MAX Digital Asset Weekly, Nov 9 2018

MAX Digital Asseet Weekly, Nov 9 2018

Digital Assets ended the week +4.6% with volume in major coins / tokens +50% from the previous week. Breadth remained skewed to the negative, though, with only 43% of the top 200 coins / tokens ending the week higher. Gains this week were highly concentrated, with the top 5 coins / tokens by market cap accounting for almost 80% of the week’s gains (in the top 200 coins / tokens).

Trading this week was led by a sharp uptick in BCH ahead of next week’s (Nov 15) fork. Volume and price gains were best in 3 of the space’s more centralized projects — BCH, XRP and EOS — pointing to a possible pick up in proprietary trading ahead of next week’s action. Volumes in BCH, XRP and EOS were up between 67% and 180% from the previous week whilst trading in BTC, ETH, LTC and ZEC were up between 15% and 30% WoW.

Institutional news this week was led by that Australian investment bank Macquarie and Korean tech giant Naver had joined an $80M investment in Bitfury;2. Listed companies Hut 8 and Square reporting strong 3Q revenues; and 3.VanEck remaining upbeat on the chances of regulatory approval for their institutionally focused ETF.

Miining news was rounded out by Bitmian launching its new flagship 7nm S15 miner and mining pool BTCC (one of the longest running miners in the space) shutting down operations.

BCH’s upcoming (Nov 15) fork was one of the key focuses of the week, initially leading a sector wide rally on airdrop expectations before correcting somewhat into the end of the week. The fork is set to pit BCHSV (Satoshi’s Vision) against BCHABC. Given the lack of replay protection (meaning a transaction on one chain could be mirrored on the other), the expectation now is that one chain will emerge as dominant. Given the steep discount with which BCHSV is trading on Poloniex’s pre-fork BCH pairs, it looks like the market is anticipating BCHABC to emerge as the dominant chain.

Outside of the normal news flow, a handful of new data points pointed to increased user adoption with crypto related tweets from celebrities William Shatner and Gwyenth Paltrow and a survey out of the UK reporting that 90% of UK residents know a Bitcoin holder and that 9% of 18–24 year olds own Bitcoin.

Our midterm view continues to see risk as skewed to the upside. A sharp pull back in Bitfinex shorts over the past 2 weeks (to an ~80 day low) would seem to offer support for our view that record low volatility and consistent 4Q seasonality are reasons for continued optimism into the end of the year.