Commentary
Digital Assets ended the week +9.7%, but -15% off the week high. Total Digital Asset market cap briefly hit a 411-day high of US$386B. BTC +15% continued to do most of the heavy lifting, widening the gap with smaller coins and tokens. Breadth was skewed towards the negative with only 31% of the top 200 coins and tokens ending the week higher.
Trading was extremely active with average daily turnover this week +34% WoW to US$88B. Mid-week saw the most active day of Digital Asset trading on record with BTC trading US$45B and the entire space trading US$132B.
News sentiment this week remained positive with 81% of BTCarticles bullish vs 71% across the Digital Asset space. Top stories this week included: 1. Deutsche Bank strategist, Jim Ried, commenting that aggressive central bank policy could fuel BTC gains, 2. BitMEX posting a massive $16B single day trading record, 3. CFTC granting LedgerX a license for physically settled BTC futures trading, and 4. Jack Dorsey’s Cash App now supporting BTC withdrawals and deposits.
BTC price performance this week finally started to show signs of overheating. Red flags this week included: 20-day ROC of 65%, RSI of 87, a 50 day Z Score of 3.5 and a Mayer Multiple of 2.49 (ratio of price to the 200 day MAVG). On top of that, we’ve also had 2 days of very large long liquidations this week totaling ~ US$583M. Looking back at previous red flags like Mayer Multiples ≥ 2.49, price has typically seen corrections in the -30% to -40% range. That would imply a correction to the ~ $8,000 level. Though given the strength of recent sentiment, would be surprised if the pullback went that deep.
With BTC dominance at a multi-year high of 65% (BTC market cap as % of total Digital Asset market cap), one would expect that to trigger some degree of rotation into lagging alt coins. However, in the absence of an ICO boom to absorb that liquidity this relationship may be breaking down somewhat and we could be seeing a reversion of BTC dominance to the pre 2Q17 levels of 70% or 80%.
News
- Deutsche Bank sees Fed rate cuts boosting the price of Bitcoin
– Says recent price surge driven in part by potential rate cut by Fed
“if central banks are going to be this aggressive, then alternative currencies do start to become a bit more attractive.” - Jack Dorsey’s Cash App rolls out mobile Bitcoin deposits & withdrawals
– Means that users can now fund their accounts with BTC and sell for USD - Swiss stock exchange asks central bank to issue stable coin
– Local Swiss press reports that Principal Swiss stock exchange SIX asked the country’s central bank to issue a stablecoin
“SDX would accept CHF payments from member banks in central bank money and issue equivalent tokenised CHF in SDX. The value of tokenised CHF would be pegged 1:1 with CHF at all times. We most definitely favour a central bank issued stablecoin.” - North America’s largest solar crypto mining farm is launching in California
– 49 acres of solar panels that generate 10–13 MW of electricty daily
– Interesting how BTC is really the only major payment platform globally that consistently uses renewable energy to power data centers
– You never hear about Mastercard, Paypal or JPM building out solar farms - BitMEX reports sets single day trading record, US$16B
– BitMEX CEO Arthur Hayes will be in Taipei next week to debate Dr Doom - CME BTC data shows professional traders 3x more likely to short vs retail
– Interesting, but probably about what you’d expect - ETH transaction volume -40%YoY to $743 million
– Probably fueled by a continued decrease in ICO issuances and use
– As well as a number of competing platforms including IEOs - Chainalysis hires former FinCEN & DOJ regulatory expert to FATF rules
– Specifically to help better understand the proposed ‘travel rule’
– Requires exchanges and wallets to identify all senders and receivers - Philippines said to approve 48 cryptocurrency exchanges
– 11 crypto exchanges are registered with the central bank
– 37 others licensed by the gov’s Cagayan Economic Zone Authority - BTC derivatives exchange LedgerX received retail license from CFTC
– Should be the first regulatory approved, physically settled platform
– Must mean that Bakkt (applying for the same thing) is very close - David Marcus said to attend U.S House hearing on Libra’s development
– Set for July 16th, follows a call for a moratorium on development
– Maxine Waters, Chair of the U.S. House Financial Services Committee wants Libra to wait until U.S. regulation can be fleshed out - Bitwise to launch another crypto exchange traded product
– “Bitwise 10 Select Large Cap Crypto Index”
– Comprised of BTC, ETH, XRP, BCH, LTC, EOS, XLM and ADA - Northern Trust hands off blockchain solution company to fintech firm
– Northern Trust has > $1T AUM and > US$10T assets under custody
– Wants to leverage blockchain technology to build back office efficiencies - Tron foundation announces $20M buyback plan
– Haven’t seen any reports on execution time period - House reps question FinCEN director Libra’s potential for illegal usage
– Seems like a low level of trust in FB given accusation of election medling - EU Banks to deploy instant payments system in response to Libra
– Follows BIS comments that FB’s Libra could pose new risks to banks - Continued speculation that QuadrigaCX founder stole $200M
– Report suggests he was trading on other exchanges using client funds
– May have been trying to trade his way out of losing positions - Gemini launches Chicago office to serve as engineering hub
– Now has offices in New York, Chicago and Portland - Twitch quietly brings back BTC payments
– The Amazon owned gaming platform quit BTC payment options in March - Coinbase users now have recharge capabilities with BTC lightning network
– Works via intigration with Bitrefill
– Allows Coinbase users to access its full suite of LN services services directly from within their native exchange accounts
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, 50 day z score
Chart 7. Mayer Multiple
– The Mayer Multiple is the ratio of price to the 200-day moving average
– Hit a 257 day high of 2.49 this week, the highest reading sine Jan of 2018
– Over the past 1,000 days Mayer Multiple readings ≥ the recent high of 2.49 have been followed by price corrections. The normal pattern is for a price correction of -30% to -40% over the following few weeks.
