Commentary
Digital Assets recovered from a week low of -7.5% to end -2%. Overall turnover across the space fell -11% WoW to a daily average of $83B. Breadth was skewed to the negative with just 45% of the top 200 coins and tokens ending the week higher. BTC dominance remained at the extreme top end of the 52 week range — accounting for 62% of total market cap — as Alt coins continued to bear the brunt of selling.
Trading this week was concentrated in big caps with BTC, EOS and LTC starting July with very active trading, easing volume declines in smaller coins and tokens.
Overall industry news sentiment was weaker this week with bullish BTC stories falling to 66% from 81% last week. Regulatory scrutiny was the focus of headlines with: 1. G20 supportingg FATF guidelines, 2. US legislators calling on FB to halt Libra development, 3. UK proposing a ban on retail participation in crypto derivatives and 4. South Korea’s Shinhan Bank tightening crypto exchange policies.
Outside of regulatory news the main stories were exchange focused with Bitfinex paying back $100M of its Tether loan (ahead of schedule) and Binance confirming plans to launch leveraged futures trading.
Looking into next week, would expect some degree of consolidation. While some steam has been let out of the May / June rally, the Mayer Multiple remains elevated at 2.02 (ratio of price: 200 day moving average). Over the past 2,000 days, Mayer Multiples ≥ this level have only accounted for around 7% of total price closes; meaning that the most likely scenario is for price to fall somewhat as the 200 day moving average continues to trend higher. Expect to see support at around the $10,600 given the convergence of the 20 day moving average and Fibonacci support around this level. If that line fails to hold then we may see a correction to the $8,000 — $9,000 level discussed last week.
News
- Bitfinex repays $100 million of a $700 million Tether loan
– Bitfinex made this payment in fiat wired to Tether’s bank account
– Also ‘prepaid all interest accrued under the loan facility to Tether’
– The payment was made ahead of schedule based on ‘financial position at the end of the 2Q19’. Points to strong BFX 2Q19 earnings - Deputy Finance Minister: Russia won’t ban Facebook’s Libra
– Libra will be treated in Russia like any other digital asset
– Will be possible to buy, sell and hold…but not to pay for goods/services - G20 supports FATF’s crypto exchange guidelines
– Guidelines will be very onerous for companies in the space to implement
– Requires an unprecedented degree of collaboration between regulators - Facebook has applied for a New York cryptocurrency business license
– Facebook is reportedly eyeing to obtain a cryptocurrency business license
– Also reportedly in talks with regulators in England and Switzerland - Developers identify Monero bugs
– Developers announced 9 security vulnerabilities
– Including 1 that could have allowed hackers to steal XMR from exchanges - Binance switches to ERC 20 version of USDT
– Historically the bulk of USDT has traded on Omni
– More exchanges are supporting ERC 20 — Binance, Poloniex and Huobi - South Korea’s 2nd biggest bank tightens policies on crypto exchanges
– Follows reports of increasing fraud cases involving exchanges
– Shinhan Bank will dedicate more staffing to analyzing transactions - Tokyo’s BitFlyer exchange resumes account openings after suspension
– Will resume opening new domestic accounts beginning July 3
– The company voluntarily suspended new domestic accounts last year
– BitFlyer received an operational improvement order last year
– Driven by FSA after concerns raised over poor AML controls - Binance CEO CZ confirms plans to offer futures contract trading
– Will launch ‘very soon’ and offer investors up to 20x leverage - Gemini applies for FINRA broker-dealer license
– First step toward becoming an approved Alternative Trading System - US Congress seeks to stop development of Libra & digital wallet Calibra
“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar” - CME BTC futures client sign-ups are +30% with 950 accounts
– Overall volume on CME is in a strong uptrend, +10x from 2017 launch
– Speculation that Libra has driven participation by mainstream investors - Cuba to launch crypto study in effort to boost economy
“We are studying the potential use of cryptocurrency … in our national and international commercial transactions, and we are working on that together with academics”
– Part of this seems aimed at easing the impact of US Sanctions
– The US has enforced an embargo on Cuba since 1958…seems fair - Blockstream launches “experimental’ tool for atomic swaps on Liquid
– Builds off existing Blockstream techwhich allows for token issuances
– Swap Tool allows token trading without an intermediary (exchange) - Telegram’s unreleased Gram tokens to sell at 3x private token sale price
– S Korea’s Gram Asia is selling rights to Gram at $4 from July 10 - BTC Darknet yearly transactions only 1.6 percent of daily trading volume
– Darknet usage for the whole year is thought to be ~US$550M
– Average daily volume at the moment is ~ US$30B - Nobel Prize-winning economist Stiglitz hates Libra
– Similar to views expressed by peers Nouriel Roubini and Paul Krugman
– Strongly supportive of increasingly onerous KYC/AML regulations, accredited investor rules, and the push to a cashless society - UK proposes ban on crypto derivatives for retail investors
– Not surprising; UK loves banning / filtering access to ideas and services
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
