Key Insights:
Recently, after the Bitcoin ETF approval, few comments were shared by experts, industry leaders and regulators on whether crypto will remain a form of digital currency or will transform completely to become an asset.
In our research, we found that though several experts assess crypto as an asset, yet, there are multiple instances where it can be proven to be a currency.
The latest approval of Bitcoin ETFs have sparked a debate on whether cryptocurrencies are losing their currency nature and becoming a form of asset similar to Gold, Bonds and Property.
Several experts including the BlackRock CEO Larry Fink has commented on January 12, 2024 that Bitcoin was an asset class and no different than Gold. He even went ahead to claim that Bitcoin ETFs were about to do the same thing for investors what Gold did for more than a thousand years.
On January 15, 2024, IMF Chief Kristalina Georgieva, a known crypto critic, told Yahoo Finance that when "we" talk about crypto, it means as an asset class and not as a currency. She went ahead to say that if it is backed, then it's a less risky and if not, it is a riskier investment.
Finally, Georgieva claimed that crypto would never be able to rival US Dollar in the future. This could be presumed as a base to her opinion about cryptocurrencies being an asset class.
Coinbase CFO Alesia Haas told Yahoo Finance that with Bitcoin ETFs, trillions of dollars which were earlier not able to buy Bitcoin would now be able to access it.
Earlier SEC Chairman Gary Gensler has numerous times criticized Bitcoin as a risky investment. His latest statements were on January 09, 2023, a day before the approval of Bitcoin ETFs.
He said that those who were considering an investment in crypto assets needed to be cautious and claimed that there were serious risks involved.
We have analyzed cryptocurrencies which have the potential to become both assets and currencies. They are Stablecoins, Bitcoin and Ethereum.
We found that all of them showed different micro-trends but the overall sentiment still favors the currency aspect.
By the third quarter of 2023, stablecoin transaction volumes reached $5 trillion. Stablecoins volume alone was much higher than all of the crypto investments combined together.
But let us also dive deep into top cryptos and see the micro trends within them.
Let us see how much people hold in crypto.
On Jan 16, 2023, 68% of all Bitcoins were held for more than 1 year which seems as an investment. Its had a value as of 569 $billion.
Bitcoin volumes by Glassnode for the same period roughly stood at $5 billion per day which translated to around $150 billion per month or more than $1.8 trillion per year on a generous estimate.
Even by a conservative estimate of $2.4 billion per day (lowest daily Bitcoin volume in 2023), Bitcoin's yearly transactional volume far exceeded its 1-year HODL volumes.
On Jan 16, 2024, Ethereum had a TVL of a little less than $31.15 billion. We assume that these values are invested for at least 1 year. Ethereum transaction volumes for the same time were just at $1.3 billion.
The trend for Ethereum shows that it is more favored as an asset class rather than a currency.
If we take a look at overall markets, then we see that stablecoins are mostly used for transactions. the stablecoin transaction volume far exceeded any market cap of large cryptocurrencies which shows the properties of a typical currency.
On the other hand, largecap cryptocurrencies were mostly used for investments possibly due to their high transaction fees. Also, since these largecap have more trust associated with them and have more utility, people are focusing on them from an investment perspective.
Therefore, we reach the conclusion that crypto would remain a currency for much longer, but it will also have an asset value.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.