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Trust | Want | Need

March Market Outlook

  • Trust: are cryptoassets and protocols like bitcoin (and crypto service providers that support them) trusted enough for a majority of people to use and own?
  • Want: do people have a favorable attitude towards holding and using cryptoassets?
  • Need: is there sufficient motivation to change behaviors to hold and use cryptoassets?
  • ongoing concerns over bitcoin’s energy consumption and carbon footprint
  • speculative volatility and hype cycles, which can be stressful for many or result in feelings that “I’m too late” and “missed the bitcoin boat”
  • confusion over what’s a reasonable valuation for a cryptoasset, particularly for ones that show little to no bona fide economic activity (“ghost chains”) but see their prices pump anyway
  • concerns that crypto is primarily used by the “bad guys” and rogue nations

Quick take:

  1. Market Movements
  • Bitcoin (BTC) set another new all-time high at ~$58k on the 21st of February, and finished the month up 36%; Ethereum (ETH) lagged but was up 8% for the month
  • Broader financial markets were mixed: stocks were up almost 3% but two big losers in February were long-dated US treasuries (-5.8%) and gold (-6.2%)
  • We draw medium-term confidence in bitcoin’s valuation outlook based on its valuation relative to gold
  • Average bitcoin transaction fees nearly double to $21 per transaction. May have resulted in a decrease in retail activity.
  • The bitcoin network continues its trend towards efficiency in processing multiple payments within one transaction. This fact is often lost in the energy consumption story held by some media outlets.
  • Mempool size has inflated with the price of bitcoin, causing some payments to get stuck in the mempool. Roughly 25% of transactions have been waiting in the mempool for at least 6 days.
  • The mempool acts in a cyclical manner. Mempool levels are at their lowest on Sundays and in the early morning house (UTC).
  • Institutional demand for crypto products continues to soar, which is important to sustaining and boosting crypto valuations from current levels
  • Crypto markets have become more robust as spreads and depth are less volatile following a crash
  • The vulnerability of crypto exchange infrastructure continues to be on display with downtime, lagging interfaces, and a brief flash crash on Kraken

1. Bitcoin blasts higher while long bonds and gold plunge; US dollar stays steady

Sources: Blockchain.com, Google Finance
  1. all above-ground gold estimated to be worth approximately $10 trillion
  2. gold available for investment is estimated to be in the ~$2.5 trillion range
  3. bitcoin’s total market value is currently less than $1 trillion

2. On-Chain Analysis

3. Kaiko’s February Market Report — Guest Post by Kaiko

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

Important note



Blockchain.com is the oldest and most trusted provider of crypto products.

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