The crypto app warned that Bitcoin is facing a liquidity crunch and that a lack of supply in the open market could have repercussions for both buyers and sellers.
According to SwissBorg, the number of bitcoins stored in the exchange’s wallet has decreased significantly in recent months. This resulted in a number of major trading platforms being abandoned, with some having to impose time restrictions on buy orders.
While many cryptocurrencies only rely on one exchange, SwissBorg is connected to four leading platforms: Binance, Kraken, HitBTC, and LMAX. The company says this means that there is a much greater possibility of sending customer orders through a functioning exchange during times of high market volatility.
SwissBorg analyst Fidel Velasco says daily movements of more than 10% that Bitcoin has experienced occasionally is somewhat unusual for an asset with a total market value of more than $ 1 trillion.
Learning the basics helps explain why this is so. First, the fact that Bitcoin’s monetary policy is not controlled by one person means that wild fluctuations can be anticipated. Second, the institutional adoption coincided with a sharp decline in the number of new coins in circulation, and in the second half of 2020, Grayscale Bitcoin Trust purchased 133% of the new Bitcoins recovered during that period.
Although Bitcoin in theory has 18.68 million traders, the reality is different. A Glassnode report released in December 2020 found that 14.5 million Bitcoins (about 78% of the total supply) belonged to illiquid units. All this means that there are only 4.2 million Bitcoins available to buy and sell. Typically, a decrease in liquidity coincides with an increase in the value of this digital asset, like the one we’ve seen so far this year.
To make matters worse, Velasco cited data from Bitcoin Investment Manager Timothy Peterson that 4% of available Bitcoin supply is wasted every year, with nearly 1,500 BTC per day becoming unavailable after users lose their hardware wallets and private keys. In fact, several horror stories have surfaced in recent months, including how a software engineer lost the password to a hard drive wallet containing 7002 BTC. SwissBorg says it is addressing this issue with its multi-lateral computing technology, a keyless method that was pioneered at Curv.
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Keep the markets moving
SwissBorg says the smart engine constantly helps users get the best price – regardless of current market conditions.
A total of 258 unique cryptocurrency pairs are available. Users can freely exchange any of the 15 fiat currencies it supports for any of the 12 cryptocurrencies on the platform, regardless of whether this pair is located on another exchange or not.
Smart exchange reports also ensure that investors get a complete overview of their journey.
SwissBorg’s goal is to help you avoid speculation when investing and take advantage of spreads that can occur on exchanges during peak hours.
Full graphic transparency is also guaranteed – and the encryption app says it proudly delivers an important point, unlike the competition. Some platforms claim to offer “zero fees” but end up hiding them in the exchange rate or spread offered. Instead, SwissBorg offers the best possible rate and charges a small transparent fee, which is then reinvested into the ecosystem.
As Cointelegraph previously mentioned, SwissBorg is also working to make return farming affordable for everyone and is integrating the benefits of centralized and decentralized financing through the Smart Yield wallet.