Want to have some insight into what’s happening in the Bitcoin (BTC) market? Cryptocurrency research firm Chainalysis presented a detailed report through August 2018 showing that 36% of BTC in circulation is lost. This could be due to exchanges losing millions of dollars in hacking incidents and frauds.

The report further notes that there is not much change, since May, in the BTC held for speculation and for investment. The Chainalysis report shows that the BTC held for speculation remained stable at 22%, while that for investment remained at 30%.

Chainalysis Cites Earlier Market Figures

Earlier this year, a Chainalysis report showed long-term investors liquidating nearly $24B USD worth of BTC holdings to speculators. The sell-off took place in the period between December 2017 to April 2018. The interesting part is that investors sold half of the $24B USD in December itself when Bitcoin was trading at its all-time peak.

This gives us the reason to why Bitcoin faced an immediate collapse at the very start of 2018. This made matters even worse. At each price drop, speculators sold more and more, creating a spiral downturn and further triggered a prolonged sell-off.

As per the latest report, it is only after May 2018 that things got a bit settled down. These findings show that the market is now becoming more stable and less sensitive to hype and speculation.

Chainalysis Maps Investor Behavior Patterns and Money Supply

In the latest report, Chainalysis shows that crypto-market participants follow the concept of standardized monetary aggregates. Ultimately, this has its roots in traditional economics and methodology implemented by Federal Reserve. The Federal Reserve earlier noted that:

“For emerging financial systems, such as the crypto-economy, building an understanding of the underlying economic signals is a key factor in empowering participants to make more informed decisions. People are simply less likely to stay in and are less well served by, a market that appears random and based on hype. If we can identify and monitor clear signals —and those signals are logical— more people will feel comfortable investing. That’s where data can play an important role.”

Cryptocurrency Market is Maturing

In a concluding note, Chainalysis notes that the crypto-market is maturing with time. It says that the next major market move, either good or bad, will be based on the change at a fundamental level. It notes: “For example, restrictive regulation, new use cases, or technology improvements —such as the lightning network— could act as catalysts of change.”

Furthermore, the report notes that we have already overcome the first stage of Bitcoin adoption, i.e. getting it into people’s hands. It remains to be seen how the next stage of adoption looks like. Likely, it will rely on the value of utility, rather than on random waves of speculation.