MaiCoin Digital Asset Weekly, May 31 2019

MaiCoin Digital Asset Weekly, May 31 2019

Commentary

Digital Assets +7% this week for the 5th consecutive week of gains. Trading this week remained active at a daily average of US$85B, +18% WoW. Breadth fell from the previous week but remained positive with 53% of the top 200 coins and tokens ending the week higher.

Profit taking in IEOs and Small Mid-Caps was offset by another week of gains in Big Caps and Exchange Tokens.

News sentiment was 83% bullish this week but slow with total articles written -11% vs normal. Top stories this week included: 1. Investment app Abra expanding into 150 countries, 2. EOS’ rallying 20% ahead of tomorrow’s big announcement, 3. Crypto focused asset manager Grayscale’s AUM breaking above US$2B, and 4. Continued Lightning Network development.

Trading was tough for leveraged positions this week with BTC’s spike higher earlier in the week liquidating $136M of short positions and the drop lower later in the week forcing another US$207M of long liquidations. This could put the market a little more back foot going into next week and help support a decrease in price volatility.

BTC’s inability to extend the breakout described in last week’s note likely means consolidation for the first week of June. Declining volatility will likely be encouraged by a week of significant margin liquidations this week. BTC now looks to be in an ascending channel (chart 8). A breakout of the channel would likely put BTC above the $10,000 mark. The bottom end of the channel and the 20-day moving average will likely converge sometime next week, which should provide a fairly solid line of initial support at the $8,000 level.

Thoughts

  • The largest BTC holders are increasing their positions
    – This a great summary of BTC flows by address over the past 1.5 years
    – Over the last 9 months wallets in the 1k BTC — 10k BTC cohort have increased their BTC holdings by 450,000 BTC
    – Since Jan 2018, 955k new BTC have been mined, about half of that has been absorbed by ‘firm’ sized wallets (100 BTC — 10,000 BTC)
    – This is a high value indicator, if the Big Money BTC balances start to shrink it would likely foreshadow a pullback in price
  • Union Square’s Fred Wilson: US regulators will push innovation to Asia
    – We see this as a likely scenario where smaller, hungrier jurisdictions have an opportunity to leap frog capital market incumbents
    – Just as global investors have been excluded from the previous few decades of capital market innovation in the US, US investors could be left out of the next few decades as a global internet age capital market develops. As Fred Wilson, put it:

“In 5–10 years when we look back and consider why the next big tech sector centered itself in Asia and not in the US, it will be the SEC’s unwillingness to create new rules to regulate new assets that will be the cause”

News

Charts

Chart 1. Weekly Price vs Volume

Chart 2. Weekly Price Change

Chart 3. Major Thematics

Chart 4. Monthly average daily volume as % of historic high

Chart 5. MTD Avg daily volume

Chart 6. Price, 50D Z Score

Chart 7. BTC vs other Digital Assets, 1 month % change

Chart 8. BTC, Ascending Channel

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