low point before the ensuing bull run.

Exchanges

Exchanges listed on the Canadian Bitcoin Index combined for a record volume of $149.6 million on 200,000 BTC, an increase of 98% over 2015 continuing the trend of Canadian Dollar volume increases per year since the first CAD trade logged in 2011 and a notable jump from previous years.

A chart of monthly volume shows that exchange volume peaked in the run up to $1000 in June and there was also heavy volume in the final two months of the year accompanying the most recent price rise.

Despite seven exchanges being active on the Index during 2016 only four of those remain with 2016 seeing the removal of Cavirtex (acquired by Kraken), Coinbase (who closed their CAD orderbook after losing their payment processor Vogogo) and Cointrader, who after a period of low liquidity finally closed its doors amid claims of hacking.

Quadriga CX was once again the volume leader among exchanges on the Index accounting for almost 50% of volume (some $73 million) and actually increasing that advantage in the fourth quarter of 2016 to 59%.

Of those remaining on the Index, Coinsquare increased its market share during each quarter in 2016 and currently has over 20% of the market. Kraken, following its acquisition of Carvirtex, looked set to challenge the Quadriga CX dominance with funding promotions and heavy volume during the second quarter of 2016. However, Kraken also lost its payment processor (Vogogo) and as a result its momentum, due to the lack of funding options available to Canadian residents. Taurus struggled for liquidity in late 2016 with low volumes and large spreads albeit it still account for around 10% of the current market.

The largest volume day of 2016 was on 18th November where some $17.7 million were traded for 1774.98 BTC. The average daily volume for 2016 was $408,000 or 546 BTC.

Volatility

The Canadian Bitcoin Volatility Index (CBVIX) tracks the annualized realised volatility of Bitcoin over the prior 30 days. Whilst the CBVIX peaked in July at a value of 98.38% 2016 was again notable for it’s relative lack of volatility which saw a historic low in the CBVIX of just 18.24%.

Whilst still generally considered volatile compared to other asset classes Bitcoin’s volatility continues to decrease year-on-year as demonstrated on the following chart of annualized average historical volatility.

Market Capitalization

Bitcoin’s market cap now exceeds $21 Billion and as a comparison if Bitcoin were a public Canadian company it’d be the 25th largest in Canada (with a similar market cap to Rogers Communications). It hit a new record market cap in early June surpassing its 2013 high primarily though the expansion in the money supply since that time and has more than double its market cap in 2016.

Bitcoin vs. Gold

Bitcoin is often described as digital gold due to its fixed supply and use as a store of value. Bitcoin has significantly outperformed Gold in 2016 (Gold was up about 5%) and looks set to gain parity with an ounce of Gold for the first time. Currently it takes 1.22 BTC to buy an ounce of Gold and this ratio has continued to fall throughout 2016.

Summary

2016 was another successful year for Bitcoin in Canada with a substantial increase in value, record volume on exchanges all accompanied with a decrease in volatility.

The Canadian Bitcoin Index (www.cbix.ca) is a real time blended bitcoin (BTC) price index which reflects the true price of the digital currency in Canadian dollars. In addition the site features live trade monitoring, enhanced charting, a notification system for Index movements, live bid/asks from all supported exchanges, a combined orderbook and a suite of developer APIs.