One year after “312”, the value reconstruction of the crypto financial market

March 12, 2020 was a perfect day for many users in the crypto-financial market, when both danger and opportunity coexisted. Crypto assets plummeted on that day, and the market was full of pessimistic predictions; it was also this day that made March a great time for crypto asset allocation. For Amber Group, due to its rich experience in security risk control and active and orderly strategy adjustments, it was able to smoothly pass the "312".

A year has passed in a flash, and the crypto-finance market has reborn from the global liquidity crisis. As a leading crypto-finance intelligent service provider, Amber Group has witnessed the magnificent road to redemption of crypto-finance during this period. Based on Amber Group's focus and research on the industry, this article sorts out the key changes in the market in this year from three aspects.

Cornerstones, Crypto Central Banks, and Newcomers

As a bridge connecting the value of the real world and the crypto world, stablecoins are the cornerstone of the entire crypto financial market. We can perceive the changes in the crypto financial market through the development trend of stablecoins. Amber Group research shows that in March last year, the overall market size of stablecoins remained at US$4.5 billion, of which USDT accounted for about 71%. Today, the corresponding values ​​are US$37.8 billion and 54%, respectively. Based on the assumption of 100% full reserves, the volume of US dollars locked in stablecoins is eight times that of the same period in 2020. As the scale expands rapidly, the market structure of stablecoins has begun to change-although Tether, as the central bank of the crypto world, still occupies half of the market, the trend of horns has emerged. USDC, BUSD, PAX, HUSD, etc. have gradually gained the favor of incremental funds with more compliant, more transparent and multi-chain characteristics. In terms of stablecoins, Amber Group has seen large-scale funds begin to enter the construction of the crypto financial ecosystem in a more compliant and transparent way.

The battle between DeFi and CeFi

May to August 2020 was called the "Summer of DeFi" by the industry. The endless innovation and iteration in the DeFi field has made it an unstoppable force in the financial system. The financial innovation and technological innovation demonstrated in projects such as Chainlink, Compound, Uniswap, Yearn.Finance, and Synthetix have continuously brought inspiration and practice to the future development of finance. In the past year, the impact of DeFi on the existing financial system has been truly felt by more people. At the same time, the lack of clear definitions and the rapid development speed have made the original regulatory paradigm not applicable to DeFi, which has also aroused the attention and concerns of the government and regulatory agencies on DeFi. Based on this background, the game and coexistence between DeFi and CeFi will continue.

FOMO’s Institutions and Value Reconstruction

After the Fed's $2.2 trillion economic stimulus took effect, the loose global monetary policy brought excellent liquidity support to financial assets. In the context of the Internet of Everything, in the choice between cryptocurrency and gold, major institutions gradually turned their taps to cryptocurrency. Including Grayscale, Microstrategy, Square, MassMutual, Tesla and other institutions continue to buy or increase their holdings of Bitcoin, which gradually reshapes the voice of the market. The entry of traditional institutions has continuously reduced the volatility of Bitcoin. Even in December 2020, the number of Bitcoins purchased by institutions was almost three times the number of miners in the same period. A large amount of Bitcoin has flowed from retail investors to institutions, and its value storage and anti-inflation characteristics have been perfectly demonstrated. At the same time, in addition to institutions that actively hold positions, many giants have also begun to build a bridge between traditional finance and crypto finance-Visa and Mastercard are expected to connect encrypted digital currencies to the global clearing and settlement network; Paypal and Robinhood have opened payment gateways to crypto finance, etc.-the entire crypto financial system has been continuously extended from the early state of trading-oriented, constantly reconstructed, and continuously integrated into everyone's daily life.

The views expressed in this article do not constitute investment advice, please be aware of investment risks.

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