In the bull run of 2017, there were roughly 2 Billion USDT issued from Aug 1st to the Jan-2018 peak, a period in which BTC market cap grew by $290B, a ratio of roughly:
1 USDT issued : $145 increase in BTC Market Cap
Compare that to the recent sharp increase in Bitfinex's 'liquidity products". Since April 1st 2019, there have been $3.5B equivalent issued (USDT/LEO), but the market cap of BTC has only increased $97B, or:
$1* assets issued : $27.7 increase in BTC Market Cap
There seems to be less organic investment gambling on a crippled chain (BTC), or trust a company currently under investigation.
If Bitfinex is able to sustain the current ratio of asset issuance to BTC market cap, and the next BTC run follows a similar pattern to previous ones, there will be about 108B in liquidity products issued and a BTC market cap of $3T.
However it seems given the sharp drop leverage these assets have to pump the price a number of things might be happening:
- Institutional investors came away from 2017 believing that Bitcoin, and therefore blockchain, cannot scale.
- Smart money started trading against the pronounced correlation between liquidity issuance and price increase.
- Users are less willing to wait days or weeks to have transactions clear on BTC.
- The leverage of liquidity injection is down because this is a premature bull run.
Either way, you can't fool all the people all the time.
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from Bitcoin - The Internet of Money http://bit.ly/31KQy8G
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