MaiCoin Digital Asset Weekly, Oct 18 2019

MaiCoin Digital Asset Weekly, Oct 18

Commentary

Digital Assets ended the week lower as consolidation stretched into the 3rd consecutive week. Price ended -3.6% WoW with volume falling ~ -7% to a daily average of US$51B.

End of week selling was broad based with only 26% of the top 200 coins and tokens ending the week higher. Small Mid Caps were the hardest hit with IEOs and Utility Tokens both down a median -8%. BTC ended at the bottom end of its recent 3 week consolidation range on reports that an unknown wallet had transferred 10,000 BTC to Binance (likely in preparation to sell).

Headlines continued to be dominated by macro, regulatory and Libra news with 1) Reports that both Canada and the US are researching digital cash, 2) Telegram looking to push back SEC action, 3) US Fed actions looking increasingly like QE, 4) Policy makers in Europe and the US continuing to criticize Libra and 5) India pushing back its crypto ban decision for another month.

With volatility and volumes across the space continuing to contract, it looks as if the market is once again setting itself up for a significant price move. Sentiment feels very weak at the moment with social indicators (google search etc) showing little signs of retail interest. BTC downside looks limited in the short term, though, with RSI already at 34 and a Mayer Multiple of 0.9. Next line of support for BTC is $7,400 which is the convergence of June lows and the 61% Fibonacci retracementlevel.

Seasonality offers a glimmer of hope — as mentioned last week, 4Q seasonality has historically been strongly positive with median gains of +15% over the previous 5 Octobers, +12% in November and +14% in December.

Thoughts

Negative rates and sovereign crypto

This week we had news that both the US Fed and the Bank of Canada are discussing the benefits of digital cash. One of the potential motivations for this is the ability to implement negative interest rates. J Powell, Federal Reserve Chairman, noted this week that negative interest rates could play a key role in providing stimulus to sluggish economies — and, if deployed during a financial crisis, could be integral in helping to boost the economy.

The implementation of negative rates, though, depends on the removal of cash. As Masayoshi Amamiya, deputy governor of the Bank of Japan, has stated:

“To overcome the nominal zero lower bound, central banks would need to eliminate cash. Eliminating cash would make settlement infrastructure inconvenient for the public, so no central bank would do this.”

Sovereign digital cash would likely not be an optimal solution for users. It would enable the ability of the state to track and censor spending in the same way China does with WeChat Pay. Citizens would completely lose sovereignty over their money — making bank runs impossible and negative interest rates a matter of time.

News

Charts

Chart 1. Price vs Volume.
– Lower volume almost across the board

Chart 2. % Change — Major Thematics
– Smaller Coins and Tokens were the hardest hit this week

Chart 3. This time last year…
– BTC, EOS and BNB still trading at historic highs for this point in Oct

Chart 4. Price Table
– XRP and BNB the top 10 day gainers

Chart 5. Volume 50 Day Z Score
– Volumes in BTC, ETH, EOS, BCH and ETC very light

Chart 6. Average Daily Turnover — By Month
– Most major coins tracking multi month volume lows
– TRX, EOS and ETH a bit more active MtD

Chart 7. BTC vs Alts

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