Circle research

Weekly Crypto Recap 9/21-9/27

Know & go

  • The SEC and CFTC shut down securities dealer 1broker, a16z bought MKR tokens at a discount, and Bitmain published a 432 page disclosure document in preparation for its IPO*. More below.
  • XRP briefly overtook ETH as the second largest crypto asset by market cap on the morning of 9/21. The reason for the rally is unclear though people believe it was driven by record high trading volumes and xRapid announcements.
  • BTC and ETH are both down a little over 1% w/w. ~80% of top 100 by market cap is trading up in the last 24 hours.

Weekly market snapshot

Top Stories

XRP surges 67% in September. Prices of XRP rallied from $0.25 to $0.80 over three days (9/21-9/23) and XRP briefly overtook ETH as the second largest crypto asset by market cap. The industry struggled to explain the move, though many attributed it to record high trading volumes on Bitfinex. On 9/21 XRP/USD posted highest daily trading volume since 1/14 on Bitfinex.

Another reason for the rally could be Ripple’s comments around xRapid. Ripple, the company, has partnered with many banks and institutions, most of which use xCurrent. xCurrent does not require partners to use XRP. xRapid is a new product that Ripple claims will improve on xCurrent and make transactions faster and cheaper by using XRP as the bridge currency. If that’s true, increased adoption of xRapid could result to an increase in the demand for XRP. The launch date of xRapid has not yet been revealed.

A16z invests in Maker. A16Z's crypto fund bought 6% of Maker tokens at an ~20% implied discount to the price of MKR at the time. Some criticized Maker for violating its own governance process by not being more transparent with its existing token holders about raising capital from a new investor by selling tokens at a discount to the public market price. Others believe that raising funds at a discount is nothing new in the venture capital world and believe Maker was protecting the company, as sharing the information could have triggered a selloff.

In other news

  • The SEC and CFTC took action against 1broker and its CEO for allowing customers to trade security-based swaps funded with bitcoin only without undergoing KYC/AML and for failing to register as a security-based swaps dealer (sec.gov).
  • Coinbase has partnered with Caspian to provide trading and portfolio management tools to Coinbase Prime customers, with potential for additional integrations (Caspian Blog).
  • Bitcoin purchase volume in Argentina and other South American countries is surging. The Central Bank is also considering diversifying reserves into BTC (Seeking Alpha).
  • Bitcoin core developers patched a vulnerability that would allow malicious actors to double spend bitcoin (Cointelegraph).
  • Vitalik said zk-snarks (used by Zcash) could allow Ethereum to scale to 500 tps without requiring L2 solutions such as Plasma or Raiden (Coindesk).

What we’re reading

  • Nic Carter’s presentation on Bitcoin. Nic Carter gave a presentation on Bitcoin at the 2018 Honeybadger conference and shared his slides for all to see. These are a few key highlights: (1) Bitcoin just recently surpassed Gold OTC settlement markets. (2) He believes market cap is not an accurate measure of network value because it includes permanently lost coins, and suggests using a new metric, realised cap, calculated by aggregating UTXOs at the price they last moved. Willy Woo comments that this de-emphasizes older coins that are likely lost. (3) Crypto exchanges comprise 30-40% of all on-chain transaction volume and hold 18% of Bitcoin’s network value. You can watch his presentation and view his slides.
  • Bitmain’s 432 page disclosure. Bitmain published a 432 page disclosure report as a part of the IPO process. Katherine Wu from Messari breaks it down into key digestible pieces.*
  • Diar’s data on ICOs. Diar published data highlighting that the market cap of 70% of tokens is less than the amount they raised in their ICO.

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

Disclosures

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*Note: Bitmain is an investor in Circle Internet Financial, Inc.