Alongside the cryptocurrency’s meteoric climb over the back half of 2020 and early 2021, a curious phenomenon has unfolded; heightened profit-taking and conversion to fiat currencies. Data collected by Simplex, a fiat-crypto gateway, underscores this seemingly paradoxical development.
A Curious Race to Convert Crypto to Fiat Has Accompanied Bitcoin’s Latest Drive Higher
Sharing exclusive data with Bitcoin.com, Simplex cofounder and chief analytics officer Netanel Kabala says:
While the international press coverage of Bitcoin’s rally has caused a swathe of new users to flock to the industry and buy-in, outflows have been equally significant. Of the total amount of cryptocurrency sold in the last six months, 43% was off ramped in December alone.
A quick look at Google Trends for the term ‘Bitcoin’ echoes these developments, especially now that new equity instruments like Grayscale Bitcoin Trust and big-name funds like Blackrock are adding exposure and raising crypto awareness.
Still, given the increased ability to quickly convert crypto and withdraw in fiat currencies, the uptick in funds leaving the ecosystem is astonishing. Part of this can be attributed to the growing fungibility of cryptocurrency, primarily helped by the support of players like Simplex, which empowers users to buy, sell, and spend crypto through Visa partnerships.
Although some of the latest rally’s onlookers have decried the rapid rise in crypto valuations as proof that a bubble is forming in this nascent asset class, others within the industry see the development as a harbinger of times to come. One of the areas this is most apparent is altcoins.
Data compiled by Simplex illustrates that as Bitcoin prices have leveled off above $30,000, daily purchases of altcoins have risen by approximately 65%. More interestingly, the data highlights that newer users account for nearly 20% of this volume, marking a sharp increase in the number of novice retail…