Bitcoin may plunge below $10,000; Will it impact Web3?

Until recently, Bitcoin was considered immune to fluctuations, but now joins the high market risk assets

By Kiran N. Kumar

More than half of all Bitcoin daily trading volumes are reportedly fake, said a Forbes analysis supporting another similar finding by digital asset researcher Bitwise, which estimated in March 2019 that 95% of CoinMarketCap’s Bitcoin trading volume was fake and/or non-economic.

In fact, Bitcoin prices had recovered from below $20,000 in June when they hovered around $23,000 to $24,000. But the optimism remained brief as signs of weakening cryptocurrency market swayed the industry with massive layoffs and closures.

Close on the heels, the world’s largest cryptocurrency nosedives again amid global economic turmoil to $19,975 soon after Federal Reserve Chair Jerome Powell’s keynote address on Sunday.

Read: Napster sees second life with ‘Web3’, big tech begs to differ (May 20, 2022)

Bitcoin initially showed little reaction to Powell’s remarks, but then plunged sharply by more that 60% from last year’s peak of $68,000, recorded in November 2021. Until recently, Bitcoin was considered immune to fluctuations but now joins the high market risk assets.

In its latest report, Forbes analyzed 157 crypto exchanges and trading platforms, and reported that more than half (51%) of all reported trading volume is likely to be fake or non-economic.

“We estimate the global daily bitcoin volume for the industry was $128 billion on June 14. That is 51% less than the $262 billion one would get by taking the sum of self-reported volume from multiple sources,” said the report.

Bitcoin leads the $1 trillion global crypto market with a leading share of 40%. The Forbes report underscores that there is no genuine method of calculating bitcoin daily volume, “even among the industry’s most reputable research firms.”

While CoinMarketCap puts the latest 24-hour trading of bitcoin at $32 billion, CoinGecko keeps it at $27 billion, and Nomics at $57 billion but Messari lowers it to $5 billion.

Read: As Bitcoin loses steam, blockchain moving into next generation (September 10, 2021)

In terms of market size, Bitcoin is traded on 21 crypto exchanges generating about $1 billion or more daily, while another 33 exchanges trade a volume between $200 million and $999 million, said the report.

Binance leads the Bitcoin exchange with a 27% market share followed by FTX and Chicago-based CME Group is leading the Bitcoin futures.

Will it affect Web 3?
A latest Bloomberg ‘MLIV Pulse survey’ too showed that the Bitcoin may be heading back to $10,000 levels this year. Shark Tank’s Kevin O’Leary has reiterated that Bitcoin price has reached its lowest level still. In tune with these expectations, many crypto market watchers expect the Bitcoin price will hit $10,000 by the end of this year.

Already, amid the economic meltdown, several crypto exchanges and trading platforms are winding up operations, laying off people, and freezing fresh hirings, while the global cryptocurrency market lost at least $670 million in the April-June quarter (Q2), most because of hacks and scams.

Read: Lure of Bitcoins: Greed blinds even the wise to risks (February 24, 2021)

Essentially, the impact of downturn in crypto domain may affect Web3, the next generation of Internet, often portrayed as the future world of digital lifestyle where crypto and blockchain technology excel bereft of a few big technology giants which are dominating the current Web2 world.

It promises not to leverage your information the way tech giants do now but to give back control of data to the individual. Citing the example of musical artists, who can post their creations on decentralized platforms or their own personal devices instead of relying on centralized organizations like Spotify or YouTube to profit from them.

Web3 wants to do away with the watchdogs or agencies restricting services you can access or transactions between two or more parties without a middleman to improve privacy, autonomy and control of data.

Web3 is often associated with cryptocurrencies based on these principles of decentralization and equal access to provide services in the Internet world. Web3 crypto projects such as Helium (HNT) promise a decentralized peer-to-peer wireless network.

Read: Bitcoin is more likely to hit $10,000 than $30,000, finds MLIV Pulse survey (July 11, 2022)

Chainlink (LINK), a blockchain middleware allows smart contracts to access vital off-chain resources such as data feeds, web APIs and traditional bank payments while Filecoin (FIL) is a decentralized storage network to be rented out in exchange for Filecoin tokens, instead of opting for Amazon Web Services or Google Drive.

Another Theta (THETA), a dispersed network facilitates video streaming that allows users to share bandwidth and computing power in a peer-to-peer fashion.

If cryptocurrency hits the bottomline, so will be the ambitious future of Web 3.