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In the Market
Has the market found a floor? Prices finally went on a rally this week; however, the price movement pattern was chunky, and selling pressures, at least in our view, have not subsided. Although we think it is a “good enough” time to enter the market (we don’t believe in market timing), we also think that it is entirely possible the prices will continue to decline in the short-term. The DCX index grew by 11.3% while the DCEX Index clocked a higher 14.0%. This week, the application layer was the star with the token index (DCTX) going on a 17.1%rip. The protocol layer (DCPX Index) closely followed it’s token brethren with a performance of 15%. Ripple slightly dragged down the performance of the cryptocurrencies (DCCX Index) which finished the week with a 10% increase.
Status (SNT), is a mobile app which enables you to use all the Ethereum-based applications, was the big star with an incredible performance of 59.9%. WAX, a decentralized exchange token, reversed last week’s losses and was the second-best performer with a return of 49.0%. Tezos (XTZ), a smart contracting platform with a unique governance system, has finally arrived to the secondary market, but had a terrible week with a -65% slide. This comes in the context of considerable uncertainty from the SEC due to the conditions surrounding Tezos fundraise and the launch of the Tezos betanet.
In The News
Summary: Coinbase Inc., one of the world’s largest cryptocurrency exchanges, said 10 hedge funds and family offices have begun using the custody service it debuted last week that seeks to safeguard digital tokens in a manner similar to traditional securities. While the service is just available now for Bitcoin, Ether, Litecoin and Bitcoin Cash, the company plans to expand to support more cryptocurrencies. The company is taking on clients with a minimum of $10 million, and charges a $100,000 setup fee and 10 basis points in monthly fees.
Commentary: Institution money is coming to the market and everyone is gearing up to absorb the influx of investors. Having proper storage is paramount for institutional investors to enter the space. Those in the know are using this time when crypto prices are low to build the infrastructure to prepare for the next wave of investors who could send the price up to new highs.
Summary: PwC, a Big Four auditor alongside KPMG, Deloitte, and EY, reported that 537 initial coin offerings (ICOs) conducted in the first five months of 2018 generated $13.7 billion.
Commentary: After all the hype of 2017 and the many failed ICOs, US regulators have stepped in and began regulating ICOs. As a result the ICO sector has become more mature and established, with an improved focus on best business and legal practice, investor relations and fundraising.
Summary: Two sites that are actively cataloging failed crypto projects, Coinopsy and DeadCoins, have found that over a 1,000 projects have failed so far in 2018. Scam and dead ICOs raised $1 billion in 2017 with 297 questionable startups in the mix.
Commentary: When investing in ICOs, it’s best to adopt the perspective that you should only invest what you can afford to lose. Ultimately, the best you should hope for is to be pleasantly surprised when an ICO actually provides profits. Otherwise, you could be in for a world of disappointment.
Summary: PoWx is a new non-profit organization with the goal of developing a fairer and more energy efficient consensus algorithm for Bitcoin.
Commentary: Although the initiative can have deep and positive implications for Bitcoin, it is difficult to say how the Bitcoin community will take it. Positive proposals to alter Bitcoin’s source code have already been attempted and oftentimes the community has rejected them. This has led to forks and the formation of new crypto, such as Bitcoin Cash.
Coin Encyclopedia (Part 1) – Matias Antonio, CEO @DigiCor
Summary: The first edition of our new weekly series where we present short explanation of all the coins and crypto terminology.
Interesting quote: “Cardano is a smart contract platform that aims to solve the scalability, sustainability, and interoperability that platforms like Ethereum are currently facing. The development team takes a layered approach where the accounting and computational functions are separated. …. Unlike the rest of crypto assets, the Cardano developers emphasize a peer-reviewed, research first approach.”
Before EOS and Ethereum: How much has Proof-of-Stake evolved since PPCoin? – David Yakira, Head of Research @Orbs
Summary: An investigation on how proof-of-stake consensus algorithm has evolved since it was pioneered by PPCoin in 2012.
Interesting quote: “The main motivation behind PPCoin’s creation was Bitcoin’s diminishing returns: As the reward for mining a PoW block reduces, so will the incentive to mine them (unless fees are dramatically increased, which people would like to avoid). Since PoS blocks are much cheaper to produce and should serve as a long-term solution, the rewards they entitle are much smaller but remain constant, aiming at a conservative 1% yearly inflation rate.”
Bitcoin’s $30 billion sell-off – Chainalysis
Summary: An interesting analysis of Bitcoin’s sell-off from a purely monetary supply perspective.
12 Graphs That Show Just How Early The Cryptocurrency Market Is – Chris McCann, partner at Greylock
Summary: An argument from one of the most prestigious venture capitalists on why crypto is still in diapers.