Data Transparency Could Make The Next Bitcoin Bull Run More Sustainable

Bitcoin’s 2017 bull run was full of surprises. Many early adopters became millionaires over the course of several months, while other investors profited from meteoric rises in the prices of altcoins. The euphoria didn’t last, however, and the market for both bitcoin and altcoins retraced dramatically throughout 2018.

Now, bitcoin is gaining momentum again, surging in price and increasing its market dominance in the process. This time though, the market feels much different.

Institutional investors are climbing aboard, more fiat gateways are available, regulatory authorities are slowly eliminating the threat of scams, and most importantly, bitcoin’s dominance is becoming more pronounced. So, what exactly will be different this time around?

A Convergence on The Leaders

Almost as if drawing direct inspiration of the dotcom bubble, the cryptocurrency markets were rife with a series of scams and altcoins that never stood a chance of materializing into reality. Prices of many altcoins crashed by more than 98 percent, and some were delisted by exchanges, never to be heard from again.

In an emerging technological and financial market, it is only inevitable that the best will rise above the competition. Today’s tech giants emerged from a similarly crowded field in the late 1990s and early 2000s, and now, bitcoin, among a few other projects, seems to be leaving other altcoins in the dust.

Bitcoin’s market dominance is currently 63.3 percent, amongst the highest in over two years.

It’s not just that bitcoin retains the largest community of supporters, but it also provides the best application of blockchain technology — censorship-resistance of fixed monetary policy for a sound money. Other altcoins, whether through spurious promotions of faster block times and higher transactions per second (TPS), have failed to grasp that singular value proposition.

Other projects atop of the cryptocurrency markets, like Ethereum, also maintain outsized communities, and in the case of Ethereum, is largely driven by its potential for applications like DeFi. However, Ethereum is beginning to face competition in the form of “next-generation,” interoperable blockchains like Cosmos, Polkadot, and Cardano.

Outside of the competition between altcoins, institutional money is pouring into the crypto sector. Derivatives products for bitcoin are launching left and right, and volumes have never been higher. BitMEX is even working on offering fixed-income products, a boon in conventional derivatives markets.

Bitcoin is different this time around too. SegWit adoption is proving its worth, and protocol enhancements like Dandelion++ and Schnorr signatures are just over the horizon.

Add in the ever-expanding number of fiat gateways, atomic swap protocols, and P2P exchanges, and it is evident that the market for bitcoin and cryptocurrencies is much more mature this time around. More maturity does not necessarily confer better investor protections, however, and is why some initiatives are focusing on unmasking the opaque corners of the cryptocurrency markets.

Transparency, Delistings, and Accountability

Before many people are comfortable entering the cryptocurrency markets, they are looking for assurances that they will not be exit scammed or subjected to inflated exchange volumes via wash trading or trans-fee mining.

Fortunately, the spate of problems has not gone unnoticed by several prominent entities in the sector.

For example, Bittrex started delisting many of the more obscure altcoins on its exchange beginning last year. According to recent research, a vast portion of those altcoins has gone under completely since then, revealing their subsistence as inextricably linked to their trading profile, not their espoused value proposition.

CoinMarketCap (CMC), the leading coin rankings and aggregation site, recently launched its Data Accountability and Transparency Alliance (DATA), a multi-faceted bid to incentivize exchanges to adhere to stricter order book reporting guidelines and volume transparency.

The moves are representative of a broader stroke push by the industry to pull back the curtain on some long-standing problems with exchanges. The obscure relationships between exchanges and tokens have raised eyebrows with enormous listing fees and unheard of projects gaining trading traction, but that narrative is changing.

And it’s not just exchanges that are under scrutiny – cryptocurrency projects are also being examined in more detail than ever before. As part of the DATA initiative, Crypto Briefing, an independent news and analysis firm, will embed their institutional-grade analysis product, SIMETRI, into CMC’s coin profile pages. According to CoinMarketCap, this will help offer more insight into the fundamental strengths and weaknesses of crypto projects.

As we progress further into bitcoin’s existence, it is becoming increasingly clear that each interval of narratives for the legacy cryptocurrency is defined by a unique set of circumstances. With the price surging and knowledge of the underlying value proposition more versed than ever, the seemingly inevitable bull run on bitcoin’s horizon seems poised for a very different outcome than before.

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