Analyst: BTC Turned Reserve Currency For Investors
September 11, 2018
Analyst Nodar Janashia has come up with a suggestion that crypto investors now use Bitcoin as a reserve currency more often as total volume of transactions that involve the coin this year has dropped almost twice.
Janashia’s post at Medium says, the turnover velocity in the BTC net is “the frequency at which the same unit of a token is used to process on-chain transactional value” and it is going to slow down this year when compared to that of 2016 and 2017:
“…In 2016 Bitcoin processed approximately $58 billion worth of transactions and the average size of bitcoin’s asset base (market capitalization) through 2016 was $8.9 billion, so Bitcoin’s hybrid velocity in 2016 was 6.5 ($58/$8.9)”.
In other words, this means that every BTC involved in the turnover at that moment changed the owner 6.5 times. The expert stressed that this index is not to be taken as highly accurate provided there is some amount of immovable bitcoins.
“If the number of speculators is increasing at a faster pace than the number of actual users, it shows us that most people don’t want to use bitcoin as a transactional medium”, Janashia stated.
Chris Burniske, analyst at Placeholder company, gave his comment on this post in his Twitter account:
“With a reserve currency, as confidence falls market wide more people will hold onto the reserve asset (namely, [Bitcoin]), dropping its velocity”.
“…Non-reserve currencies tend to be the opposite: as confidence falls, velocity accelerates as people try to get rid of the asset before it loses more value.”