
Commentary
Digital Assets -3% this week, down for only the 2nd time over the previous 10 weeks. Trading remained active with volume this week +8% vs the previous week for a daily average of US$54B.
Declines this week were broad based with only 40% of the top 200 Coins / Tokens ending the week higher. Bluechips outperformed the rest of the space, though, with modest gains in BTC, ETH and EOS helping to offset declines in small mid caps. Exchange tokens were the hardest hit major sector led by profit taking in KCS and BNB.
Headlines this week were a mixed bag. Regulatory news was the focus of the week, though, with 1. China announcing plans to ban mining, 2. Bitstamp receiving a NY BitLicense, 3. Bittrex not getting a NY BitLicense, and 4. Taiwan expecting to publish an STO framework by June. Other major stories included: 1. Harvard’s US$39B endowment fund investing in a token sale, 2. Bithumb positing a large 2018 loss and 3. Binance threatening to delist BSV.
Going into next week, we expect BTC to remain a bellwether for the space. BTC outperformance relative to the rest of the space likely foreshadows some degree of mean reversion incoming. This will either manifest itself in the form of 1. BTC following smaller Coins / Tokens lower or 2. another rip in smaller, higher beta Coins / Tokens. If BTC can hold the $5,000 level this weekend, we think that confidence in this rally will be bolstered and that the most likely scenario is for another rally in smaller Coins / Tokens. We expect the 200 day moving average to provide support across the space at ~ US$146B. Declines in high flyers this week have let some steam out of the market. This now sets us up for a potential refill of the Nov 2018 gap lower and for the 2nd leg of the rally which could see a test of the US$200B market cap level
News
- Harvard’s endowment fund invests in Blockstack token sale
– Harvard and 2 other investors subscribed for US$11.5M in tokens
– Very interesting to see a US$39B endowment comfortable holding tokens - China bans Bitcon (mining) … again …
– Conflicting opinions on how strictly this plan will be enforced
– We would expect that large miners will be able to find away to continue
– Regardless, the mining industry has been leaving China since mid 2017
– The cheapest global energy (hydro / geo) is in N Europe & N S America
– Interesting, though, that this news had essentially no impact on price - Korean exchange giant Bithumb posts $180M loss for 2018
– Down from a +$469M profit in 2017
– Opex increased to $119M from $60M
– Non Op increased to $334M from $3.6M
– Bithumb recently cut headcount by 50% and was hacked for ~$13M EOS - Binance’s CZ: ‘Craig Wright is not Satoshi!’
– Craig Wright has been threatening lawsuits against Twitter users questioning his claim to be BTC’s founder Satoshi Nakamoto
– CZ threatened to delist BSV if Wright continued with his lawsuits
– Delisting from Binance would be a major blow to BSV liqudity - Kimchi premium returns
– Refers to the tendency in 4Q17 of Digital Assets to trade at a premium on Korean exchanges vs global peers
– The return of the premium is likely a very bullish sign
– Korean retail was arguably the largest driver of the last bull market - Bitstamp receives NY BitLicense
– The 19th firm globally to receive a NY BitLicense
– Obviously signals at an interest from Luxembourg based Bitstamp to expand more aggressively into the US market - New York denies Bittrex BitLicense application
– Denial cites continued compliance deficiencies and lack of controls - Tron and EOS are the most active DAPP networks
– EOS said to be the most popular network for gambling applications
– EOS is one of the recent rebound’s top leaders ~ +50% over past 1M - Coinbase CEO reveals strong 1Q19 user metrics
– No axis included on the charts but momentum looks strong across Coinbase Commerce, Earn and Wallet - Taiwan plans to launch STO framework by June of this year
– Issuances above the NT$30M (US$1M) limit mentioned in the article are expected to also be allowed via the Taiwan’s regulatory sandbox
– Lots of details to be decided, but Taiwan has committed to regulatory clarity by June - QuadrigaCX starts bankruptcy proceedings
– Quadriga’s 115,000 former users are owed roughly $190 million
– Quadriga’s implosion is one of Canada’s largest recent financial scandals - Kraken trading bots run amok, sell BTC 10% below spot
– Looks like a relatively minor issue that was caught very quickly
– Have obviously been much larger algo mishaps in traditional markets - Hacker claims to have gained access to new Galaxy S10 crypto wallet
– An involved process of photographing, altering & 3D printing fingerprints
– The use case for the wallet is probably more as a retail hot or warm wallet than a cold one (like a Trezor or Ledger), sacrificing some degree of security for increased convenience is probably reasonable and not a deal breaker - Bitfinex removes US$10,000 limit, opens doors to smaller traders
– Looks like a move to recapture trading volumes from competitors
– Bitfinex has historically maintained a high average ticket size vs peers - PewDiePie partners with blockchain platform DLive
– PewDiePie has more than 93 million subscribers on YouTube
– Has had videos demonitized by YoutTube due to content concerns
– Interesting to see online personalities like PewDiePie and Jordan Peterson diversifying from platforms like Youtube and Patreon - Coinbase debuts Visa card for UK customers
– Allows UK users to pay in-store and online with cryptocurrency - IMF Managing Director: Crypto is shaking the system — we don’t want that
– “We don’t want innovation that could shake the system so much that we would lose the stability that is needed”
– IMF wants innovation…as long as nothing changes
Charts
Chart 1. Price vs Volume
– Volume again robust in most major Coins / Tokens
– BTC, ETH, EOS and ETC the best this week in terms of both price and volume

Chart 2. Major Thematics
– Sharp drop in KCS this week weighed heavily on Exchange Tokens

Chart 3. 7 Day Price Change
– XMR led gains amongst major Coins / Tokens, BSV led declines

Chart 4. 50 Day Z Score
– Most major Coins / Tokens mean reverted towards neutral this week

Chart 5. Monthly ADV vs Record High Monthly ADV
– BTC, DASH, EOS, ETH and LTC all on pace for the best month of ADV ever
– XRP and TRX remain notable laggards

Chart 6. Monthly ADV
– BTC tracking US$17B / Day this month. Its best month ever

Chart 7. Lightning Network Stats
– BTC Capacity up to 1,079. A new record high, but growth looks to be slowing
– Channel growth this month tracking an 8M low, Node growth an 11M low
