Digital Assets ended the week modestly lower on another week of light volumes. Price declines were broad based with < 40% of the top 200 coins and tokens ending the week higher. Performance was worst in smaller coins and tokens which gave up most of last week’s tentative rally in smaller, high beta assets.
Trading across the space remained range bound — and highly correlated — stretching consolidation into the 13thstraight week. Trading in BTC over that period has remained confined to a tight 2.5% band — outperforming both developed and emerging market equities and showing considerably less volatility than most major asset classes.
News flow remained positive. The overarching theme of the past couple of weeks has been increased participation from mainstream institutional investors / traditional financial service providers, an improving regulatory environment and industry leaders continuing to report large top line numbers despite the ongoing bear market in Digital Assets. News flow this week continued to add data points to these themes, including: 1. Positive comments from Fidelity Digital Assets and Morgan Stanley, 2. Tether revealing a US$1.8B account balance with a new banking partner, 3. Reports that Coinbase 2018 revenues would hit US$1.3B, 4. And talk that Goldman Sachs has begun onboarding clients for BTC derivative services.
Our midterm view remains intact, think the current low volume / low liquidity market, tendency of BTC to rally in Nov / Dec and continued institutionalization of the space skews near term risk reward to the positive.