Market Dashboard

 

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In the Market

The market took a wrong turn halfway through the week and is now deep in the red. The sell-off was broad and most acute in the lower cap coins.  This caused the DCEX index to drop by -12.7% whereas the DCX index slid by -8.9%. The Cryptocurrency index (DCCX) offered the best protection through the week as Bitcoin and Ripple retreated less than the rest of the major cryptos. Tokens (DCTX index) were hardest hit with a hurtful -17.4% dive. The Protocol Layer (DCPX index) of the crypto economy closely followed suit with a slide of –15.6%.

DMarket(DMT), a decentralized market for gaming assets, was the best performer for the week with a 24.8% return. The rally was fueled by being listed in the Korean exchange UpBit but has already begun a correction course. This is a fairly common phenomenon in crypto and one that is also present in newly listed equities, albeit at lower volatility. AdToken(ADT), a decentralized advertising network, was the worst performer with a -46.6%drop. This was primarily a continuation of a correction that begun last Friday following a 98% rally due to being newly listed in UpBit (a very similar story to DMT).

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In The News

OTC is Much Larger Than Bitcoin Exchange Volume: Where Real Whales Trade – CCN

Summary: This week, TABB Group claimed that the OTC market of Bitcoin is at least two to three times larger than the toal exchange market. Given that the bitcoin exchange market processes around $4 billion worth of trades per day, if the TABB’s assessment is accurate, the OTC market of bitcoin is processing more than $12 billion worth of trades on a daily basis.

Why it matters: This demonstrates that the lack of liquidity on major exchanges is an issue in processing large trades for high profile investors. Selling hundreds of millions of dollars of Bitcoin on a public exchange in a short period of time could crash the market, especially if there are not enough buy orders set in place to liquidate large sell orders. As a result, investors are looking to OTCs that can process much larger amounts.

Northern Trust Opens Doors to Cryptocurrency Hedge Funds As Part Of Pervasive Blockchain Expansion – Forbes

Summary: A 129-year-old Chicago-based firm Northern Trust, which caters to institutional investors, corporations, and high net worth individuals, has begun to open up some of its services to cryptocurrency hedge funds while also exploring how to integrate blockchain technology into its private equity division.

Why it Matters: Northern Trust has an estimated $10.7 trillion in assets under custody and administration, according to its website. That revelation, along with the recent news that “Big Four” accounting firm PwC had agreed to audit the Tezos Foundation, which oversees the assets raised during the cryptocurrency’s then-record initial coin offering (ICO), is the latest sign that established financial services firms are recognizing that the cryptocurrency industry is a market that they can no longer dismiss.

When Nobel Winner Asks What Problems Bitcoin Solves… – CryptoNews

Summary: Economist Paul Krugman has expressed his skepticism about the value of cryptocurrencies in a New York Times Opinion piece publishedrecently. Krugman, says crypto is too expensive to create, transactions are not frictionless, and the costs of doing business in crypto are high. On the other hand, he argues that conventional money ‘generally does its job very well already.

Why it Matters:  Paul Krugman was awarded the Nobel Prize in Economic Sciences in 2008, so it’s safe to say he is a pretty smart guy.  However, he acknowledges, that he might be wrong and ends his article this way: “If you want to argue that I’m wrong, please answer the question, what problem does cryptocurrency solve? Don’t just try to shout down the skeptics with a mixture of technobabble and libertarian derp.” Got to love his spunk.

NYSE-Owner ICE to Form New Company for Digital Assets New York Times

Summary: Intercontinental Exchange (ICE), the operator of 23 leading global exchanges including the New York Stock Exchange (NYSE), has announced plans to create a Microsoft cloud-powered “open and regulated, global ecosystem for digital assets,” according to a press release published August 3.

Why it Matters: Despite Bitcoin’s astronomical surge last year, it’s still not widely used to buy and sell actual goods in most countries. Many startups have sought to take cryptocurrencies mainstream by developing exchanges or payment solutions for merchants, but few have had success connecting all of the necessary players. ICE wants to help change that.

Former hedge fund manager Novogratz’s crypto bank drops in stock market debut CNBC

Summary: Shares in Mike Novogratz’s crypto-focused merchant bank plunged 20 percent during their trading debut on a major Canadian stock exchange Wednesday, August 1.

Why it Matters: While Novogratz said he has no regrets and remains bullish as ever on blockchain’s potential to revolutionize finance, his odyssey is a cautionary tale for others looking to use Canada’s capital markets as a shortcut to going public.

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Knowledge Corner

 Bitcoin: we don’t expect new highs in 2018 – Tuur Demeester

Summary: Despite an already six month cool-off period, for 2018 the author (and we agree with him) see more sideways and downside potential in the Bitcoin price due to sluggish retail demand, hesitation from institutions, and a current market cap that seems too high relative to on-chain activity.

Interesting observation: “While institutional investors are certainly getting involved in Bitcoin, the vast majority of the firms are trading firms who are looking to make markets regardless of price: they’re just as happy to take on short positions as they are to go long. Institutions who are known to be long biased, such as mutual funds and pension funds are not ready to invest because they’re not yet comfortable with the available custody solutions.”

Drinking From The Crypto Firehose – Fred Wilson

Summary: A take from a legendary venture capitalist on what is the current stage of the blockchain industry.

Interesting chart:

The Most Interesting Debate in Corporate Governance is Happening in Real Time and Most People Don’t Even Know About It – David Koenig

Summary: This article provides some context to the centralized vs decentralized governance models and how blockchain is experimenting.

Interesting quote: “Evolution in blockchain governance is happening at an almost immeasurable pace — far faster than the near-linear rate of change in corporate governance practices. It’s not taking place over millions of years, let alone decades. In some cases, successes and failures occur in a matter of weeks or even days.”

Visions of Bitcoin – Nic Carter and Hasufly

Summary: A historical look at how the many narratives behind Bitcoin have evolved.

Interesting chart:

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