A healthy market, whether it’s a financial market, real estate market, or any other type of market, is characterized by certain signs and conditions that indicate stability, efficiency, and fairness. The IPv4 market began in response to the exhaustion of a rare technology and a surge in client demand in 2015.
From the start, we saw an increase in price of around +20% per year, and then came the correction in Q4 of 2021. After an 18-month roller coaster in the IPv4 industry, we can finally say that we are seeing signs of a healthy market from a demand standpoint.
In September 2023, there were 147 transfer requests, which is +3% than the average in 2023. In addition to consistent demand with a stable market, the transfer requests are also +10% higher than last year’s average of 134 per month.
With that said, we wanted to change things up in this month’s entry. Here are some key signs of a healthy market, regardless of industry:
- Liquidity: A healthy market has sufficient trading volume and liquidity. It requires enough buyers and sellers, making it easy to transfer assets without significant price fluctuations.
- Transparency: Information about the assets being traded is readily available and accessible to all market participants.
- Price Stability: Prices in a healthy market tend to grow slowly over time. While some volatility is normal, extreme price swings can indicate instability.
- Fair Competition: A healthy market promotes fair competition. It ensures that no single entity or group has an unfair advantage over others.
- Regulatory Oversight: Effective regulation and oversight help maintain market integrity. Regulatory bodies ensure that market participants follow rules and ethical standards.
- Efficiency: Healthy markets efficiently allocate resources. Prices reflect the supply and demand for assets, helping to ensure that resources are used optimally.
- Low Bid-Ask Spread: The bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. A healthy market has a relatively narrow bid-ask spread, ensuring that transactions can occur.
- Accessibility: A healthy market is accessible to a wide range of participants. It is not limited to a select few.
- Market Depth: Healthy markets have depth, meaning there are a significant number of buyers and sellers at different price levels.
- Price Discovery: Prices in a healthy market are determined by a healthy balance of supply and demand.
- Information Flow: Accurate and timely information flows freely within a healthy market.
- Economic Stability: A healthy market is often associated with broader economic stability. A stable macroeconomic environment can support market growth.
- Resilience: Healthy markets demonstrate resilience in the face of economic shocks or crises. They can absorb short-term shocks without experiencing severe disruptions.
It’s important to note that markets can evolve and change over time, and these signs of a healthy market may vary depending on the specific type of market and the prevailing economic and regulatory conditions.