After reaching historic highs in 2017, cryptocurrencies languished across multiple fundamental metrics in this year’s first quarter.
Unease permeated the industry, mostly from regulatory uncertainty and pull-back after a year of parabolic growth.
To shed light on a tumultuous Q1, CoinDesk’s latest State of Blockchain report provides a 90-plus slide analysis of some of the most significant data points.
Released Monday, the report covers public blockchains, distributed ledger technology (DLT), consortium chains, initial coin offerings (ICOs), trading and investments, and regulation. It also features the results of our 50-plus question sentiment survey, which provides insight from over 420 CoinDesk readers.
Here are six of the most important trends that defined Q1 2018:
Following an all-time high of nearly $20,000 in the previous quarter, bitcoin suffered a 51% decline in Q1. Other fundamental metrics, such as transaction volume, transaction count, and exchange volume, saw similar drops.
Most altcoins mirrored this behavior and followed bitcoin down, with correlation coefficients of returns ranging from 0.7 to 0.9. The entire cryptocurrency market capitalization lost about $348 billion.
The numbers may look grim, but that didn’t show up in overall sentiment: 79 percent of the respondents to our CoinDesk Sentiment Survey thought this bear market would be short-lived.
Eighty-six percent said this was a correction after the rampant over-speculation of the prior quarter while 62 percent said that regulation was a depressing factor.
After the introduction of bitcoin futures markets at the end of Q4, we’ve seen steady growth in this activity through Q1. Both long and short positions grew – but strikingly, the shorts outnumbered the longs.
Short positions ended the quarter at about 5,000 and long positions ended at about 3,000. It appears that it’s mostly pessimistic investors taking advantage of these contracts.
And this, in turn, appears to have contributed to the slump in the underlying asset.