Circle research

Weekly Crypto Recap 10/5-10/11

Know & go

  • ICO funds raised are down 90% from January highs; of total hedge funds expected to launch by year-end, crypto funds are expected to be 20% of the total; the endowments of Harvard, Stanford, Dartmouth, MIT, UNC invest in crypto following Yale’s announcement last week, and more.
  • Bitcoin’s weekly volatility as determined by the difference between the high and low dropped to $317 last week, the lowest since July 2017 (Coindesk). By this measure, Bitcoin’s volatility week to date is $420. BVOL1, another measure of volatility as calculated by Bitmex, dropped to 32.6% on 10/9 versus 47.2% a week ago and 60.1% a month ago.
  • Total crypto market is down 7% w/w. The market experienced a large sell-off Wednesday night (10/10). The top 10 crypto assets by market cap were trading down over 5% Thursday morning (10/11). 33% of the top 100 by market cap are trading up in the last 24 hours.

Weekly market snapshot

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Chart sources: coinmarketcap.com, sifrdata.com, Circle

Top Stories

ICO funding down 90%. Autonomous Next shared data showing that ICO funding is down almost 90% from January 2018. Reasons? 1) Regulatory uncertainty around utility tokens, 2) devaluation of utility tokens due to lack of product or function (and simultaneous drop in value of tokens), 3) growing popularity of private fundraising, and 4) growing interest in security tokens.

Continued rise in crypto hedge funds. Crypto Fund Research published a report highlighting 90 new crypto hedge funds launched in the first three quarters of 2018, despite the continued bear market. 600 total hedge funds are expected to launch in 2018, of which 120 are expected to be crypto hedge funds (20%). Crypto hedge funds comprised 16% of total funds launched in 2017, and 3% in 2016.

Of note, Alexander Pack and Bo Feng launched a new $100 million crypto fund called Dragonfly Capital Partners focused on investing in a mix of crypto protocols, applications, funds and startups. They are especially excited about the opportunity in Asia. So far, they have invested $20 million in over 20 companies and funds, including Basis (stablecoin), Spacemesh (protocol), Oasis Labs (protocol), and MetaStable Capital (fund).

More endowments invest in crypto. Following the news of Yale investing in crypto last week, The Information published an article highlighting that the endowments of Harvard, Stanford, Dartmouth, MIT, and UNC have invested in at least one crypto fund.

In other news

  • Blockchain startup Oasis Labs announces backing from Accel, a16z crypto, Binance Labs, Polychain, and Pantera to launch an incubator focused on “privacy first computing on blockchain” (Coindesk). Bitcoin Magazine’s cover story in September also focused on privacy focused projects (Bitcoin Magazine).
  • Coinbase to close its index fund (launched in March 2018) targeted at accredited investors as it was not able to attract the expected number of clients (The Block). In other news, Coinbase added ZRX (0x) to Coinbase Pro (Coindesk).
  • The head of the UAE securities regulator discusses new rules that could deem tokens as securities and allow domestic companies to use token sales as an alternative fundraising mechanism (Reuters).
  • Cred (formerly known as Libra), co-founder of the UP Alliance, will launch another USD backed stablecoin (Fortune).
  • Augur announced that users will be able to use MakerDAO’s stablecoin, DAI, on its prediction markets platform with the dApp’s next update. (CCN)
  • Airswap (founded by former Virtu Financial trader) rolled out “decentralized OTC trading” platform, Spaces, aimed at simplifying the process of executing large crypto asset trades and reducing counterparty risk associated with OTC platforms that serve as brokers (Bitcoin Exchange Guide).
  • Blockstream launches Liquid Network, the first production Bitcoin sidechain. Liquid is geared towards traders. Partners include BitMEX, Bitfinex, Xapo, OKCoin, Altonomy, among 23 total (Blockstream).
  • St. Regis Aspen sold $18 million worth of Aspen Coins to accredited investors in the first security token offering (STO) to be conducted on Indiegogo. Earlier this year, MicroVentures ran an ICO on Indiegogo but later returned funds to investors due to regulatory concerns (CCN).
  • Diar published a report showing that miners paying retail prices for electricity were unprofitable for the first time in September (Diar).
  • IBM’s takes its IBM Food Trust supply chain distributed ledger using Hyperledger Fabric into production. Partners include Walmart, Dole, Tyson, Kroger, Unilever, and most recently, Carrefour (Coindesk). It has been 18 months in the making.
  • Haseeb Qureshi provided live tweets from talks at CESC.
  • Messari’s Zack Voell provided live updates from the Senate Banking Committee hearing on cryptocurrency and the blockchain ecosystem.

What we’re reading

  • How To Think About Crypto Investing, For Institutional Investors. Scott Kupor of a16z believes institutional investors already have a well-defined strategy they can deploy to incorporate crypto assets into investment plans: “asset class diversification across listed and private assets”. He proposes that institutional investors first carve out their allocation to venture capital then (after appropriate assessment of risks) determine how much of that to allocate to crypto assets versus other “domain-specific subsets of VC” like life sciences, fintech, AI, semis, etc.
  • Tokens Not Equity. Tony Sheng eloquently describes the challenges with the way token holders view tokens, specifically how they mistakenly conflate their properties with those of equity. Stephanie Hurder also wrote an insightful post this week on how equity market cap and token market cap should not be seen as the same.
  • Securities Law & Crypto (in 7 minutes). Messari’s Head of BD & Community, Katherine Wu, makes securities law and how it applies to crypto companies accessible to us all.
  • $100 Trillion. Kyle Samani of Multicoin Capital published research on the addressable market of crypto assets, which he believes will be driven by the increasing use of crypto assets as a hedge against fiat (as “digital gold”), a wealth storage mechanism, and a means to secure the world’s assets and facilitate new economic activity.
  • Envisioning the Stacks of a Decentralized Financial System & a Decentralized Internet. Vision Hill Advisors, a crypto asset and blockchain focused fund of funds, published a piece on digital assets and how they relate to, coexist with, and potentially re-architect the traditional global financial system and internet stack.

Circle in the news

  • CNBC's Kate Rooney profiles Circle’s recent acquisitions and long term strategy (CNBC).
  • Poloniex adds MANA to its platform. MANA is the token used in Decentraland. Decentraland is a virtual reality platform built on the Ethereum blockchain.

What we’re listening to

Where we’ll be in October

  • Block Con, Santa Monica, CA, 10/10
  • Institutional Crypto: Laying the Foundation, New York, NY, 10/15
  • Underscore.vc Core Summit, Boston, MA, 10/16
  • French Founders: Cryptocurrency - What Future for Banks?, London, UK, 10/16
  • Uprise Festival, Dublin, IE, 10/17-10/18
  • Mars Finance Blockchain Summit, New York, NY, 10/18
  • Web3 Summit, Berlin, DE, 10/22-10/24
  • Multicoin Summit, New York, NY, 10/24
  • Hong Kong FinTech Week, Hong Kong, 10/30-11/2

1 BVOL refers to the annualized 30-day rolling volatility of BTC price.

If you have any thoughts or questions, please reach out at [email protected].

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