Cryptocurrency prices are down, but Transactions are up. What does this mean?

Cryptocurrency prices are down, but Transactions are up. What does this mean?

I read this article on crypto news website: “Crypto Adoption Surges Even as Prices Plunge!”, it was written by Juan Vilaverde, mathematician devoted to the analysis of cryptocurrencies since 2012. The article was long and dealt with multiple issues, but the one which caught my eye was transactional volume and type of transactions. In this article I will attempt to summarize and translate that portion of the article from cryptocurrency jargon to plain language.

People often look at the current market cap for the cryptocurrency market and because it’s down they think cryptocurrency is dying and or becoming irrelevant. A different viewpoint is to look at utility otherwise known as use case for cryptocurrency and measure that as an indicator of whether or not cryptocurrency is becoming irrelevant. The investment appraiser Weiss, a forty year old company which assesses stocks, bonds and other investments has begun rating cryptocurrencies in 2018. One of the things this company tracks is transactions and the types of transactions on cryptocurrency blockchains.

What is Weiss looking for?
First it’s looking for trading transactions on exchanges as an indicator of volume and interest.
Second and more importantly its looking at transactions where cryptocurrency is being for payments, voting or on decentralized applications like Steem Monsters on Steem or Cryptokitties on Ethereum. These are business transactions and represent utility and utility is a very important measuring stick for currency or any store of value.

What did Weiss find?
Weiss found that both types of transactions are up during this bear market, but the second type is up much more then the first. For example EOS has grown its on chain transaction volume by over 600 times in one year. Utility, the example Weiss gives is oil. Oil is very important because it is used in thousands of ways to create money, from gasoline to heating oil to jet fuel and many many other uses. Utility creates value. Ethereum allows smart contracts and other applications to be run on it and this creates utility for Ethereum. Steem allows DAPPS like Steem Monsters to be run on it and soon SMT which are similar but different from ERC Tokens on Ethereum and this adds utility to Steem and value. I think these attributes explain why Weiss gave both Steem and Ethereum ratings of “B”in its cryptocurrency ratings this year, which was the highest rating it gave any coin.

Weiss has found that for the leading coins utility measurements are increasing and that means the coins are increasing in value and value means the holders of those coins will eventually profit, when this bear market resolves.

References:

1. https://cryptonews.com/exclusives/crypto-adoption-surges-even-as-prices-plunge-3078.htm