It’s over 200 mln crypto users already, and many more to come

Week in short:
The market is bullish now as never — new users are coming to crypto, politicians support Bitcoin, CBDCs are getting traction, and Ether rallies.

This weeks’ digest:

1. Over 200m crypto users already
   Coinbase has published its quarterly report noting that the crypto adoption is growing at increasing rates as the total number of crypto users now exceeds 200 mln. An exciting remark here is that the adoption curve mirrors that of the internet in the early 90s. If it goes on this way, we might expect over 1 bln users in the following 4–5 years. However, it may come even sooner as Reddit announced its plans to bring 500 mln users to crypto via Ethereum (they agreed on a partnership earlier this year). It could be possible by tokenizing their karma points (reputation-based point system that rewards helpful answers). Some new crypto users may also come thanks to AMC (the world’s largest cinema network), which announced the acceptance of BTC, LTC, ETH, BCH in their online store. Remarkably, they say that crypto sales already account for 14% of their online sales.
   So what? The number of people using it — is an important value driver for any currency. Cryptocurrencies are not an exception. The more people are in this market, the more its overall value. 200 mln — is already a large number, which explains almost 3 tln capitalization of the crypto market, which is already larger than that of any corporation. Imagine what we can expect than the number of crypto users reaches 1 bln…
   *Link [report, 26 pages]
2. BTC exchange balances are at the 3-year minimum
   Glassnode has recently reported that BTC balances on exchanges reached the 3-year low. This is a good indicator of overall market sentiment. If investors withdraw their funds from exchanges to their personal wallets (which are called the “cold storages”), it means they do not plan to sell it any time soon. That is, the market is bullish. As we see from the data now, the market is very bullish. It is not a surprise, especially when the US announces the highest inflation in 30 years. The fiat money becomes cheaper, which in turn leads to crypto money becoming more expensive.
   So what? It is crucial to track the market sentiment as it’s a good indicator of expected market movement. Currently, we definitely see a bullish market and expect future growth in the nearest time.
   *Link [chart]
3. NYC wants to become the center of the crypto economy
   The newly-elected New York major seems to be the crypto ambassador indeed. Not only does he want to receive the BTC salary, but he also tries to encourage local schools to teach blockchain and crypto to children to build a new mindset. There is also an NYC coin coming pretty soon. However, it raises some questions because it was initiated by the city’s community rather than its officials, and also it’s already past its launch date without any news.
   So what? In the turbulent world of crypto, the support of every single influential politician is essential for the market. The fact that such a figure as the NYC major supports crypto may lead to more favorable crypto regulation in the future (even though recently SEC has rejected one of Bitcoin ETF applications from VanEck), larger institutional investment, and greater community understanding and support.
   *Link [watch, 2 min]
4. e-CNY is getting traction
   Not the only US brings us good news, but even China sometimes does. 140 mln users have opened digital wallets for e-CNY and already spent over $9.5 bln. To be clear, this number is not included in those 200 mln crypto users as CBDCs (Central Bank Digital Currencies) are not actually crypto. Anyway, it’s pretty close to crypto, and this data shows us that it’s getting some traction. Many countries are now trying to launch their CBDC, and looks like China is at the forefront.
   So what? As discussed before, the greater adoption of digital currencies not only brings us into the future of payments but also brings many users into the digital economy, and we may expect some share of those users to get into the crypto economy as well.
   *Link [read, 1 min]
5. Ethereum became deflationary
   Contrary to Bitcoin, Ethereum’s supply is not limited, putting some inflationary pressure on the currency. This is why the “London” hard fork was introduced this summer, and the transaction fees partly started to burn at an increasing rate. At this point, this rate has overtaken the rate of mining supply, which means that the currency has become deflationary.
   So what? Initially, there were some doubts whether “London” would be able to make ETH deflationary, but it turned out it was. This is excellent news for the Ethereum value as we can expect its price to rise further on this basis. Goldman Sachs forecasts ETH to rally to $8000 already this year.
   *Link [read, 2 min]