Weekly Crypto Recap 11/9-11/15
Know & go
- Highlight of the week: Bitcoin Cash hard forked, creating two separate blockchains with separate crypto assets.
- Three things to know: (1) More traditional equity raises, Lolli and Coinmine (2) Volatility and volume return to the markets (3) CFTC charges trader with fraudulent Bitcoin and Litecoin scheme.
- BVOL (the rolling 30-day annualized volatility as calculated by Bitmex) fell to 14% on 11/13 and rose dramatically to the 49% range yesterday (11/15). The Block reported that this was accompanied by a surge in traded volume.
- This week, total crypto market cap bottomed at $175 million on Nov. 15, and is now down 13.5% w/w. BTC is trading at $5601 (down 12.5% w/w), ETH is at $178 (down 15.5% w/w).**
*As of 11/15 11:30AM ET
Weekly market snapshot
Bitcoin Cash hard fork
Bitcoin Cash took the front seat this week, as the crypto community awaited the outcome of the hard fork on Thursday, November 15. The question on everyone's mind was whether the fork would result in two separate chains, and as it happens, it did. For a detailed breakdown of the proposals, risks and potential impacts, refer to our recent Bitcoin Cash Hard Fork Report.
In the run up to the fork, it was unclear what the outcome would be, with contradictory signs from prices in pre-fork markets vs. hashpower devoted to each faction - Bitcoin ABC and Bitcoin SV. While the price of BCHABC was higher than BCHSV in pre-fork trading, estimates of hashpower devoted to BCHSV were significantly higher than that devoted to BCHABC, according to coin.dance.
While the fork has passed, and there are two distinct chains with two distinct crypto assets and software implementations, the future is still murky. Coindesk reports that mining support could still switch from one chain to another or that resources could be added to reinforce either chain. Other uncertainties include (1) which chain will retain the BCH name and ticker? (2) will exchanges who only announced support for Bitcoin ABC prior to the fork also roll out support for Bitcoin SV? (3) will the Bitcoin SV miners attempt to take down Bitcoin ABC because they view it as illegitimate? Only time will tell.
The price of BCH fell from $617 on 11/7 to $439 on 11/14 (a 29% decline). At press time, BCHABC/USDC is priced at $284 and BCHSV/USDC is priced at $108 on Poloniex (or $392 combined). The uncertainty created by the unanswered questions is likely a key reason for the fall in price.
Bitcoin ABC is currently the longer chain, with 175 blocks. Bitcoin SV is 31 blocks behind, at 156 blocks. Hashrate on the chain using Bitcoin ABC is 7.6EH/s and 4.1EH/s on the chain using Bitcoin SV. Exchanges have disabled the BCH market. Until the situation stabilizes, trading will also be halted on both assets.
In other news
- Binance has added both the BCHABC/BTC and BCHSV/BTC trading pair, implying that it will support both chains, but it has yet to make an official announcement. Source.
- As volatility returned to the market after hitting the lowest 30-day vol. since December 2016, traded volume increased by 80% in a 24-hour period, likely also driven up by yesterday’s Bitcoin Cash hard fork. Source.
- The CFTC charged Joseph Kim with operating a fraudulent Bitcoin and Litecoin scheme, which led to over $1 million in losses, requiring him to pay more than $1.1 million. Source.
- Coincheck exchange said they will resume NEM trading. Hackers stole $534 million of NEM earlier this year. Source.
- The Block gave us the low down on Galaxy pivoting from small ICOs to larger, institutional clients and the departure of five executives. Source.
- Canaan, a leading producer of mining equipment, dropped its application to IPO in Hong Kong, for at least $400 million. Source.
- German crypto exchange, Bitcoin Group SE announced the acquisition of an investment bank, allowing it to acquire its BaFin license. The license would allow the exchange to develop and sell crypto asset based investment contracts. Source.
- Coindesk rolled out a cryptoeconomics explorer. Diar announced a curated data platform.
- Bitcoin rewards startup, Lolli raised $2.25 million from multiple investors including Bain Capital and Version One. With Lolli, users receive rewards in Bitcoin when they shop at Lolli's partners. Source.
- New company Coinmine announces its first product - hardware that attempts to make it easy for anyone to mine crypto assets without the steep learning curve. Coinmine is backed by Coinbase Ventures, Arrington Capital, Balaji Srinivasan, Morgan Creek partner Anthony Pompliano, and Product Hunt co-founder Ryan Hoover. Source.
- Gitcoin announced Gitcoin Labs, which will be a service that provides research reports and toolkits for developers. Source.
- Gods Unchained, a trading card game using Ethereum to tokenize assets, provided the community with a progress update, which included their official gameplay trailer. Source.
What we’re reading
- The BCH Civil War - Unqualified Opinions. Qiao Wang from Messari shared a unique angle on the BCH hard fork highlighting three debates we should mull over: (1) Governance is the killer feature vs. Minimize argument surface (2) on-chain governance vs. off-chain governance (3) centralized governance vs. decentralized governance. Later in the week, Ryan Selkis commented on the price impact of the fork. Eric Turner at Messari compiled a great resource page on BCH.
- Vision Hill Crypto Hedge Fund Returns: 3Q18. Building on their piece from 2Q18, Vision Hill shared an insightful post on hedge fund performance in 3Q18. Vision Hill found that the median quarterly return of hedge funds included in the research was -9.2% vs. 3.5% for bitcoin.
- Crypto Market Cap: An In-Depth Review & Survey of Emerging Alternatives. Clay Collins of Nomics and Nathaniel Whittemore publish an analysis of crypto market cap as a metric, how it came to be so widely used, and the caveats associated with it, including inflation schedules and circulating supply.
- The Case for Decentralizing Content. Jeremy Gardner shares his thoughts on why we should leverage blockchain technology to displace centralized intermediaries in the creation of content, and specifically discusses Audius, a decentralized music platform.
- Horizen (ZEN) Investment Thesis. Grayscale published an investment thesis on Horizen, "an "end-to-end" encrypted platform over which money, messages, and media can be securely and privately transmitted and stored".
- Unpacking the Bitcoin Price Drop. Breaker Mag interviewed Nic Carter, Jalak Jobanputra, Anthony Pompliano, and Preston Byrne for their thoughts on the sell off.
What we’re listening to
- Unchained: Down 94% since winter, what has happened to ICOs?
- The Smartest Contract: Qiao Wang - Curating Truth
- Boost VC: Media in Crypto with Mike Dudas of The Block
- Venture Stories: Competitive Governance with Patri Friedman
- Hidden Forces - Venture Capitalism and the future of the Innovation Economy
- Off the Chain - Bill Barhydt
- Re: thinking - Joe Edelman on Designing Human Systems
- Messari Podcast #14: The unintended consequences of product design with Taylor Monahan
Circle in the news
- We published two reports this week - an in-depth look at decentralized prediction markets (specifically Augur, Gnosis, Stox) and a report on the Bitcoin Cash hard fork.
- USDC becomes the second regulated stablecoin to be added to Binance. Global exchanges Korbit and Liquid also add support for USDC.
- Circle Invest published a great 101 piece on hard forks, specifically yesterday's BCH hard fork.
Where we’ll be in November
- TechCrunch Shenzhen, Shenzhen, CN, 11/90
- United Conference of Internet Money, Singapore, 11/96
- Consensus Invest, New York, NY, 11/97
- Monetary Authority of Singapore, Singapore, 11/97
- Forbes Live, Milan, Italy 11/97 - 11/98
- Coingeek Week Conference, London, UK 11/98 - 11/30
- American Banker Block FS Conference, New York, NY 11/99 - 11/30
- MJAC Crypto Compare Blockchain Summit, London, UK, 11/30
If you have any thoughts or questions, please reach out at [email protected].
Reports, market insights, and other information (“Information”) provided by Circle Internet Financial Limited (“Circle”) or its affiliates have been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. Information has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Information provided is not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and is not a recommendation to buy, sell, or hold any asset. Information is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of the date of publication, and are subject to change without notice. Trading and investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. Circle and its affiliates trade and hold positions in digital assets and may now or in the future trade or hold a position in an asset that is the subject of Information provided. As a result, Circle or its affiliates may be subject to certain conflicts of interest in connection with the provision of Information. Circle will not be liable whatsoever for any direct or consequential loss arising from the use of this Information.