Commentary
Digital Assets +13% this week to end just shy of the US$300B market cap level. Weekly volume -5% WoW for a daily average of US$58B. Big Caps did most of the heavy lifting this week offsetting declines in Small Caps and IEOs. Breadth was only modestly positive with just 53% of the top 200 coins and tokens ending the week higher.
Overall Digital Assets ended at a 330 day high with BTC at a 411 day high, LTC at a 393 day high and XMR at a 225 day high.
News sentiment this week was strongly positive. BTC outperformed with 89% of articles this week positive vs 67% across all Digital Assets. Overall, headlines were dominated by new details on Facebook’s Libra ecosystem. Other major stories included: 1. JPM hiring more blockchain talent, 2. Binance launching its first IDO (Initial Decentralized Exchange Offering), 3. Ripple making a $50M investment in MoneyGram and 4. Bakkt making progress on its payments business.
Given strong sentiment and a wave of short liquidations this week, think there’s a good chance that BTC could challenge the $10,000 mark next week. Despite strong gains this week, BTC isn’t really showing signs of overheating. It’s 20 day price gain is only ~13% (less than half the level of typical price peaks), its RSI is only starting to get warm and its 50 day Z Score is still well off previous highs. Given relatively low volume above the current level, think it would be relatively easy for BTC to get pushed up to the $11,000 level and for ETH to challenge $400.
Thoughts
- Libra isn’t BTC, but it could be a quantum leap for finance and banking
– Really interesting interview with Facebook’s David Marcus here
– Marcus is FB’s Libra Director, was on Coinbase’s board and was president of PayPal from 2012–2014
– Marcus’ interview paints aspirations of a much more decentralized and potentially innovative (for the legacy banking industry) product than the impression given from our first read of the white paper
– Marcus says that while Calibra will be FB’s wallet for the protocol, 3rd party wallets will also be possible and that Libra will be traded on regulated exchanges
– There are clearly significant regulatory hurdles to this product being implemented, but Silicon Valley’s entry into the industry could potentially be a massive shake up of the global banking and financial system
News
- Binance DEX has an Initial DEX Offering (IDO) of Raven Protocol
– For those keeping score at home, we now have ICOs, IEOs, STOs & IDOs
– IDOs are just initial offerings on decentralized exchanges
– On Binance’s DEX users have the ability to vote on which projects list - J.P. Morgan seeks job candidate with bitcoin scaling tech knowledge
– JPM is looking for a blockchain director with experience in BTC scaling solutions, including Lightning, but insists the role will focus on blockchain and have nothing to do with crypto…good luck
– Banks are probably amongst the last place this kind of talent wants to be - Coinbase Custody has $1.3 billion in assets under custody
– Up from $1B in May and expected to hit $2B by the end of the year
– Sounds impressive, but given rally in crypto ~2/3 of that increase is from US$ price appreciation in digital assets over that time - ETH 2.0 is set to launch Jan. 3rd 2020
– Coincides with the release of the first block of BTC chain 10 years earlier - Binance to launch several crypto pegged BEP2 tokens
– Pretty interesting…allows Binance to monetize cold storage reserves
– BTC remains in cold storage, while the BTCB derivative trades in a controlled ecosystem (unlikely to be hacked, and even if it was hacked could possibly be reversed like USDT hacks have been previously) - Ripple to invest up to $50mn in MoneyGram following new partnership
– $30m in shares/warrants and has an option to invest a further $20m
– Will become “MoneyGram’s main partner for cross-border transactions using digital assets, reducing operating costs and working capital requirements”
– MoneyGram stock rallied hard on the news, but was really overshadowed in the crypto world by FB’s Libra announcment this week - Facebook’s Claibra wallet registered to operate as an MSB in all 50 states
– Calibra is the wallet for Facebook’s Libra protocol
– MSBs are businesses that transmit or convert money - U.S House Financial Services Committee looks to halt Libra
Maxine Waters: “Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action” - French Finance Minister requests Libra central bank review
– “It is out of question’’ that Libra “become a sovereign currency,’’ Le Maire said in an interview on Europe 1 radio. “It can’t and it must not happen.” - Litecoin announced partnership’s for cryptocurrency debit card
– Number of these on the market already
– Creates some marginal degree of additional utility for LTC - Bitmain Technologies announced the launch of a low-cost miner
– Looks like a marketing spin to help clear out outdated hardware - Bakkt has brought on a former Google consultant in consumer app push
– Bakkt Pay could be released in the next couple of months - Libra vulnerable to a “34% attack”?
– Proof of Work assets like BTC are generally vulnerable to 51% attacks
– In a 51% attack, miners — totaling 51% of the network hashrate — collude to stop transactions, double-spend, and wreak havoc
– But only 1/3 of nodes could disrupt the entire Libra network
– To be fair, while technically possible, a node costs US$10M so the entry barrier to control 1/3 of the network remains significant - BTC ATMs go live at 20 Circle K stores
– OTC platform, Digital Mint, has installed ATMs across Arizona & Nevada
– Clients will be limited to US$20,000 / day and charged 12% comm - ETC Atlantis hardfork scheduled for Sep 17 launch
– Looks like a tehcnical upgrade to protect against security vulnerabilities
Videos
- Renovations of MaiCoin’s new HQ finished, grand opening end of July
– Open accounts, join events, learn about BTC and Digital Assets - Interview: Pankaj Balani, CEO of crypto derivatives platform Delta
– Pankaj and his team bring a wealth of experience from their time with UBS, Citi, GIC, some of India’s top internet startups and one of the space’s fastest growing digital asset derivative platfroms — Delta Exchange - Facebook’s Libra — The Good and The Bad
– Libra represents a number of drivers (Good) for BTC and the overall digital asset industry. Potential regulatory and legal roadblocks (Bad) could be major impediments to implementation, though.
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 average daily volume
Chart 6. Price, 50D Z Score
Chart 7. BTC vs other Digital Assets, 1 month % change
