Crossing the Crypto Chasm

April Market Outlook
Apr 5 · 13 min read

Crypto continues crossing the adoption chasm.

The ongoing Wall Street-Crypto convergence received a big boost with news in March that investment banks like Goldman Sachs and Morgan Stanley would be ramping up crypto product offerings, and Fidelity and other established firms filing bitcoin ETF applications.

We also saw the crypto and art world collide with a record setting $69 million non-fungible token digital art sale. The mainstream validation of use cases for crypto beyond its role as “digital gold” are incredibly valuable for educating the broader world on the wide range of ways that crypto is impacting the world.

Here are our latest thoughts on what’s driving crypto markets and analysis of bitcoin on-chain activity this month.

Be sure to also watch and listen to this month’s webinar featuring Witek Radomski and Caleb Applegate, CTO and COO of Enjin, and our discussion of Enjin and NFTs.

Quick takes:

  1. Market Movements
  • Bitcoin (BTC) set another new all-time high at ~$61k on March 13th; crypto markets subsequently sold off and have settled into a sideways pattern but bitcoin and Ethereum (ETH) both managed to finish up over 30% for the month
  • Broader financial markets were mixed: stocks were up ~5% with long-dated US treasuries plunging again (-5%), gold continuing drifting downward (-2%), and the US dollar showing strength (+2%)
  • We continue to see strengthening crypto adoption fundamentals, including major Wall Street firms adding crypto product offerings and the validation of crypto’s value proposition for the art world

2. On-chain insights: Highlights from the data science team

  • Activity on the bitcoin network continues to decline due to high network fees and a congested mempool
  • The average fee per transaction is now $18 per transaction; high fees continue to push out the crypto “retail” market
  • The average transaction size increased 9%, confirming that larger transactions are increasingly making up more of the BTC network

3. Non-Fungible Tokens: Why Digital Collectibles Have Real Value — Guest Post by Enjin

  • Non-Fungible Tokens (NFTs) feature all of the technological benefits brought by blockchain: provide scarcity, unique identities, security when trading, and more
  • Humans are hardwired to collect; thanks to blockchain technology, digital collectibles can now be truly owned and verified
  • There are additional benefits that blockchain provides digital collectibles as compared to tradition physical collecting

4. What we’re reading, hearing and watching.

1. Bitcoin makes another new all-time high; rising interest rates and a strengthening dollar give traditional markets pause

The crypto bull market continued into early March with bitcoin (BTC) setting another new all-time high at ~$61k on the 13th of March.

As of the end of March, bitcoin was up +31% for the month. Ethereum (ETH) slightly outperformed bitcoin in March (+36%) and has pushed above $2100 in early April to set a new all-time high. Both bitcoin and Ethereum are now well over 1,000% over the last two years with Bitcoin (+1,347%) slightly outperforming Ethereum (+1,323%) over that time period.

Traditional asset markets in general were mixed in February, with stocks up (S&P500 +4.3%). The US dollar continues to strengthen and turned in its best performance in recent months, up 2.6% for the month.

February’s big losers continued underperforming in March, with long-dated US treasuries down a whopping -5.3% and gold dropping significantly as well at -2% for the month.

Table 1: Price Comparison: Bitcoin, Ethereum, Gold, US Equities, Long-dated US Treasuries, US Dollar (% Change)

Sources:, Google Finance

We continue to closely monitor gold’s weakness. Gold investors transitioning some (or all) of their gold portfolio into “digital gold” is a major potential source of support for sustained bitcoin price strength.

As we commented last month, gold’s continued price slide may be in part related to a firmer dollar and increase in bond yields in recent months as these traditionally draw investors away from the yellow metal. However, we also continue to see evidence of more investors coming around to accept bitcoin as an alternative to gold, albeit one with more functionality and potential upside.

That 2017-feeling…

The macro environment and crypto adoption fundamentals continue to remain strong for further cryptoasset price appreciation.

However, we would also sound a note of caution around current market conditions in crypto, particularly for cryptoassets with significant valuations that have yet to demonstrate fundamental traction / product-market fit.

While the combined value of all listed crytpoassets on CoinMarketCap has climbed to nearly $2 trillion, this threshold is not surprising to many given the view that both bitcoin (BTC) and ethereum (ETH) would reach the $1 trillion total market value level. Indeed, bitcoin achieved that level earlier this year and Ethereum is about 25% of the way to the $1 trillion mark.

What raises more of an eyebrow is all listed cryptoassets in the top-100 rankings by market capitalization being valued at or above the $1 billion mark, including “projects” only weeks old.

We would encourage traders, particularly ones employing any leverage and trading further down the crypto market value leaderboard, to think carefully about the extreme volatility that crypto markets can endure.

2. On-Chain Insights

Another month of increased price action and a new all-time high led to similar trends as those seen in February: high fees, a congested mempool and decreased activity.

Table 2: March vs February bitcoin network activity

Bitcoin’s price remained above 50K for most of March, but the average daily number of payments and transactions were down. We saw this decline begin in February and discussed a few possible causes in last month’s Market Outlook report. High fees and a congested mempool continue to be contributing factors behind this month over month trend.

The average fee per transaction did decrease from $21 to $18 per transaction in March. A decrease in BTC fees is typically a welcome sign, however, the $18 price tag is still well above what’s been seen in the past. It is also still too high to realistically allow retail consumers to use bitcoin on a day-to-day basis.

Increased average transaction size

As discussed in last month’s report, fees this high disproportionately affect the crypto “retail” market (small holders), pushing them out. At these rates, only exchanges and institutional players, sending large quantities of BTC, are able to stomach the high fees.

We see this play out in the average transaction size. In March, the average transaction size increased 9%, confirming most transactions being confirmed are the ones with high number of inputs and outputs, like exchanges that are batchings multiple payments within the same transaction.

Figure 1: Average transaction size increased 9% in March, as high fees boxed out the retail market

Mempool congestion continues

This month, the mempool was once again congested and even saw a significant spike towards the close (see our definition of the mempool and live chart here). This congestion is typically seen as the price of bitcoin rises.

Figure 2: Mempool size is still inflated with the spike in bitcoin’s price

Notedly, institutions are continuing to make their way into crypto. PayPal has most recently announced that they will allow U.S. customers to use their crypto at checkout. While this may lead some to worry about even more congestion and higher fees, it’s important to note that these transactions will likely be done off-chain.

3. Non-Fungible Tokens: Why Digital Collectibles Have Real Value — Guest Post by Enjin

Digital collectibles have more real-world value than ever before thanks to blockchain technology — here’s why.

Our lives are spent in cyberspace more than ever before. Virtual goods are now worth real money, and there’s no question digital collectibles are here to stay.

The proliferation of smartphones means we’re always connected, and we carry more processing power in our pocket than it took to land the first astronauts on the Moon.

Given our increasingly digitized existence and constant tech evolution, it comes as no surprise that digital assets and items are assuming more importance in the lives of many.

This is especially true when they exist as non-fungible tokens (NFTs), featuring all of the technological benefits brought by blockchain: provable scarcity, unique identities, security when trading, and more.

NFTs come in a variety of forms, from unique gaming assets and provably-rare digital art, to memes and mementos.

What do they all have in common?


To the right audience, these items are all desirable for various reasons–and that audience is growing.

From thought leaders and innovation seekers like Mark Cuban and Chamath Palihapitiya boasting about their NFT collections, to pop culture icons like Lindsay Lohan and Post Malone creating their own NFTs, it seems pretty clear that the dawn of true digital collecting is upon us.

Digital Assets, Real-World Value

The Psychology of Collecting

Before diving into the specific case of collectibles, it’s worth thinking about why any form of collectible or collection has value to anybody.

In some ways, we humans are complex and sophisticated creatures, able to bend technology to our will and create amazing experiences that bring imagination to life.

When it comes to collecting, we’re still stuck in caveman mode, and that’s ok.

The desire — or indeed, the need — to collect is one that’s likely remained with us since prehistory. Collecting food, water, and other resources was absolutely essential. The best at collecting would be the best providers, and therefore the most desirable partners.

Since time immemorial, we’ve been hardwired to collect. It’s survival.

In modern times, scarce or valuable resources are still sought out, although the benefits have evolved away from primal survival and more toward personal satisfaction.

In Maslow’s Hierarchy of Needs, the act of collecting aligns with esteem needs and self-actualization (i.e., the needs that provide us the most personal satisfaction). image: simplypsychology

Specific psychological phenomena relevant to collecting include the endowment effect (valuing something more highly when you own it) and contagion (valuing something more because of associations it carries, like a famous previous owner, or link to a favorite team).

There are many reasons people may have for collecting, ranging from personal hobby to a deliberate pursuit of profit. Whatever their motivations, the act of collecting is universal across humanity.

How Digital Collectibles Carry Value

When people think about collections or collectibles, the usual images that spring to mind are physical, rather than digital.

That’s fair enough; historically, physical collecting has been the only method possible.

Whether it’s living out a childhood dream through autographed baseballs or wanting to be the very best and catching all Pokémon merchandise, collectors have always had something tangible to show for their efforts.

One of the benefits of the tangible physical format is that nobody can own the same exact copy of something as you. Small differences in condition or characteristics like ownership history can result in big valuation differences between similar items.

Ultimately, a variety of factors combine to help determine the value of collectibles in the physical world, some of which were never previously possible in a digital format:

  • Rarity: If something has a scarce supply, it becomes harder to acquire, and can thus be regarded as more valuable by collectors. Supply and demand.
  • Provenance: An item’s origin can impact its value, whether based on the reputation of its creators, or the fame and renown of previous owners.
  • Quality: A somewhat subjective judgement, but quality can be judged by factors like condition, preservation, value of materials, and functionality. In essence, a combination of aesthetics and utility.

Until recently, digital collectibles didn’t (and couldn’t) really exist in any meaningful way because the above properties couldn’t be replicated in a digital format.

Anything depicted digitally could essentially be duplicated an infinite number of times. Digital assets like in-game cosmetic skins were never truly owned by players, only licensed for access from a central server.

Thanks to blockchain technology, digital collectibles can now be truly owned and verified.

NFTs replicate the properties that give traditional collectibles their value — and even feature additional advantages the physical format can’t compete with.

As a decentralized database, blockchain prevents any information, value, or assets (represented as tokens) from being replicated. All the computers maintaining the network achieve consensus and ensure that nothing is copied or duplicated.

The creation of NFTs allowed digital collectability as a concept to flourish, because each token could represent a truly unique asset, identified by token ID and guaranteed by code on the public blockchain.

NFTs were created with the development of the ERC-721 standard, and then optimized with the release of the ERC-1155 standard.

Digital items can now benefit from value factors traditionally limited to the world of the physical:

  • Scarcity: Smart contracts can guarantee the maximum supply of an asset and set unbreakable issuance limits. If the smart contract governing the creation of a token stipulates that only 50 copies can ever exist, then that’s guaranteed and enforced by cold hard code.
  • Utility: Rather than just existing as pictures on the internet, ERC-1155 tokens can have a wide range of utility, including as items that function within multiple games and apps. In fact, digital collectibles can even become more useful after creation, as it is possible for any developer to add them to their project.
  • Provable Provenance: Blockchain provides a publicly-visible chain of transactions. So, if you’re buying a pulse rifle on the premise that it was owned by your favorite eSports athlete to achieve the winning killshot in a championship match, the blockchain’s got your back.

The Atari Pluriform fashion NFTs can be worn in Minecraft, augmented reality apps, and more.

Digital Does What Physical Can’t

There are some major additional benefits that blockchain provides digital collectibles as compared to traditional physical collecting:

  • Convenience: There’s no need to trek out to swap meets out in the boondocks (or be chauffeured to Sotheby’s, depending on what you’re collecting). Online marketplaces are open 24/7, always accessible when the urge to collect strikes.
  • Demand: Because of the convenience of online NFT marketplaces, sellers are less likely to go unseen, as items can be searched by name, creator, or platform.
  • Space: Put simply, one of the great advantages of the virtual format is that you can carry your entire collection with you in your pocket. Unlike with Pokémon plushies, there’s no need to banish family to the cellar in order to have enough room for all your adorable Nestables.
  • Value Recovery: ERC-1155 tokens feature the powerful benefit of being backed by Enjin Coin (ENJ) when they are created. If you tire of your collection or can’t sell it, you can destroy the items to recover their ENJ value. Think of it as salvaging the raw materials the item is made from.
  • Transparency: Even if unscrupulous types try to copy the visuals and descriptions of an existing token, a simple search on a blockchain explorer can prove whether or not it was minted under the platform or address of the original creator.

Digital, for Real

Digital collectibles have evolved into a rapidly growing market since the inception of NFTs.

Embraced by game devs, artists, enterprises, and more for the incredible possibilities unlocked, the space is filled with innovation and creativity.

The guarantee of provable scarcity via code has been a game changer, allowing the digital to replicate many of the key properties responsible for physical collectability.

Through demonstrable scarcity, instant authentication, true ownership, and deepened utility, these cutting edge collectible tokens are bringing value to the realm of the digital–and making it a lot more real.

Read the original article here.

4. What we’re reading, hearing, and watching.


Beyond Crypto

Important note

The research provided herein is for your general information and use and is not intended to address your particular requirements.

In particular, the information does not constitute any form of advice or recommendation by and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.

Appropriate independent advice should be obtained before making any such decision.


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