MaiCoin Digital Asset Weekly, Apr 26 2019

Digital Asset Weekly, April 26 2019

Commentary

Digital Assets -4% this week on active trading. Volume +15% from the previous week to a daily average of US$46B. Only 34% of the top 200 coins higher this week.

BTC +1% was modestly higher, benefiting from declines in smaller, higher beta coins and tokens as another round of USDT concerns drove a rotation into BTC and second tier US$ coins — USDC and PAX.

A week of generally positive news flow was reversed overnight with reports that Bitifnex has allegedly had US$850M in deposits frozen — forcing the exchange to borrow ~ US$700M from its sister company Tether and driving renewed speculation that USDT may be underfunded.

News flow prior to the Bitfinex / Tether allegations was positive, though, with a number of stories pointing to improving investor access to Digital Assets, including: 1) Samsung deepening its investments in the Digital Asset space, 2) Reports that TD Ameritrade may be edging towards Digital Asset support, and 3) Binance launching fiat trading in Singapore.

Looking into next week, the short term focus will certainly be on how USDT events play out. If Bitfinex and USDT operate normally over the following few days (and users are able to withdraw funds), then Digital Assets will likely resume a push for the US$200B market cap level. If not, expect an acceleration of the rotation into BTC from USDT and other smaller coins and tokens dependent on USDT liquidity. Its worth noting that while there are other USDT alternatives, USDT continues to account for ~ 97% of the total stable coin tradng volume and the alternatives will likely be unable to handle the bulk of any potential USDT outflows.

Thoughts

  • Bitcoin mining is not bad for the environment
    – Great report this week from CoinShares Research on the mining industry
    – A few interesting takeaways:
    1. “… contrary to the common narrative, the vast majority of global Bitcoin mining capacity (minimum 77.6%) is running on renewable energy.”
    2. “…not only does cryptocurrency do no harm, it could actually be doing good. Bitcoin mining may in fact be acting as an electricity buyer of last resort , creating a highly mobile base-demand for any electricity sources able to produce at prices below current producers, regardless of location.” Essentially incentivizing and subsidizing renewable energy production.
  • Lots of speculation around improved access for mainstream US investors
    – Articles this week speculated that TD Ameritrade users will be given access to Digital Assets through NASDAQ or ErisX
    – On the surface level, this should be price positive to BTC as it will allow millions of mainstream investors access to BTC, but is also likely very negative existing Digital Asset exchange platforms.
    – However, it is also possible that trading through TD Ameritrade will be heavily resitricted, and not allow users to move their Digital Assets off the TD Ameritrade platform (similar to Robinhood). This would still be positive to BTC, but would be less negative to existing platforms.

News

Charts

  • Chart 1. Weekly price vs volume
    – BNB and BAT up on better volume
    – BTC up on slightly lighter volume
    – Almost everything else down on lighter volume
  • Chart 2. Weekly price change
    – BNB and BTC the lone gainers this week
  • Chart 3. Major thematics
    – Small Mid Caps the hardest hit as USDT scare decreases risk appetite
  • Chart 4. Monthly average daily volume as % of historic high
    – TRX and XRP volumes continue to lag the rest of the space
  • Chart 5. MtD average daily volume
    – BTC, ETH, LTC and EOS continue to set new Monthly ADV highs
  • Chart 6. Price 50 Day Z Score
    – XRP looking slightly oversold as price falls -2SDs below its 50D MAVG
  • Chart 7. Stable coin daily volume as % of YTD peak
    – USDC and PAX see volumes surge on USDT concerns
    – USDT still dominating overall stable coin volumes, though, accounting for ~ 97Engl% of total. USDT averaged daily volume of US$12.6B over the previous 10 days while all other stable coins combined averaged just US$267M.
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