COINDESK QUARTERLY REVIEW - SECOND QUARTER 2020
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CoinDesk
Quarterly
Review
Second Quarter 2020
| 1Contents
RETURNS, VOLUME, VOLATILITY AND CORRELATIONS STABLECOINS & CBDCS
Returns................................................................................................................................................................................4 CBDC update: Latest global launches.............................................................................................................. 24
Volatility..............................................................................................................................................................................5 CBDC update: Libra Association..........................................................................................................................25
Correlations.......................................................................................................................................................................6 Who’s new in the Libra Association..................................................................................................................26
Volume.................................................................................................................................................................................7 Stablecoin market cap and transaction value share............................................................................... 27
Returns, crypto assets................................................................................................................................................8
BITCOIN MINING UPDATE
WHAT MARKET VOLUMES TELL US Miners hodl....................................................................................................................................................................29
Winners and losers among the largest spot exchanges........................................................................10 Bitcoin miners: Hashrate .......................................................................................................................................30
Fastest-growing spot exchanges.........................................................................................................................11 Bitcoin miners: Fees...................................................................................................................................................31
Regulated bitcoin futures markets are bigger than ever.......................................................................12 Mining on non-bitcoin networks........................................................................................................................32
Options open interest ...............................................................................................................................................13 Return of the Antminer S9......................................................................................................................................33
Bitcoin options probabilities have changed little.......................................................................................14
IN SEARCH OF VOLATILITY
BTC VS. ETH The ‘March Madness’ effect...................................................................................................................................35
BTC vs ETH: Performance........................................................................................................................................16 Crypto assets and stock market volatility I...................................................................................................36
BTC vs. ETH: Value transacted............................................................................................................................... 17 Crypto assets and stock market volatility II................................................................................................. 37
BTC vs ETH: Fees..........................................................................................................................................................18
Synthetic bitcoins: Market map...........................................................................................................................19
Synthetic bitcoins: Issuance.................................................................................................................................20
Synthetic bitcoins: Trade activity on DEXs.....................................................................................................21
WBTC: Volume...............................................................................................................................................................22
Contents | 2Returns, volume,
volatility and Bitcoin has outperformed other asset categories,
even as its historical volatility sank back to
pre-Q1 levels.
correlations
| 3Returns
Bitcoin outperformed traditional macro assets such as stocks, gold and bonds in the second quarter of 2020. Bitcoin, stocks and
gold all provided double-digit returns; only bonds were negative on the quarter. The gains made from bitcoin were more than
double the gains made from the S&P 500 and quadruple the gains made from gold.
Bitcoin & Macro Assets Quarterly Returns
Quarterly Returns (%)
60%
Bitcoin
50%
40%
30%
S&P 500
20%
10%
Gold
0%
Bonds
-10%
5 12 19 26 3 10 17 24 31 7 14 21 28
April May June
Source: Nomics, St. Louis Fed, Yahoo Finance. Bonds = iShares 20+ Year Treasury Bond ETF; Gold = London Bullion Market pm fixing price.
| 430d Historical Volatility of Daily Log Returns in 2020 Q2
The 30-day volatility of daily returns
for bitcoin has consistently trended Volatility (%)
220%
higher than other macro assets since
the end of April. The volatility of
200% Bitcoin
stocks climbed to levels equivalent
to bitcoin’s normal price swings. All
180%
three macro assets were slower than
bitcoin to fall back to near-normal
160%
volatility; stocks and gold remain
more volatile than normal.
140%
120%
Volatility 100%
Stocks
80%
60%
Bonds
40%
Gold
20%
0%
Jan Feb Mar April May June
Source: Coin Metrics & FactSet. Stocks = S&P 500 Index; Bonds = iShares 20+ Year Treasury Bond ETF; Gold = SPDR Gold Trust.
Returns, volume, volatility and correlations | 5Correlations
Since the infamous March 12 market crash when BTC price nearly halved, bitcoin has maintained a higher level of correlation with the
price movements of both stocks and gold. Before March 12, 90-day correlation of daily log returns with both the S&P 500 and gold rarely
exceeded 0.1 in 2020.
Bitcoin & Macro Assets: 90d Correlation of Daily Log Returns
Correlation
0.6
Stocks
0.5
0.4
Gold
0.3
0.2
0.1
0
-0.1
Bonds
-0.2
-0.3
Jan Feb Mar April May June
Source: CoinDesk BPI & FactSet. Bitcoin price at 4pm Eastern; Stocks = S&P 500 Index; Bonds = iShares 20+ Year Treasury Bond ETF; Gold = SPDR Gold Trust.
Returns, volume, volatility and correlations | 6Volume
The dollar volume traded on crypto exchanges with a high transparency grading as dictated by Nomics was around $127 billion
for June, its lowest month in a quarter that again saw volumes fall short of last year’s highs. Last year, monthly transparent dollar
volume for June was at a 2019 high of roughly $200 billion.
Crypto Assets Verifiable Monthly Dollar Volume (USD Billion)
$199
$176 $177 $173
$172
$161
$141
$127
$122
$114 $112
$105
$96 $96
$81
$69
$60
$55
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Source: Nomics
Returns, volume, volatility and correlations | 7Quarterly Performance of Assets in the CoinDesk 20
Bitcoin outperformed eight other
cryptocurrencies in the CoinDesk
20, this quarter, including the world’s ZRX 122.50%
fourth and fifth largest coins by LINK 102.80%
market cap, XRP and BCH. The
BAT 79.20%
CoinDesk 20 is a list of crypto assets
with the highest aggregate verifiable ETH 70.60%
dollar volume in two consecutive
ZEC 66.90%
quarters. ZRX ranked the highest for
quarterly returns. All of the top crypto XLM 64.40%
assets except BSV posted positive XTZ 47.40%
returns for Q2 2020. The CoinDesk
TRX 45.40%
20 includes stablecoins, which are
excluded here. BTC 42.40%
XMR 33.90%
Returns, ETC
LTC 8.60%
16.20%
crypto assets EOS
DASH
6.80%
4.90%
BCH 1.60%
XRP 1.20%
BSV -4.00%
Source: Nomics, CoinDesk Research
Returns, volume, volatility and correlations | 8What market Regulated bitcoin futures markets are bigger
than ever; meanwhile, new exchanges are
volumes tell us grabbing market share with new models and new
geographic markets.
| 9Winners and losers among the largest spot exchanges
The first half of 2020 saw Japan-based crypto exchange BitFlyer recovering part of what it lost in 2019, picking up in both absolute
volume and market share. Binance also grew modestly, consolidating its place as the largest among those measured here.
Meanwhile, U.K.-based BeQuant’s market share faltered in Q2, compared with Q1.
Market Share (Volume) by Month Among the Largest Crypto Spot Exchanges
% of Monthly USD Volume
100%
Phemex
80% Liquid
Kraken
HitBTC
60% Coinbase Pro
DeversiFi
bitFlyer
Bitfinex
40%
Binance
BeQuant
20%
0%
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Source: Nomics
What market volumes tell us | 10Monthly Volume Among the Fastest-Growing Spot Exchanges in Crypto
Fastest- Monthly Volume (USD Million)
growing spot
$40
Phemex
FarhadMarket
Currency.com
exchanges
$35 CoinField
Bitso
$30
Five up-and-comers stood out:
• Singapore-based Phemex has $25
seen phenomenal growth in the
first half of 2020. In May, it began
offering zero-fee spot trading. $20
• CoinField, headquartered in
Europe, first reached $1 billion in
volume in February. $15
• Launched last month in Belarus,
Currency.com offers tokenized
securities. $10
• In May, Iran-based Farhad
Exchange reached $100 million in
volume for the first time since 2019. $5
• Mexico-based Bitso’s volume has
been increasing since September
and reached a new high of $350 $0
19-Jan 19-Feb 19-Mar 19-Apr 19-May 19-Jun 19-Jul 19-Aug 19-Sep 19-Oct 19-Nov 19-Dec 20-Jan 20-Feb 20-Mar 20-Apr 20-May 20-Jun
million in May. Source: Nomics
Source: Nomics
What market volumes tell us | 11CME Bitcoin Futures Daily Dollar Volume
CME’s bitcoin futures market is a
U.S.-regulated alternative to much Daily Volume (USD Million)
$9.2
$8.8
larger derivatives markets operating
Daily Volume (USD Million)
offshore, like BitMEX, FTX, Huobi $9.2
$8.8
and OKEx. The size of the CME $6.2
$5.3 $5.2
futures market, measured in the $4.3 $4.3
$6.2 $4.0
dollar value of the number of open $3.2 $3.4
$5.3 $2.8 $5.2
contracts, reached new highs in Q2 $2.5
$4.3 $4.3
$4.0
and has remained elevated. Activity $3.2 $3.4
$2.8
in the market, measured in the dollar $2.5
volume of contracts exchanged each July Aug Sep Oct Nov Dec Jan ‘20 Feb Mar April May June
day, spiked in May, as it has around
Daily Open Interest (USD Million)
the time of other recent price run-ups: CME July Aug Sep Oct
$600 Bitcoin Futures Daily Open Interest ($)
Nov Dec Jan ‘20 Feb Mar April May June
Jan-Feb 2020 and July 2019. Daily Open Interest (USD Million)
$500
$600
Regulated
$400
$500
$300
$400
bitcoin $200
$300
futures
$100
$200
$0
$100
July Aug Sep Oct Nov Dec Jan Feb Mar April May June July
$0
July Aug Sep Oct Nov Dec Jan Feb Mar April May June July
Source: skew
What market volumes tell us | 12Bitcoin Options Daily Open Interest (USD)
Options open Daily Open Interest (USD Million)
$1,300
interest $1,200
$1,100
The size of bitcoin options markets,
$1,000
as measured by the dollar value
of open contracts, crossed $1 $900
billion in May (as noted in May’s
$800
CoinDesk Monthly Review).
It continued to grow in June, $700
reaching peaks above $1.6 billion,
before falling back drastically on $600
June 26 with the expiration of June Deribit
$500
contracts. Bitcoin options markets
are still small, compared to futures, $400
but they have reached a size that
$300
makes them worth watching as a
barometer for price predictions. $200
OKEx CME
$100
LedgerX
$0
Jan Feb Mar Apr May Jun
Source: Nomics
Source: skew
What market volumes tell us | 13Bitcoin options probabilities have changed little
The bitcoin futures price probability curves for contracts expiring in September and December show little change, since May. All
options series continue to show a less than 50% chance that the BTC price will show a significant increase this year.
Probability of BTC Being Above x$ per Maturity
100%
Sep ‘20 (%) July ‘20 (%)
Dec ‘20 (%)
80%
June ‘20 (%)
60%
40%
20%
0%
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000
Source: skew
What market volumes tell us | 14Ethereum’s fifth birthday is on July 30. The
BTC vs. ETH
runner-up crypto network remains a fraction of
bitcoin’s market cap, but in other key metrics—
returns, fees and value transacted—it is
outperforming.
| 15BTC vs. ETH: Performance
ETH significantly outperformed BTC in 2020 Q2. This could be due to a number of factors such as the upcoming shift to a proof-of-stake
protocol (known as ETH 2.0) expected to launch some time before the end of the year. In addition, there has been continued growth in the
number of users and transaction activity for decentralized applications on ethereum, specifically with a finance focus.
BTC & ETH Quarterly Returns
Performance QTD (%)
100%
90%
ETH
80%
70%
60%
50% BTC
40%
30%
20%
10%
0%
5 12 19 26 3 10 17 24 31 7 14 21 28
Apr May Jun
Source: Coin Metrics
BTC vs. ETH | 16BTC vs. ETH: Value transacted
The difference in growth in activity on the bitcoin and ethereum blockchains can be seen in the USD value of BTC and ETH transferred
between wallets. At the end of June, the 7-day rolling average transfer value in USD for ETH was over 225% higher than the level at the
beginning of the quarter, whereas for BTC it was 40%.
Daily Value Transacted (USD, 7d Moving Average)
BTC (USD Billion) ETH (USD Billion)
$3.0 $0.80
$0.75
BTC
$2.5 $0.70
$0.65
$2.0 $0.60
ETH
$0.55
$1.5 $0.50
$0.45
$1.0 $0.40
$0.35
$0.5 $0.30
$0.25
$0 $0.20
5 12 19 26 3 10 17 24 31 7 14 21 28
April May June
Source: Coin Metrics
BTC vs. ETH | 17USD Value of Daily Network Fees Paid
The relative growth in activity on
the ethereum blockchain versus Value of Daily Network Fees Paid (USD Million)
the bitcoin blockchain can also $4.0
be seen in the transaction fees
ETH fees
paid on each: for most of June, $3.5
ethereum fees exceeded those on
bitcoin in dollar terms, even though
$3.0
the dollar transfer amount is less
than half.
$2.5
On June 11, the fees on ethereum
spiked to their highest level $2.0
since January 2018. This could BTC fees
indicate growing congestion on $1.5
the network, which the move to
ethereum 2.0 aims to solve.
$1.0
BTC vs. ETH: $0.5
Fees $0
5 12 19 26 3 10 17 24 31 7 14 21 28
April May June
Source: Coin Metrics
BTC vs. ETH | 18Timeline of Synthetic Bitcoins
Synthetic
bitcoins:
Market map
March 2018 October 2018 January 2019 February 2019 October 2019
The Lightning Network is a Liquid Bitcoin is a representation Wrapped Bitcoin is the first ERC20 Launched by decentralized synthetic Launched by cryptocurrency
second-layer payments platform of bitcoin on a sidechain, Liquid. token backed 1:1 with bitcoin. The asset platform Synthetix, sBTC is exchange Tokenlon, imBTC is a
running atop bitcoin. It enables faster Liquid is a blockchain platform with aim is to boost asset liquidity of non-custodial and can be traded stablecoin on ethereum backed 1:1
and more cost-effective transactions of faster transactions and more decentralized finance applications in against other synthetic assets at with bitcoin. To compensate for the
BTC. feature-rich smart contract the ethereum ecosystem. Synthetix Exchange. liqudiity loss of BTC after
Synthetic bitcoins are Token: BTC functionality than bitcoin. Token: WBTC Token: sBTC purchasing imBTC, Tokenlon pays
representations of bitcoins created Platform: Lightning Token: L-BTC Platform: Ethererum Platform: Ethererum imBTC holders interest.
More info > Platform: Liquid More info > More info > Token: imBTC
on platforms and blockchain More info > Platform: Ethererum
More info >
protocols outside of bitcoin’s main
network.
2018 2020
2019
February 2020 March 2020 May 2020 May 2020
Launched by cryptocurrency exchange Huobi, the Launched by decentralized finance tool RenVM is a tool to unlock inter-blockchain The tBTC token is an ERC-20 asset pegged to the
Huobi BTC token aims to promote growth of the pTokens, pBTC enables bitcoin to be used on liquidity. It supports three cryptocurrencies, price of bitcoin. Days after its launch, tBTC was
decentralized marketplace by injecting bitcoin ethereum. PToken offers redemption of pBTC BTC, BCH and ZEC. RenBTC is a one-to-one forced to shut down temporarily due to a bug in
into the decentralized finance (DeFi) ecosystem. in bitcoin. representation of bitcoin on ethereum. its code.
Token: HBTC Token: pBTC Token: renBTC Token: tBTC
Platform: Ethererum Platform: Ethererum Platform: Ethererum Platform: Ethererum
More info > More info > More info > More info >
BTC vs. ETH | 19Growth in Off-Chain Bitcoin Supply (Ethereum & Other)”
Over three quarters of the total
bitcoin represented outside of the Off-Chain Supply (BTC)
16,000
main bitcoin network is now issued
on the ethereum blockchain. The rise
in the number of bitcoin issued off- 14,000
chain may be a bullish case for further
adoption according to some industry
experts. 12,000
Synthetic 10,000
bitcoins: 8,000
Issuance 6,000
4,000
Other
2,000
ETH
0
Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Source: Bitcoin Visuals, BTConEthereum.com, Liquid.net
BTC vs ETH | 20Number of Trades Using Synthetic Bitcoin on Decentralized Exchanges
Synthetic No. of Trades
3,000
bitcoins:
Trade activity 2,500
on DEXs 2,000
imbtc
The aim of most synthetic bitcoin
projects built on ethereum is to
1,500
support the decentralized finance
(DeFi) ecosystem with increased
liquidity. As an instrument for
liquidity, synthetic bitcoins are 1,000
being used more frequently on
decentralized exchanges. The
WBTC token is currently driving 500
the majority of trade activity wbtc
happening on decentralized
exchanges for synthetic bitcoins. 0
pbtc
22 29 5 12 19 26 2 9 16 23 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 21 28
Dec 2019 Jan 2020 Feb March April May June
Source: Elias Simos, Senior Research Analyst at Decentral Park, via DuneAnalytics
BTC vs ETH | 21WBTC: Volume
About 75% of the market share of synthetic bitcoin on ethereum is dominated by WBTC, the first ERC-20 token to be created with a 1:1 peg
to Bitcoin. WBTC volume on exchanges with a high transparency grading as dictated by Nomics surged during last year’s BTC bull run but
quickly plummeted in the second half of 2019 as bitcoin gave back some gains. Dollar volume has remained relatively constant for the past
two quarters, only spiking temporarily in February when BTC broke over $10,000 for the first time in 2020.
BTC Price & WBTC Monthly Average Dollar Volume since Launch
Volume (USD) BTC Price
$4,000,000 $14,000
$3,500,000 BTC Price
$12,000
$3,000,000
$10,000
$2,500,000
$8,000
$2,000,000
$6,000
$1,500,000
Volume $4,000
$1,000,000
$500,000 $2,000
$0 $0
Jan Mar May Jul Sep Nov Jan ‘20 Mar May Jul
Source: Nomics and Coin Metrics
BTC vs ETH | 22Stablecoins & Beyond the impressive growth of Tether, fiat-
pegged digital assets are changing in significant
CBDCs
ways. This section includes updates on CBDCs
and Libra, and a picture of how market share
among stablecoins is changing.
| 23CBDC update: Latest global launches
At least 17 countries are pushing blockchain-based CBDC projects. Eleven (including six countries from the Eastern Caribbean
Currency Union) are testing or have already completed pilot versions of their projects, four plan to launch their CBDC projects this
year and next, and two countries (Bhutan and Venezuela) have already officially rolled out their CBDC programs.
Upcoming Blockchain-Based CBDCs
Country Project Start Date Expected Launch date Name of Project/Coin Description
Twelve Belarusian commercial and state-owned banks have received permission from the national central bank to
2020/6 2021/1 (Pilot) N/A
issue digital tokens. The pilot program will take place in Belarus Hi-Tech Park.
Belarus
Project Bakong is a permissioned blockchain that will work alongside traditional banking accounts in the country.
2017 Later in 2020 Project Bakong The digital currency of the blockchain is envisioned to be exchangeable for Khmer Riel, the official currency of
Cambodia.
Cambodia
The Bank of Lithuania is issuing “LBCoin” tokens, a digital token exchangeable for physical legal tender that is not
2018/3 2020/7 LBCoin
intended for daily use. The LBCoin will be a commemorative coin meant for holders to collect, rather than spend.
Lithuania
The SOV will be the new legal tender of the Republic of the Marshall Islands. Supply of the cryptocurrency will
Marshallese
2018/2 Later in 2020 be algorithmically fixed to grow at 4% each year until it reaches a hard cap of 24 million tokens. Blockchain firm
Sovereign (SOV)
Algorand is working with the Marshallese government on the SOV as a technology partner.
Marshall Islands
Source: CoinDesk Research
Stablecoins & CBDCs | 24CBDC update: Libra Association
Libra 1.0 (Unveiled June 2019) Libra 2.0 (Up-to-date as of June 2020)
One multi-currency stablecoin Multiple single-currency stablecoins + one multi-currency stablecoin
Libra Coin plans to be a global means of payment backed by a basket of Each single-currency stablecoin is backed by a single sovereign currency and might be
existing fiat currencies, like EUR and USD, and government bonds. replaced with the country’s CBDC in the future. The multi-currency stablecoin will fill the
void in regions with no stable sovereign currency.
Lack of regulation Work more closely with regulators
The currency is not regulated by any international finance organization. The Libra Association will be regulated by central banks or an international organization
(e.g., IMF) under the guidance of the Swiss Financial Market Supervisory Authority
(FINMA). The new whitepaper also focuses on the prevention of illicit activity.
A permissionless system with no single authority A permissioned blockchain based on Libra Association
The system starts as a permissioned network for the Libra consortium The network will be well controlled by a centralized system, so all the participants’
members and becomes a “public” network after five years. identity can be verified and their roles can be defined. The Libra Association will
gradually expand its membership.
Raise the idea of Libra Reserve Build protection for Libra Reserve
Libra Reserve is a proof of concept rather than a finished roadmap for the Each stablecoin on the Libra network will be fully backed by a Reserve of liquid assets
project. and the Libra Reserve is endowed with an additional capital buffer, which can be used in
times of crisis.
Source: CoinDesk Research
Stablecoins & CBDCs | 25Change in Roster of the Libra Association (June 2019 – June 2020)
Who’s new
in the Libra
June 2019 June 2020
Original Roster Current Roster
Association
Anchorage Mercado Pago Anchorage Paradigm
Andreessen Horowitz Mercy Corps Andreessen Horowitz PayU
Bison Trails PayPal Bison Trails Ribbit Capital
Booking Holdings PayU Breakthrough Initiatives Shopify
Breakthrough Initiatives Ribbit Capital checkout.com Slow Ventures
The Libra Association is an Calibra Spotify Coinbase Spotify
Coinbase Stripe Creative Destruction Lab Tagomi
independent membership Creative Destruction Lab Thrive Capital Farfetch Temasek
organization, headquartered eBay Uber Heifer International Thrive Capital
Farfetch Union Square Ventures Iliad Uber
in Geneva, Switzerland. The Iliad Visa Kiva Microfunds Union Square Ventures
Association is responsible for the Kiva Microfunds Vodafone Lyft Women’s World Banking
Lyft Women’s World Banking Mercy Corps Xapo
governance of the Libra network Mastercard Xapo Novi
and the development of the Libra
project. 2019 2020
October 2019 January 2020 February 2020 April 2020 May 2020
Exits Exits New Members New Members New Members
Booking Holdings Vodafone Shopify checkout.com Paradigm
eBay Tagomi Heifer International Slow Ventures
Mastercard Temasek
Mercado Pago Calibra renamed
PayPal to Novi
Stripe
Visa
Source: CoinDesk Research
Stablecoins & CBDCs | 26Share of Stablecoin Market Cap
Stablecoin 100%
Tether (USDT)
market cap
90%
USD Coin (USDC)
80% True USD (TUSD)
70% Sai (SAI)
and
Paxos (PAX)
60% HUSD (HUSD)
50% Gemini Dollar (GUSD)
transaction
40% Dai (DAI)
Binance USD (BUSD)
30%
20%
value share 10%
0%
2014 2015 2016 2017 2018 2019 2020
Share of Stablecoin Transaction Value
Tether (USDT) made up 100% of
stablecoin market capitalization and 100%
Tether (USDT)
transaction value between 2014 and 90%
USD Coin (USDC)
2017. Only in the last three years 80% True USD (TUSD)
70% Sai (SAI)
have others, such as USDC and Paxos (PAX)
PAX, started to gain a share of the 60%
HUSD (HUSD)
stablecoin market. Still, USDT issued 50% Gemini Dollar (GUSD)
40% Dai (DAI)
on omni, tron and ethereum make up Binance USD (BUSD)
the bulk of stablecoin market cap and 30%
20%
transaction value.
10%
0%
2014 2015 2016 2017 2018 2019 2020
Source: Coin Metrics; latest data of TUSD are from June 10; latest data of other ten crypto assets are from June 30
Stablecoins & CBDCs | 27Bitcoin mining Hashrates are flat, fees have spiked and the
persistence of a once-dominant piece of
update equipment signals emerging uses for bitcoin
mining.
March 12 crash | 28Miners hodl
Mining pools represent the lion’s share of bitcoin mining. And mining is a capital intensive and competitive business, forcing most
operators to lock in returns when they can. Miners’ selling activity, as measured by the percent of bitcoin moved onto exchanges, plumbed
new 365-day lows in Q2. It seems miners, at least, expect to be able to sell bitcoin higher in the coming months.
Percent of Bitcoin Sent by Mining Pools and Coin Generation to Exchanges
% of Bitcoin to Exchanges
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun Jul
Source: Chainalysis
Bitcoin mining update | 29Bitcoin miners: Hashrate
Hashrate is a supply-side fundamental, measuring the amount of computing power invested in the bitcoin network. After more than
doubling in 2019, it’s stayed relatively even in the first two quarters of 2020, returning to around 20 million terahashes per second, twice,
after two events that temporarily cut it by a third: the price crash of March 12 and the halving of May 11.
Bitcoin Daily Hashrate
TH/s
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Jan ‘19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun Jul
Source: Coin Metrics
Bitcoin mining update | 30Bitcoin Fees as a % of Miner Revenue
Bitcoin Bitcoin Fees as a % of Miner Revenue
24%
miners: Fees 22%
May 11, 2020:
Bitcoin Halving
20%
After the third bitcoin halving in
18%
May, there was a surge in the
percentage of miner revenue 16%
coming from transaction fees.
On average, only about 2% of 14% XRP LTC BTC XMR ADA EOS ETH BNB BCH XTZ
miner revenue comes from fees,
12%
but in May this number jumped
to roughly 20%. While fees have 10%
climbed back down considerably
since May, they remain at above- 8%
average levels of around 4% to 5%
6%
of miner revenue.
-32%
4% -37%
-39%
-41% -41% -42%
2% -44% -44% -45%
-48%
0%
Jan Feb Mar Apr May Jun
Source: Coin Metrics
Bitcoin mining update | 31Bitcoin Cash and Bitcoin SV hashrate since January 1, 2020
Hashrate (TH/s Million)
Like bitcoin, the next three proof- 6.0
Hashrate (TH/s Million)
of-work cryptocurrencies, ranked 6.0
5.0
by market capitalization, have
seen little change in hashrate. 5.0
4.0
Bitcoin Cash and Bitcoin SV saw a 4.0 Bitcoin Cash
3.0
temporary dip around the time of
3.0 Bitcoin Cash
their halving events while hashrate 2.0
on ethereum, with no halvings, 2.0
1.0
Bitcoin SV
remained relatively constant over Bitcoin SV
1.0 XRP LTC BTC XMR ADA EOS ETH BNB BCH XTZ
the past two quarters. 0
Jan Feb Mar Apr May Jun
0
Mining on
Ethereum
Hashrate Hashrate since Feb
Jan (TH/s) January 1, 2020 Mar Apr May Jun
200
Hashrate (TH/s)
200
non-bitcoin
160
160
120
networks 120
80
-32%
-37%
-39%
-41% -41% -42%
80 -44% -44%
40 -45%
-48%
40
0
Jan Feb Mar Apr May Jun
0
Jan Feb Mar Apr May Jun
Source: Coin Metrics
Bitcoin mining update | 32Return of the Antminer S9
Received wisdom had it that the bitcoin halving on May 11 would mark the final retirement of a champion. The low-cost Antminer S9,
manufactured by Bitmain, had since its release in 2016 been the dominant equipment used by bitcoin miners. As of July 1, these machines
operate at a loss, unless power costs 3 cents per kw/h or less. And yet, The S9’s contribution to global hashrate increased after the halving,
indicating activity by miners with access to near-free power.
Bitcoin Hashrate Contributed by Antminer S9
Hashrate (TH/s)
55 x 1018
50 x 1018
45 x 1018
40 x 1018
35 x 1018
30 x 1018
25 x 1018
20 x 1018
15 x 1018
10 x 1018
5 x 1018
0 x 1018
Jan ‘19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun
Source: Coin Metrics
Bitcoin mining update | 33In search of Has the so-called Robinhood Effect hurt crypto
assets, or helped? We look at changing crypto
volatility markets moves alongside changes in sports
gambling and the VIX.
March 12 crash | 34The ‘March Madness’ effect
Pundits have observed that the extraordinary activity in stock markets may have something to do with an absence of another venue, commonly used to
access volatility: sports gambling. Using the state of New Jersey’s monthly report of casinos’ online sports betting revenue, there is some sense of a pattern
in which stock volumes rise as sports gambling falls, and vice versa. Crypto market volume shows no such discernible pattern; nor does the “GBTC premium,”
which can be used to measure the enthusiasm of retail investors for a fast way to get bitcoin exposure via their their stock brokerage accounts.*
Online Sports Betting Revenue & Verifiable Crypto Exchange Volume Online Sports Betting Revenue & Avergage GBTC Premium Online Sports Betting Revenue & ETF Trade Volume
Verifiable Crypto Exchange Volume Sports Betting Revenue GBTC Premium Sports Betting Revenue ETF Volume Sports Betting Revenue
(USD Bill) (USD Mill) (%) (USD Mill) (Shares) (USD Mill)
$200 $50 30% $50 4.5 $50
$180 $45 $45 4.0 $45
25%
$160 $40 $40 $40
3.5
$140 $35 $35 $35
20% 3.0
$120 $30 $30 $30
2.5
$100 $25 15% $25 $25
2.0
$80 $20 $20 $20
10% 1.5
$60 $15 $15 $15
$10 1.0 $10
$40 $10
5%
$20 $5 $5 0.5 $5
$0 $0 0% $0 0 $0
Jan Feb Mar Apr May Jan Feb Mar Apr May Jan Feb Mar Apr May
Source: Sports betting revenue via N.J. Division of Gaming Enforcement; Combined volume of the top 5 ETFs by net flows YTD as of June 24 via ETF.com and FactSet; Verifiable crypto market volume via Nomics “Transparent” rated exchanges; GBTC premium calculated using
FactSet price data and Grayscale disclosures as of June 24.
*Disclosure: CoinDesk, like Grayscale Investments, which manages the Grayscale Bitcoin Trust and GBTC, is owned by Digital Currency Group.
In search of volatility | 35Annualized 30d Volatility of Daily Bitcoin Log Returns
Crypto 30-Day Annualized Volatility: BTC
100%
assets and 90%
80%
stock market
70%
60% 2019 Avg: 68%
50%
volatility I 40%
30%
20%
10%
Towards the end of Q2, an
0%
interesting trend emerged: BTC’s Jan ‘19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun Jul
30-day volatility continued to
trend lower, while that of the S&P 30-Day Annualized Volatility: S&P 500
180%
500 leveled off. BTC’s volatility 160%
is currently well below that of 140%
its 2019 average, while the S&P 120%
500’s volatility is significantly 100%
above. In other words, it looks like 80%
the differential between the two 60%
volatilities is narrowing. This could 40%
lower an the oft-cited barrier to 20%
greater institutional involvement, of 0% 2019 Avg: 13%
high volatility, and usher in a new Jan ‘19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun Jul
Source: Coin Metrics & FactSet
role for bitcoin in global portfolios.
In search of volatility | 36Crypto assets and stock market volatility II
Another interesting shift over the quarter is the persistently low correlation between BTC and the VIX, an index that represents the expected
volatility of the S&P 500, as indicated by options pricing. Traditionally, the correlation has hovered around zero, lending support to the thesis that
bitcoin is not considered a safe haven by investors. Since early Q2, however, the correlation has been negative. While this is not enough to confirm
an inverse relationship, it does reinforce bitcoin’s narrative as a risk-on asset.
BTC-VIX 60d Correlation
BTC-VIX 60d Correlation
0.4%
0.3%
0.2%
0.1%
0%
-0.1%
-0.2%
-0.3%
-0.4%
-0.5%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan ‘20 Feb Mar Apr May Jun Jul
Source: Coin Metrics, FactSet
In search of volatility | 37Thank you
CoinDesk Research is an investor-focused team of crypto data analysts, engineers
and writers. Our aim is to build products, innovate metrics and create editorial
content that serve all types of cryptocurrency investors. For more reports on the
crypto investing landscape, visit coindesk.com/research. You can get in touch with
us to learn more:
Email: research@coindesk.com
Twitter: @coindeskdata
This report has been prepared by CoinDesk solely for informative purposes. It should not be taken as the basis for making investment decisions, nor for the formation of an investment strategy. It should not be construed as investment advice or as a
recommendation to engage in investment transactions. The information contained in this report may include or incorporate by reference forward-looking statements, which would include any statements that are not statements of historical fact. No
representations or warranties are made as to the accuracy of these forward-looking statements. Any data, charts or analysis herein should not be taken as an indication or guarantee of any future performance.
Information is based on sources considered to be reliable, but is not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of publication and are subject to change without notice. Trading and
investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. The authors may hold positions in digital assets, and this should be seen as a disclosure of potential conflicts of interest. CoinDesk
will not be liable whatsoever for any direct or consequential loss arising from the use of this information.
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