Often when panic hits the cryptocurrency market and it seems like every coin is falling into the red, Dash is the only one left sailing along in the green. Why is this?
One explanation, is Dash's two tier network of masternode owners. In order to operate a masternode in the Dash network, an individual must hold at least 1,000 Dash making the current entry price over $750,000. These masternode owners provide valuable services to the network such as facilitating instant transactions and voting on budgeting and governance proposals. One other service that they seem to provide, however, is adding stability on a daily basis.
Masternode owners are paid a dividend for providing and maintaining these services and are therefore incentivized to not allow market ripples to effect their investment decisions. Additionally, most masternode owners have been so well rewarded by the increase in price and what that means for their overall investment return that they would be fearful of not being able to buy back in if they were to sell. This additionally incentivizes non-masternode owners to buy in on dips as they don't want to miss their opportunity either. This all combines to have a large portion of the network held by long term investors and true believers in its future, as opposed to speculative traders willing to sell at the first sign of trouble. How much of the network is owned by masternodes providing this level of support?
You can see from these images that there are currently about 7.72 million coins outstanding in the Dash network, and 4,737 masternode owners. With each masternode holding 1,000 coins, at least 61.4% of the coins are currently locked away and not available for trading.
When one considers the fundamentals of supply and demand which drive most markets, cryptocurrency included, an incredibly unique value creating situation arises with Dash's relative scarcity. Have a look at Bitcoin's current situation.
At about 16.71 million coins outstanding, there is a little more than 2 times more Bitcoins in the market than Dash at any given time, giving Dash greater scarcity and therefore a higher price per coin for the same level of demand. When you incorporate the fact that over 60% of the total Dash are locked away, however, that supply falls again to become more than 4 times smaller than Bitcoin's. For this reason, if the same demand was placed on each network, each Dash should be priced over 4 times higher than each Bitcoin.
With this in mind, it should perhaps be less surprising that Dash seldom falls in line with the rest of the market's movement as this high level of scarcity decreases the chance that there will be more sellers than buyers in the market at a given moment. This factor, combined with industry leading innovations and strong ecosystem growth, present very favorable conditions for the price of each Dash to continue its rapid rise in the months and years to come.
Disclaimer: I am not a financial adviser, and this is not financial advice. These are merely my observations on the market as I see it today.
I am long Dash, but have the goal of being objective about the factors at play. I encourage counterarguments and appreciate any feedback. Only time will tell how these things shake out. I believe, however, that there is a strong and logical case for Dash’s success in the long run. Thanks for reading!