January 2020
Market Overview

The digital asset industry is off to a strong start in 2020. We are beginning to see the most talked-about narrative of 2019, Central Banks (CB) issuance of digital currencies unravel, the startup behind the most popular stablecoin, Tether, seeks further widespread adoption, the digital asset industry continues its successful push to attract institutional capital and altcoins continue to “shock and awe” digital asset investors.

As Japan’s government begins to develop its own digital currency (Cointelegraph) and the People’s Bank of China completes the top layer design of the digital Yuan (AMBCrypto), “the central banks of Canada, the United Kingdom, Japan, European Union, Sweden, and Switzerland have created a group with the Bank for International Settlements (BIS) to jointly research central bank digital currencies (CBDC)” (Cointelegraph). In addition, at the 2020 World Economic Forum (WEF), WEF along with several central banks, have released a central bank digital currency (CBDC) toolkit, which will act as a “decision guide” to help policymakers navigate the digital currency landscape (World Economic Forum).

Tether has just released a new digital asset, Tether Gold (XAUt), which is pegged to one troy ounce of physical gold on a London Good Delivery gold bar. Tether Gold is primarily geared towards institutional investors as the minimum purchase price allowed is 50XAUt (50 troy ounces) or $75,000. The tokens can be redeemed for the physical gold, which will be stored in a vault in Switzerland (Cryptoslate). As Tether seeks to be one of the first movers in the metals tokenization market, the startup is also venturing into the adult entertainment industry. Tether has just recently partnered up with the firm behind the 34th most popular website in the world, Pornhub. The adult entrainment website will now accept Tether’s US dollar-pegged stablecoin, USDT, and “will allow instant and zero-fee payments via the crypto wallet and browser extension “TronLink.” Pornhub adding support for the stablecoin, is in response to PayPal discontinuing its payment support for the adult entertainment website (Cointelegraph). Although subtle, this is a groundbreaking advancement in digital asset markets as we are beginning to see digital asset technology replace traditional payment systems.

Institutional capital has finally made its way into crypto. Grayscale has just recently reported a record-breaking $600 million of inflows into its investment products, with 70% of the capital coming from institutions (Decrypt). However, Grayscale is not the only firm capitalizing on the trend. CME’s recent release of its regulated bitcoin options contracts is already doing $5.3 million in daily volumes after only a week after its launch (Cryptoslate). Meanwhile, one of the world’s largest asset managers ($63.8 billion AUM), Wisdom Tree, is planning to launch a regulated stablecoin. If Wisdom Tree successfully convinces the SEC that its stablecoin is regulatory compliant, unequivocally, Wisdom Tree’s brand equity in the traditional financial space will attract much institutional capital into its digital asset product (Coindesk).

Lastly, in altcoin news, the SEC continues its crackdown on Telegram. The SEC’s ongoing lawsuit against Telegram for its initial coin offering (ICO) of its cryptocurrency, GRAM, began in 2019 claiming the token did not register its ICO with the SEC. Now, the SEC is stating that Telegram’s cryptocurrency has no actual utility. Although the SEC has launched lawsuits against several ICO’s, the SEC’s lawsuit against Telegram is of such importance because Telegram raised a colossal $1.7 billion, making it the second-largest ICO in history (Cointelegraph). On a different note, California VC firm, Andra Capital has partnered up with the Tezos Foundation to issue Silicon Valley Coin (SVC) in a Security Token Offering (STO). SVC will be used by Andra Capital to invest in late-stage private technology companies. It is worth noting that Tezos is at the forefront of the STO space (Crypto Potato). With over “$2.643 billion worth of STO’s to be deployed on the Tezos blockchain”, Tezos is helping to merge regulatory transparency with digital assets (Medium).

February 2020
Market Overview

This month in the digital asset and blockchain industry we see continued partnerships between digital asset businesses and traditional business, altcoins continue on the path of improving blockchain interoperability and privacy, the first hostile takeover in altcoin markets commences and lastly, blockchain continues its trend of being intertwined in our everyday lives.

The popular bookings and traveling site, Travala.com, has just recently partnered with Crypto.com to accept payment in several cryptocurrencies. While Travala.com hopes to gain more users from the partnership, this is only one of many partnerships Crypto.com has formed with traditional companies. In fact, Crypto.com Pay’s 1 million users can now access 2 million accommodations in 230 countries (Cointelegraph). In the traditional banking industry, Wells Fargo has invested $5 million in blockchain forensics firm Elliptic, which helps connect cryptocurrency exchanges to traditional banks (Coindesk). Meanwhile, Bank Asia, a $4 billion Bangladesh based bank, has joined Ripple’s RippleNet blockchain-based financial services network to help facilitate real-time remittance transfers (Flipboard).

In altcoin developments, Tether is making their infamous US dollar stablecoin (USDT) interoperable with the Algorand blockchain. Along with Algorand blockchain, USDT is supported by Ethereum, EOS, the Liquid Network, Omni and Tron. Although USDT is a centralized digital currency, it goes to show that both centralized and decentralized forms of digital currency can co-exist not only in the same industry but across several blockchains (Cointelegraph). Aztec, a financial privacy protocol, has launched its privacy network on the Ethereum blockchain. The protocol uses zero-knowledge proofs, like Zcash, to allow Ethereum blockchain users to send transactions privately (Coindesk). Tron, in what may be the first hostile takeover deal in digital asset markets, has acquired the social networking platform Steemit Inc. Although Justin Sun, CEO of Tron, believes much synergies can be realized, he has his work cut out for him as Steemit developers soft forked the steem blockchain in fear of Sun consolidating power on the decentralized blockchain. In other words, Sun and Steemit developers both have two different, and what seems to be unwavering, visions for the future of the steem blockchain (Crypto briefing).

In blockchain developments. Union of European Football Association (UEFA) is distributing one million tickets on a blockchain-based mobile application. UEFA believes this blockchain ticketing system will both enhance and smoothen stadium security (UEFA). On the other hand, South Korea’s capital city, Seoul, which is currently embracing a $109 million blockchain plan, has just released a blockchain-based voting system which will help eliminate voter fraud and allow citizens to better express their ideas and concerns (Decrypt). Lastly, the Department of Defense (DoD), has just contracted a $9.5 million deal with SIMBA Chain to deploy a secure blockchain-based messaging and transaction platform for the US Navy. The DoD will now be able to efficiently “conduct sensitive, mission-critical operations in a manner that is immutable and non-refutable” (Decrypt).

March 2020
Market Overview

Click the following link to read our COVID-19 story on Medium.

April 2020
Market Overview

In digital asset news, several of the top altcoins by market cap spark important partnerships in an attempt to expand their user base and enhance their platform. Bitcoin forks (ABC and BSV) disappoint as traders “pump n’ dump” into their halvings. In global markets, emerging markets continue to adopt bitcoin as hyperinflation decimates their local currency, meanwhile, China begins testing its own digital currency in four cities. In the digital asset fund management space, several funds look to expand their capital base, while a well-known traditional hedge fund manager looks to make a play in bitcoin futures.

In the altcoin space, Tron partners with video game streaming rewards platform Refereum. Video game streaming users on Refereum will now be able to be paid in Tron’s native token (TRX) or Bittorent token (BTT). Dylan Jones, CEO of Refereum, hopes this partnership will make “quarantining” more interesting for millions of people by offering rewards for watching gaming streams (Cointelegraph). Tezos has partnered with Chainlink and will use Chainlink’s oracles in order to service their smart contracts. Chainlink, which has been one of the best performing digital assets in the last two years, brings off-chain data to smart contracts via its oracles. Chainlink’s oracles will allow Tezos to develop a myriad of decentralized applications, which includes a stablecoin currently under development; USDtz (Decrypt). Brave, a widely adopted blockchain-based browser with over 13.5 million daily active users, has partnered with Binance and now offers a Binance widget, which allows users on Binance to trade without ever leaving their browser (Brave). Lastly, both bitcoin ABC and bitcoin SV’s experienced block halvings this month, which although both tokens experienced a slight bump in price gaining 11% and 19% respectively, the gains immediately evaporated. However, the tokens’ prices were not the only thing that was negatively affected by the halving. In fact, immediately after bitcoin ABC’s block reward was cut in half, there was an exodus of bitcoin ABC miners causing the network’s transaction per second to be 100x slower than usual. Meanwhile, bitcoin SV continues to be neglected by most of the crypto community as many including the CEO of Binance have deemed it a scam (Magazine by Cointelegraph).

In global markets, demand for bitcoin continues to skyrocket as Argentina faces its ninth straight debt default. As a result, the demand for bitcoin in Argentina has risen by over 1,000% since the start of 2018. Meanwhile, Chile and Venezuela encountered record-high bitcoin trading volumes on the global bitcoin exchange “local bitcoins” trading 330 million Chilean Pesos and 538.7 billion Venezuelan Bolivars respectively. Mexico, Peru, and Colombia all encountered an uptick in bitcoin volume as well (Cryptopolitian). While emerging markets continue to flee to digital currencies, China begins testing its own digital currency. The Digital Yuan pilot program is being conducted in four cities: Shenzhen, Suzhou, Xiong’an, and Chengdu where 19 local businesses will be accepting the currency including the following US chains: Starbucks, McDonald’s, and Subway (PYMNTS).

In the digital asset fund management space, Hong Kong’s first approved crypto fund, Arrano Capital, the blockchain arm of Venture Smart Asia, is seeking to raise $100 million by the end of 2020. The tracker fund will initially buy and sell bitcoin (Bloomberg) and will hopefully expand to actively trade other digital asset products. Meanwhile, established venture capital fund, Andreessen Horowitz, is seeking to raise $450 million for another crypto asset fund. Andreessen Horowitz first launched a crypto fund back in 2018 garnering $300 million. The firm is also currently involved in the heavily scrutinized Libra project (Cointelegraph). In the traditional hedge fund space, Renaissance Technologies Medallion Fund was recently approved by the SEC to start trading CME BTC cash-settled futures (Crowdfund Insider). The closed-end Medallion Fund is known to be highly secretive, using complex computer models to achieve consistent above-average returns for its investors. Lastly, Grayscale revealed that its Ethereum Trust fund, which manages over $284 million, owns nearly 50% of all ether mined this year. This begs the question; is Ethereum’s 2020 gain largely driven by Grayscale buying? Nevertheless, it trades at a 400% premium to Ethereum spot markets, but institutions don’t mind paying the hefty premium as they don’t have to worry about custody and burgeoning regulatory nuisances regarding the ownership of spot Ethereum (Cryptoslate).

May 2020
Market Overview

In the month of May 2020, bitcoin surpasses several key milestones as its third halving materializes, digital asset markets continue to attract notable institutional interest, and “several altcoins fly while bitcoin sighs”.

Although bitcoin’s long-anticipated halving turned out to be a “non-event” for its price on May 11th, 2020 bitcoin broke several notable records this month. Bitcoin options trading on the CME reached all-time highs eclipsing $60 million (Decrypt). Open interest in bitcoin futures hit an all-time high of $399 million surpassing the previous record set in June 2019 of $392 million (Cointelegraph). It is important to note that CME products are tailored for institutions and an increase in CME activity means that institutional interest in bitcoin continues to grow. In global bitcoin markets, bitcoin volumes in Africa hit an all-time high with nearly $14 million worth of trades taking place across popular P2P bitcoin exchanges Paxful and Local Bitcoins. Interestingly, bitcoin volumes in Africa are currently outpacing local trading in Latin America which only did $11 million worth of bitcoin volumes in the past seven days (Decrypt).

Institutions continue to flock to digital asset markets. The latest popular cryptocurrency IPO, Silvergate Bank, has seen a 75% increase in bitcoin trading volume for its 850 digital currency-related clients which include crypto exchanges, miners, custodians, and global investors. Most notably, Silvergate saw an inflow of $447 million bitcoin following the March 12th selloff (Cointelegraph). Meanwhile, the banking behemoth, JPMorgan, America’s largest investment firm, which manages over $2.6 trillion in assets and initial detractor of cryptocurrency markets, will begin to provide bank accounts, which include deposit, withdrawal and transfer services for crypto exchanges Coinbase and Gemini (Forbes). This partnership is paramount for the digital asset space as it may be the beginning of better banking relationships between traditional financial companies and digital asset firms. Kingdom Trust, a financial custodian that manages over $13 billion in assets has launched a retirement account supporting both altcoins and bitcoin. To incentivize signups Kingdom Trust is giving $62.50 worth of bitcoin to the first 1,000 “Choice” signups (Skugal). Finally, in the institutional digital assets world, famed macro investor Paul Tudor Jones reveals that he has allocated 1-2% of his investment portfolio to bitcoin dubbing the asset “great speculation” (CNBC). This manifestation will undoubtedly cause a wave of institutional investors to think and further participate in bitcoin’s role in the global economy.

In crypto markets, several altcoins “pump” on groundbreaking developments. Enjin has teamed up with Minecraft, the 126 million monthly user sandbox video game, to allow players to tokenize blockchain assets within the game. Dubbed EnjinCraft, players can now trade blockchain assets with each other within Minecraft’s in-game interface as well as allow players to view their Enjin and Ethereum balances in real-time (Decrypt). Blockchain-based delivery network Theta Labs has partnered up with Google Cloud. Google will be a part of Theta’s enterprise validator program, which means Theta will be utilizing the stability, reliability, and security offered by Google Cloud (BlockTribune). Cardano’s founder, Charles Hoskinson, reveals that Shelly Mainnent’s launch, which Hoskinson believes will render Cardano the “world’s next operating system” is on track to launch on June 30th (CryptoPotato). Lastly, the next major event all crypto enthusiasts and traders are eyeing, Ethereum’s 2.0 launch, has been confirmed by decentralized distributing system pioneer, Vitalik Buterin, and it is on track to launch in July. After its release, Ethereum is poised to be able to scale to over 1,000 transactions per second with a new layer 2 scaling solution and other innovative scaling techniques like sharding (Coindesk).

Chart 1.0: Alts Fly While Bitcoin Sighs

Several altcoins “rip” on significant developments in the month of May while bitcoin underperforms. As previously mentioned, bulls bid up ADA (+45%) into its main-net Shelly Launch. Meanwhile, bulls start to unwind on Theta token (+93%) as they sell the press release announcing Theta’s partnership with Google Cloud. Likewise, Enjin token also made some notable gains (+46%) after it was revealed Enjin would be launching a blockchain platform for one of the largest video game communities in the world. Other notable altcoin mentions include OmiseGO (+100%) and Maker (31.69%), which pumped on Coinbase listing announcements.

Chart 2.0: Bitcoin’s Price Action (Halving)

As previously speculated in last month’s Medium post, bitcoin’s halving turned out to be a non-event for the price of bitcoin. Smart money bid up bitcoin into its halving (+75%) and then sold bitcoin several days before the actual event (indicated by the red circle). Post halving, the price of bitcoin continues to trade sideways as both bulls and bears remain trapped.

 

June 2020
Market Overview

This month in altcoin news Vitalik Buterin updates the cryptocurrency community on Ethereum’s 2.0 launch, meanwhile, Ethereum Classic “follows in its sibling’s footsteps” with its Phoenix Hard Fork launch, Cardano’s Shelly Mainnet launches a Proof of Stake upgrade and Basic Attention Token becomes a magnet for adopters. In stablecoin news, Tether drowns the competition as its market capitalization continues to swell, however, the rest of the stablecoin market also experiences growth. Lastly, the DeFi market experiences parabolic growth as it carves out a new investment niche in the cryptocurrency space, which retail traders have coined “Yield Farming”.

Vitalik Buterin confirms that Ethereum’s 2.0 launch is on track to launch in July 2020 after tweeting that the initial deployment of its blockchain layer 2 scaling solution has succeeded. He adds what is left is sole “refinement and deployment” (Brave New Coin). Ethereum Classic has completed its Phoenix Hard-fork, which now means Ethereum Classic’s blockchain is fully compatible with Ethereum’s blockchain. Hopefully, for Ethereum Classic, it sees a surge in adoption following the hard-fork as it continues to follow in the footsteps of its sister chain, Ethereum (Cointelegraph). Cardano (ADA) has rolled out public testing of its Shelly Main-net, which will eventually morph the blockchain into a decentralized proof of stake network. In other words, ADA holders will be compensated to contribute their cryptocurrency to power Cardano’s network (DailyHodl). Meanwhile, Brave Browser’s monthly active users has surpassed 15 million. Although the browser has experienced a plethora of user adoption, it is still finding ways to make the browser more compatible for mobile users as it struggles to penetrate the mobile browser market (Cointelegraph). Luckily for Brave, the browser received “free press” this month from the world’s most popular podcaster, Joe Rogan, as he stated that he prefers privacy browsers like Brave over traditional browsers like Chrome (PC Mag).

The stablecoin market sees 100% growth in just 4 months as total stablecoin market capitalization surpasses $11 billion (Cryptopotato). Although both stablecoins PAX and TrueUSD have seen their growth stagnate, Binance’s stablecoin has grown more than $875 million since the start of the year, while USDC, the second-largest stablecoin by market capitalization, has also seen triple-digit growth on the year. However, Tether continues to decimate the stablecoin market as its market capitalization is now over $10 billion representing 87% of the total stablecoin market (Cointelegraph). However, not all growth is good growth for the digital asset industry, as Tether continues to overtake the rest of the stablecoin market potential risks become ever more centralized and systemic.

The DeFi space has seen unprecedented growth in the month of June 2020 as total value locked in DeFi surged from just under $979 million to $1.57 billion (DeFiPulse). This parabolic growth in DeFi can largely be attributed to the popular DeFi lending and borrowing platform, Compound, launching COMP token; a governance token where borrowers and lenders are rewarded for participating on the Compound platform (Crypto News). By lending across DeFi protocols and earning COMP rewards, users are able to earn a “double yield” on their investment. In some instances, users were able to realize an APR of over 100% on their lends. Retail crypto users coined this new investment niche “yield farming” (Forbes).

Consequently, the retail investor’s affinity for high yielding products within the DeFi space has caused the Compound platform to become the largest DeFi protocol by market capitalization, exceeding $2 billion, just a few days after its token’s release (DeFiMarketcap). Seeing Compound’s rapid growth, several DeFi protocols followed suit. Balancer, a DeFi token swap platform, adopted a similar token model, and consequently, saw its token price spike 235% on its first day of trading (Cointelegraph). BZx is also looking to hop on the “yield farming bandwagon” as it plans to revamp its token to allow BZx platform users to receive token rewards (Decrypt). Unequivocally, we are at the start of what could be another bubble in digital asset markets, but with the total DeFi market capitalization making up less than 3% of the total crypto market’s capitalization, this begs the question, how big can this bubble get?

July 2020
Market Overview

DeFi continues to surpass more milestones as the space continues to attract risk savvy investors. In the altcoin market, a once forgotten payments platform locks in a key partnership with Samsung, Binance seeks to expand its product offering, Travala token (AVA) soars as its partnership with Expedia brings crypto into the bookings industry and a popular meme coin surges over 100% in the matter of days. In other industry news, “Gen x” and “Boomers” take a play from millennials, while crypto makes headwinds in the traditional finance world.

DeFi goes parabolic as the total value locked in DeFi surges from $3 billion to over $4 billion in less than a week (Decrypt). Compound, the leading lending protocol on Ethereum, topped over $1 billion in assets borrowed (Coindesk). Although impressive, Maker Dao beat Compound to the punch as it became the first DeFi platform this month to surpass $1 billion in total value locked (Coindesk). Seeing the massive growth in DeFi, new players are making their way into the space. FTX, a popular retail geared crypto exchange, has partnered up with Solana, a blockchain platform, to launch their own decentralized exchange (DEX) (The Block). If FTX’s DEX is anywhere near as successful as their current platform, expect FTX to become a major player in the DeFi space. Lastly, Aave, another lending protocol, has just launched unsecured flash loans. In other words, users can borrow without any collateral as long as the loan is returned to the pool before the transaction ends. The technology will most likely be used by sophisticated arbitrageurs giving birth to a new breed of “Flash Boys” (The Defiant).

Expedia now allows over 700,000 accommodations to be booked with cryptocurrency after partnering up with popular hotel aggregator Travala. As a result, Travala token (AVA) rose over 300% on the month as investors believe this partnership will open up the doors for cryptocurrency in the bookings industry (Cointelegraph). Stellar foundation, the non-profit organization that supports the Stellar blockchain, has partnered with Samsung, which means Stellar’s blockchain services will be now available on the Samsung Blockchain Keystore. This partnership should further boost Stellar Network’s already 4 million clientele (Prnewswire). Binance is looking to expand its offerings after acquiring a London based provider of crypto Visa debit cards, Swipe. Binance also agreed to list Swipe’s token (SXP) on its exchange causing SXP to rise over 50% on the week (The Block). Lastly, just when you thought you have seen it all in the cryptocurrency markets the popular meme coin, Dogecoin (DOGE), rose over 100% in under a week after a “TikToker” posed a challenge to pump the token up to $1. The “pump n’ dump” came nowhere near its goal as the token would have to rise by almost 500x, but the effort was certainly audacious (Fortune).

In other industry news, Mode Banking, a U.K. trading app, has reported that Baby Boomers and Generation-X are increasing their investment into digital assets. In fact, the two groups have increased their bitcoin holdings by a factor of nine since the pandemic first hit in March. In fact, Morgan Creek Digital commented on this trend stating that the older generation will soon own more digital assets than millennials (Cointelegraph). On the other hand, in Grayscale’s most recent quarterly report, Q2 2020, the largest asset manager in crypto had once again revealed that it had another record breaking quarter. An impressive $1 billion worth of digital assets flowed into the asset manager in Q2 (Grayscale). Meanwhile, as the “Fed’s money printer goes brrr..”, the Federal Reserve announced that it had no plans to issue a digital currency in the future, but it will be ready to implement one if the need arises (The Block). Finally, in what was probably the most talked about headline in the institutional crypto space, Coinbase, the largest US crypto exchange, is looking to go public via a direct listing. With over 35 million users and a valuation of $8 billion, the platform would certainly make headwinds as the first publicly traded US cryptocurrency exchange (Reuters).

August 2020
Market Overview

This month in digital asset markets DeFi continues its hot streak as it, once again, surpasses all time highs and attracts even more crypto projects into the space. In the traditional financial sector, financial service firms continue to roll out more crypto products for the retail investor, while South Korean Banks make a pivotal entrance into crypto markets. Lastly, blockchain technology continues to enhance inefficient databases, while also being a possible remedy for a widely debatable topic regarding the upcoming US election.

DeFi markets surpass $4 billion in total value locked (“TVL”) (Cointelegraph) and its market capitalization surpasses $15 billion (Decrypt). The explosion in DeFi adoption has led popular DeFi exchange, Uniswap, to surpass Coinbase Pro in daily trading volume. According to Uniswap’s trading records, on the day it surpassed Coinbase Pro in trading volume, it did $426 million in volume as opposed to Coinbase Pro’s $349 million (Cointelegraph). What many refer to as the “meme mania,” the speculative frenzy among cryptocurrencies based off of popular internet memes, could be attributed as the primary driver of the increase in trading volume on Uniswap. Several meme tokens, in which the majority are dubbed worthless by “crypto” investors, amassed gains over thousands of percent in just several days, while one meme token rose over an astonishing 1 million percent in just several weeks of trading. However, risks are prevalent in the meme mania as many investors lost everything to meme token scams (see: BKCC Medium). It is important to note that most DeFi speculation is taking place on the Ethereum blockchain, which is now leading many other layer 1 networks to make their way into the DeFi space. In fact, Tron recently launched “Just Swap” to compete with Etherum’s DeFi sector. Additionally, Brendan Blumer, CEO of EOS, tweeted that EOS will “unleash DeFi” stating further that EOS is a better alternative to Ethereum’s slow and costly DeFi network (Daily Hodl).

In the traditional financial service sector, Fidelity Investments, the 5th largest asset manager in the world with $2.7 trillion in assets under management (“AUM”), is launching its first Bitcoin-only fund. This product will be geared towards institutional investors with a minimum investment set at $100,000. Fidelity is most likely trying to anticipate a surge of institutional capital entering into the digital asset space (CryptoPotato). 21Shares, formerly Anum, a crypto exchange products provider (ETP), has crossed over $100 million in AUM. 21Shares is one of few financial services providers at the intersection of crypto and traditional finance that is gaining market share in the European market. 21Shares’ ETPs are listed across both Switzerland’s and Germany’s stock exchanges (The Block). In Asia, four of the five largest South Korean Banks have announced their plan to provide cryptocurrency services next year after the government enforces a key piece of regulation regarding cryptocurrency. This comes after the US Office of the Comptroller of the Currency (OCC), had announced recently that US banks are authorized to provide cryptocurrency services. Clearly, the banking industry is getting ready to take on a wave of crypto assets in the coming months (Bitcoin.com).

Blockchain technology continues to replace inefficient databases worldwide. In fact, one million citizens of South Korea have abandoned their physical driver’s license for a digital blockchain based driver’s license. Through the PASS smartphone app, South Koreans are able to verify their proof of age for buying things like cigarettes and alcohol (Blockchain News). On the other hand, VeChain’s newly released blockchain application, ToolChain, intends to immensely improve the tracking of the global food supply chain (Cointelegraph). The release of ToolChain is most likely in response to the current COVID-19 pandemic, effectively, trying to verify the quality and safety of the sourcing, storing and delivery of food. Lastly, as the United States Presidential Election heats up, one of the most debatable topics that has surfaced is the use of mail-in ballots. Although the country is divided by this issue, the United States Postal Service (USPS) may have a solution. The USPS has just patented a blockchain backed mail-in voting technology that would make voting by mail both secure and convenient. It is unclear whether the USPS will actually implement the technology, it could provide not just the US election, but global elections with a transparent and convenient voting solution (Coindesk).

 

September 2020
Market Overview

In the month of September, despite DeFi markets cooling down, capital continues to flow into the space. Meanwhile, non-fungible tokens (NFTs) briefly take the spotlight away from DeFi tokens as the market hints at NFT’s possibly being the catalyst for the next cryptocurrency investment mania. Lastly, bitcoin maximalists rejoice as institutions continue to accumulate “digital gold.”

Top DeFi tokens crashed by over 50% to start off the first week of September, while the aggregate DeFi market also ends the month in a “bloodbath.” As a result this caused some traders to coin the market a “scam” (Cointelegraph). Nevertheless, DeFi adoption remains unhindered. Binance, after just releasing its DeFi focused blockchain, Binance Smart Chain, has introduced a $100 million support fund for DeFi projects seeking to build on the Binance Smart Chain. Binance will aid the following projects by adding liquidity to their platform, providing them with media coverage and giving them access to incubation financing (Binance Blog). Yearn Finance, the first “yield farming” robo-advisor, has locked up over $140 million worth of Ethereum in its collateralized Ethereum (yETH) vault. The vault, which locked up $100 million in its first day of launch, is providing an astonishing annual percentage return (APR) of over 90% (News.Bitcoin). However, it is vital to remember Yearn Finance’s platform is still in its infancy and not invincible to the occasional DeFi hack. Piggybacking off of the DeFi boom, Ethereum has seen over $350 million worth of transaction fees paid to Ethereum miners. This is the first time Ethereum’s cumulative network fees have outpaced bitcoin’s since the start of a year (News.Bitcoin).

In an ephemeral narrative shift lasting no longer than two weeks, NFT’s took the spotlight away from DeFi as the $10 million market cap space saw an average price increase among its components of +350% (Cryptonews). Iconic crypto artist, Pak, released a collection of digital art dubbed “Terminus”. Since selling his first digital artwork back in February, Pak has sold over $300,000 worth of his works to date (Decrypt). Crypto research firm Delphi Digital, has purchased Five Ethereum NFT’s, which represent digital pets that can be collected and or utilized to battle against other pets in the online game Axie Infinity, for a total of $162,000. Although the price tag may seem absurd, Delphi Digital claims, as the game’s popularity increases it will give rise to the NFT’s “rarity and utility” (Decrypt). Dapper Lab’s, the team behind the most lucrative NFT boon, CryptoKitties, has just released NBA Top Shot. The platform allows users to own memorable in-game highlights of NBA players. The platform achieved over $1 million in revenue during testing (Ledger Insights). However, the most notable development of the month, arising from NFT space, is that the team behind Minecraft has announced that it will release NFTs for the game by year’s end. (Cointelegraph). Minecraft is the ideal platform suited for NFTs as its 126 million player community along with its 11 year old track record boasts a perfect sandboxed environment to exchange and utilize rare items. Not to mention, the game reached $200 million in revenue in 2020 (The Verge).

Lastly, institutions continue to bet on bitcoin. Grayscale Investments now owns 2.4% of the total supply of bitcoin. This comes after the largest digital asset manager purchased $180 million worth of bitcoin during the month (TokenPost). The world’s largest sovereign fund, the Norwegian Government Pension Fund, now owns almost 600 bitcoin, which is currently valued at just over $6 million dollars. Although the allocation is trivial to its total assets under management of $1 trillion, it is more impressive to see sovereign wealth funds “dipping their toes” into the digital asset space (Nairametrics).  MicroStrategy, a publicly traded business intelligence firm, converted $425 million of its firm’s cash to bitcoin. The CEO of MicroStrategy, Michael Saylor, who in 2013 stated that bitcoin was doomed to fail, recently stated that bitcoin was a much better inflation hedge than gold (Decrypt).

January 2019
Market Overview

Cryptocurrencies remained flat in the month of January 2019. However, the end of a historical government shutdown and Chair of Federal Reserve Jerome Powell’s dovish monetary outlook are sparking bullish sentiment amongst investors despite trade war anxieties that continue to loom over global markets.

Meanwhile, the cryptocurrency and blockchain sector made major headlines in the month of January. Gemini Exchange, the digital asset exchange and custodian, founded by the notorious Winklevoss twins has just become the first digital asset exchange to acquire a SOC 2 Type1 Certification. In other words, Gemini Exchange is now the only digital asset exchange in the world to possess such a high level of security for their customers.

Following the end of the government shutdown, the Cboe resubmitted their Bitcoin ETF application to the SEC, which if approved, will be groundbreaking for the cryptocurrency space and what many believe to be a powerful enough catalyst to spark the next cryptocurrency bull run.

Fidelity Investments, the $2.48 trillion Financial Services firm, is in the “Final Testing” Phase of launching their cryptocurrency trading and custodial platform Fidelity Digital Assets. BKCC believes that the anticipated release of the platform could be one of the key stimulants needed to cause the institutional adoption of cryptocurrencies. The official launch is expected to take place in March 2019.

Lastly, Coinbase has integrated TurboTax to help US customers file cryptocurrency taxes. This partnership brings further transparency to the cryptocurrency space and is another strategic move made by Coinbase to encourage the mainstream adoption of cryptocurrencies.

February 2019
Market Overview

The ongoing narrative preached by cryptocurrency detractors that the digital asset industry will never blossom into something more than a retail market can now officially be put to rest as a cascade of prominent institutional players entered into the digital asset industry in February 2019.

Latin America’s largest investment bank, Banco BTG Pactual SA has recently announced and released its own security token collateralized by distressed real estate assets in Brazil, while one of Japan’s largest banks, Mizuho, is planning to launch its own Yen-Pegged stable-coin in March 2019. Meanwhile, the Swiss banking giant, Julius Baer, will soon be offering its clients access to an array of digital asset services. Additionally, the largest investment bank in the world, JP Morgan Chase, stole the spotlight when they announced that they had released their own stable-coin, JPM Coin, which will compete directly with Ripple’s tokenization model.

Investment banks are not the only institutional players making headlines within the digital asset space. Fairfax County’s Retirement Systems (fairfaxcounty.gov/retirement/) is now the first Pension Fund in the United States to allocate capital to digital assets. We strongly believe this move will ignite confidence in other Pensions Funds to further allocate capital to digital asset managers. Cryptocurrencies also made groundbreaking moves in the Fintech industry in the month of February. Kraken’s nine-figure purchase of regulated futures trading startup, CryptoFacilities (cryptofacilities.com), marks its entrance into the $1.2 quadrillion derivatives market. Conversely, Samsung’s flagship smartphone, the Galaxy S10, will now include a highly secure cold storage cryptocurrency wallet that will allow users to store Ethereum and Bitcoin on their smartphone.

As professional money managers, it is our job is to identify the narrative
underpinning financial markets, look for inflection points that could alter that narrative and then capitalize on the opportunity. Many people said that cryptocurrencies will never gain institutional adoption, now JP Morgan Chase, the world’s largest investment bank, has released their own cryptocurrency. Many people said that cryptocurrencies will never reach mainstream adoption, now Samsung, the world’s largest manufacturer of consumer electronics, is including a built-in cold storage wallet in their flagship smartphone. It is now more obvious than ever that the narrative has changed, but are investors willing to capitalize on the opportunity?

March 2019
Market Overview

Digital assets caught bids in March 2019 igniting investor confidence in cryptocurrency markets as Securities and Exchange Commission Senior Advisor for digital assets, Valerie Szczepanik, confidently told a crowd at SXSW, that she believes investors will see a “crypto spring” in 2019. In other words, Szczepanik believes that the SEC will approve a bitcoin ETF and set a regulatory framework for cryptocurrencies to come this spring.

While the SEC is in the midst of bringing further transparency to the digital asset space, Colorado Governor, Jared Polis, just recently signed The Digital Token Act on March 8^th into law. By exempting cryptocurrencies from state security laws, Polis believes this act will spur a new digital asset driven job market in Colorado.

Outside of the regulatory sector, BlockFi, a digital asset-backed lending firm, received an astonishing $35 million in cryptocurrency deposits in just two weeks after launching its new lending product. This marks their entrance into one of the fastest growing digital asset sectors as they look to compete with both Celsius Network, a peer to peer crypto lending firm which did $600 million in lending in the past 6-9 months and Genesis Capital, an institutional crypto lending firm which, did $1.1 billion in lending in 2018.

On the other hand, WesternUnion, the $8.4 billion market cap global financial services firm, which has been dubbed one of bitcoin’s biggest rivals, has officially made a play in the cryptocurrency industry by partnering up with Stellar collaborator Thunes. Western Union customers will now be able to send funds directly into a mobile recipient’s wallet.

In global markets, e-commerce giant Rakuten has completed registration of its cryptocurrency exchange, Rakuten Wallet, which will go live next month. Rakuten is one of several billion-dollar market cap Japanese tech firms which is attempting to penetrate and capitalize on the digital asset revolution. Likewise, South Korean tech giant Kakao, is also entering into the cryptocurrency space by integrating a crypto wallet onto its famous messaging platform, KakaoTalk, for its 44 million users.

Lastly, it is interesting to note that in the past several months we have seen many prominent tech companies and traditional institutions enter into the cryptocurrency space such as Facebook, Rakuten, J.P. Morgan & Chase, Samsung, WesternUnion, and Kakao. Like the internet boom, global companies are feeling the need to adapt to the digital asset revolution in fear of becoming obsolete. As the cliché goes, “If you can’t beat them, join them”.

April 2019
Market Overview

“I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.” – Christine Lagarde, Managing Director of the International Monetary Fund

April 2019 was a monumental month for developments in digital asset markets. The month began with market participants in awe when it was discovered that a partnership was formed between the International Monetary Fund (IMF) and the World Bank to launch a private cryptocurrency. The cryptocurrency, dubbed ‘Learning Coin’, is designed to help multinationals better understand blockchain technology.

On the other hand, the British Virgin Islands (BVI) has partnered up with LifeLabs, a digital currency and tokenized reward system, for the purposes of providing Rapid Cash Response in the event of an emergency, such as a natural disaster, and for also creating an alternative payment method for ongoing financial transactions across the islands. It is important to note that this is the first time that the digital asset space has witnessed a national government attempt to utilize cryptocurrencies for crisis situations.

In financial news, two of the largest financial services companies in the United States, E-trade and TD Ameritrade will soon begin to allow their clients to trade digital assets. We believe that this will increase adoption in the digital asset space as it will make it easier for retail investors to trade cryptocurrencies. By entering into digital asset markets, TD Ameritrade and E-Trade pose a direct threat to Coinbase, which has most recently, been the most popular cryptocurrency exchange for retail investors. In addition, the New York Stock Exchange (NYSE) has acquired the Digital Asset Custody Company (DACC), in an attempt to gain regulatory approval for its financial products. The SEC had originally forced the NYSE to postpone its launch of its Arca ETF and Bakkt exchange due to a lack of an in-house custody service.

Interestingly, in the automotive industry, Jaguar and Land Rover have partnered up with the Internet of things (IoT) token, Iota, to reward users for sharing their data. Jaguar and Land Rover join the widely popular cryptocurrency driven internet browsing platform, Brave Browser, in the fight to allow users to take full control of and get compensated for their personal data.

Lastly, in one of the most groundbreaking digital asset developments of this year, Nike, the most iconic global retail brand, has filed a trademark application for ‘Cryptokicks’. In other words, Nike is planning to launch a cryptocurrency, a cryptocurrency wallet, a cryptocurrency reward system, and cryptocurrency collectibles.

May 2019
Market Overview

Digital Assets ripped higher in May causing bitcoin to be up an astonishing +100% year to date (MarketWatch). We believe that this is the result of “crypto spring” as digital asset hedge funds went on a +2400% bitcoin buying spree in Q1 of 2019 (CCN). More importantly, we are starting to see popular thematic trends play out in the digital asset markets such as widespread stable-coin developments, global regulatory approval of digital assets and the monthly adoption of blockchain and digital asset technology by the largest retail firms, which is now becoming somewhat banal.

In the regulatory landscape, G20 countries will meet in Fukuoka, Japan next month with plans on creating a cryptocurrency exchange registry to help prevent money laundering with digital assets (CCN). On the other hand, the Central Bank of the Bahamas (CBOB) unveiled a plan to launch its own digital currency in 2020 via its initiative “Project Sand Dollar” (Cointelegraph). In the United States, Montana joins Wyoming in its attempt to provide a regulatory friendly environment for digital asset firms by passing a bill to exempt utility tokens from security laws (Coindesk).

In the retail space, LVMH and Christian Dior released a blockchain in collaboration with Microsoft dubbed “Aura” to verify the authenticity of luxury goods and to put an end to the counterfeit goods market (Cointelegraph). Meanwhile, payment network Flexa has launched an app that will allow you to spend cryptocurrencies at physical stores. It currently supports payment at several of the most popular firms in the United States such as GameStop, Nordstrom and Whole Foods (Cointelegraph). In addition, AT&T has teamed up with BitPay to allow its customers to pay for bills using cryptocurrencies (Coindesk).

The most notable development in the digital asset space is Amazon’s recent filing of its Proof of Work patent. Although we are still unsure of Amazon’s digital asset and blockchain plans, it is interesting to speculate on the potential impacts of Amazon releasing a cryptocurrency of their own (Coindesk). Amazon’s cryptocurrency could integrate its +100 million prime users (Fortune), in other words, creating 100 million more cryptocurrency wallets, or greater than three times the amount of bitcoin wallets in existence (Bitcoin Market Journal). Interestingly, if Amazon releases a stable-coin, it could be a perfect opportunity for citizens in countries with precarious economic situations to hedge their currency exposure, while having an all in one place to shop for everyday necessities.

Lastly, in other digital asset and blockchain news, Microsoft is now in the midst of launching a decentralized identity system, “ION”. ION is built on top of the Bitcoin network and its goal is to create an ecosystem where each individual can have more control of both their identity and their data (Cointelegraph). On the other hand, Facebook has finally unveiled its plans for its long-anticipated stable-coin, which was recently dubbed “GlobalCoin”. GlobalCoin will act as a payment network where Facebook’s billions of users can transfer money to and from each other, while also being able to make online purchases (Coindesk). Spencer Bogart, Partner at Blockchain Capital, claims that Facebook’s entrance into the digital asset industry is a “…dramatic catalyst”, which can double or even triple the number of crypto users (To The Moon News). Facebook is hoping to launch GlobalCoin in a dozen countries by the first quarter of 2020 (Coindesk). In addition to Facebook’s stable-coin plans, Coinbase is expanding their stable-coin, USD Coin (USDC), into 85 countries seeking to act as a less volatile form of payment for citizens living in high inflationary environments (Coindesk). Finally, Russia is rumoring to release a gold backed cryptocurrency of its own. If true, they will join Iran in being the only two countries to have its own national cryptocurrency backed by gold (Coindesk).

June 2019
Market Overview

Bitcoin dominated the cryptocurrency markets in June going on a parabolic run, which has been rumored to be caused by institutional buying of the digital asset. Meanwhile, Binance is launching bitcoin futures trading on their platform, which will allow speculators to use up to 20x leverage to trade bitcoin (Coindesk). Binance hopes to overtake some of Bitmex’s liquidity as Bitmex had just recently hit an astonishing $11 billion in daily bitcoin volume (Forbes). Additionally, Google partnered with Chainlink, a blockchain company that acts as a secure “middleman” and will allow Google to use its technology to transfer data between Google and Ethereum smart contracts safely (CryptoSlate). Chainlink is now the best performing altcoin this year gaining 1,195% since the start of 2019 (Swingtradebot). Moreover, LedgerX has won approval of the Commodities Futures and Trading Commision (CFTC) to settle bitcoin futures in spot bitcoin, which will allow LedgerX to offer bitcoin derivatives to retail and institutional investors in the United States and Singapore (Financial Times). All eyes were on Facebook in June as they released the Libra cryptocurrency whitepaper (Libra Whitepaper) and captivated the cryptocurrency community making this release one of the biggest cryptocurrency news of 2019.

Libra, which will be used as a method of payment and used for transactional purposes, has a mission to bring financial infrastructure to the 1.7 billion unbanked across the globe. Facebook’s inspiring and revolutionary mission has aroused cryptocurrency enthusiasts claiming that Libra will spur mass cryptocurrency adoption. However, Libra’s inspiring mission did not excite all cryptocurrency enthusiasts. Several claim that Libra is the “Trojan Horse” of the decentralized cryptocurrency movement (USSA News). So, what’s behind the Libra token that is stimulating such extraordinary narratives among crypto enthusiasts?

The Libra cryptocurrency operates on the Libra Blockchain which uses Byzantine Fault Tolerance (BFT) consensus mechanism to verify transactions. There are going to be 100 validators on the network, which Facebook’s claims are the “decentralized” part of the blockchain. However, on the Libra blockchain, you must be a globally renowned “entity” to become a validator on the network. In other words, a firm/entity must reach two of the three following requirements: more than a billion dollars in market value, reach more than 20 billion people across the globe annually and/or be recognized as an industry leader by a third party association. Clearly, those worried about the decentralization of Libra’s blockchain is justifiable as it appears that Libra’s blockchain is quasi-oligopolistic. In addition, those also worried about the decentralization of Libra’s blockchain will only be instilled with more anxiety when discovering that the Libra blockchain is, ironically, not actually a blockchain, rather, a permissioned ledger with no concept of a block of transactions in the ledger history.  Fortunately, the Libra blockchain is pseudonymous, which means users can have one or more addresses that are not linked to their real-world identity (Libra Whitepaper).

Nevertheless, on the surface, the Libra cryptocurrency has all the characteristics of a stablecoin. The cryptocurrency is backed by a basket of the most “stable” global fiat currencies, which include the US Dollar, the British Pound, the Euro, and the Yen. However, unlike most stablecoins, Libra will not be pegged to a basket of fiat currencies. As a result, the Libra Association, the entity responsible for making decisions about Libra, will not actively manage its reserves, rather, they will only intervene if there is a currency crisis that could greatly affect the value of the basket of currencies. Lastly, the supply of Libra’s is uncapped and coins will be minted and burned in accordance with the flow of fiat when buying and selling into Libras (Libra Whitepaper).

In accordance with the invention of Libra, Facebook is also releasing a digital custodial wallet, dubbed Calibra, which specifically, enables the storage and usage of the Libra cryptocurrency. It will be available on Facebook platforms, but initially, it will be integrated with WhatsApp and Messenger. Although several have stated that Calibra will not share your personal data, that is actually not true. Rather, Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent. In other words, it is likely that Facebook will have access to your personal transaction history when using the Calibra wallet (Calibra: Customer Commitment).

Being that the Libra blockchain is private, oligopolistic and not actually a blockchain, it is clear why crypto enthusiasts are skeptical about the project. Moreover, given Facebook’s questionable history regarding user’s privacy, it is justifiable to believe that this project is just another medium for Facebook to further capitalize on its user’s private data (New York Times). However, what is more worrisome is not so much the underlying technology of Libra, but the Calibra wallet. When transacting on the Libra blockchain, a person’s identity will be hidden, hence, it would be difficult for Facebook or any of Libra’s validators to capitalize on your personal data. However, the Calibra wallet will be integrated on all of Facebook’s platforms and Facebook has already hinted at utilizing your personal transaction data as long as they have your “consent” to do so. Hence, Facebook will not only have access to all of your social media platform data, but they will be able to specifically analyze what your buying and selling on a daily basis (Calibra: Customer Commitment). In fact, this concern over privacy has already promoted regulators to take action. Maxine Waters, House Financial Services Committee Chairwoman, has already scheduled a July 17th hearing for the social network’s ambitious cryptocurrency plans (The Mercury News).

Although safeguarding its user’s private data is not a primary concern for Facebook, even the largest data scandal of the 21st century, Cambridge Analytica, could not deter the 2.38 billion monthly users who continue to use Facebook’s platform (New York Times). As a result, it is clear that Facebook’s users value simplicity over privacy, which renders Libra to be a major opportunity for both Facebook and the digital asset space.
Today, the most challenging issue afflicting cryptocurrencies is adoption. Although there are around 32 million bitcoin wallets, the estimated amount of active bitcoin users, those used to make payments with bitcoin, is around 2.3 million (Bitcoin Market Journal). Meanwhile, bitcoin’s Chinese payment rival, AliPay has 900 million active users (China Daily). Hence, if Facebook is only able integrate the Calibra Wallet with only 1% of active users on both Facebook Messenger and WhatsApp (Dustin Stout), Libra will have around 8x-10x more active users than bitcoin (Zephoria). Likewise, if Facebook is able to integrate the Calibra Wallet with just a fraction of its users, it will likely render most ecommerce cryptocurrencies obsolete and will cause cryptocurrency enthusiasts to question if this digital asset movement is really meant to thrive on decentralization. However, let’s not forget that Facebook’s path to success is not as cushy as it appears as its permissioned ledger will have it competing with other centralized payment behemoths such as Apple Pay, which has over 300 million active users (Apple Insider) and PayPal, which has a user base of over 200 million accounts (Statista).

If regulators fail to intervene in Facebook’s cryptocurrency plans, Libra will inevitably impact the cryptocurrency space. However, Libra’s success will greatly depend on the logistical integration of Calibra across Facebook’s social media and messaging applications. Seamlessness integration of Libra will most likely lead to the cryptocurrency’s success, but consequently, will further exacerbate the lack of control over user data, which is one of the major issues the decentralized cryptocurrency movement is attempting to remedy.

List of all Libra “Founding Members” listed below by industry:

• Payments: Mastercard, Mercado Pago, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
• Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc.
• Telecommunications: Iliad, Vodafone Group
• Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
• Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
• Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

July 2019
Market Overview

Cryptocurrency markets sold off in July as President Trump manifested his dislike for cryptocurrencies (Coindesk) and US regulators expressed their concerns over Facebook’s Libra cryptocurrency during Libra’s congressional hearing (Mashable). In fact, Libra has come under so much regulatory scrutiny that it is possible it may never see the “light of day” (CNBC). Although Congress has an unfavorable outlook on Libra, in the most recent cryptocurrency and blockchain congressional hearing, congress appears to be taking a more open-minded and pro-innovation stance on cryptocurrency and blockchain technology. Today, Congress is not fully sold on the digital asset revolution, but the trend remains positive (CCN).

Meanwhile, in the Asian regulatory front, China’s Hangzhou Internet Court has ruled that bitcoin is virtual property and is legally protected in China. This came as a surprise to most cryptocurrency enthusiasts being that China historically has had a severe opposition to digital assets, which includes banning ICO’s in September of 2017 (BBC).

In emerging markets, cryptocurrencies continue to be a boon. Venezuelan’s continue to flee from the hyperinflationary Bolivar as more than 47 billion Bolivars were traded against bitcoin in the first week of July reaching an all-time high, which was previously set in June (CCN). However, Venezuelan’s are no longer the only emerging market participants using bitcoin to avoid hyperinflation. Zimbabweans are also fleeing to bitcoin to avoid hyperinflation in their country. Albeit, bitcoin is technically illegal in Zimbabwe, citizens like to use bitcoin as a means of exchange rather than its native currency, the Zimbabwean dollar, to avoid losing purchasing power (CCN). Lastly, Cuba is now debating whether it should issue its own national cryptocurrency to help avoid US sanctions. As a reminder, Venezuela is the only country that has issued a national cryptocurrency, the “Petro”, to help avoid US sanctions but turned out to be a failure because of its lack of transparency (CCN).

In fin-tech news, Binance has finally unveiled its long-awaited margin trading platform, Binance 2.0, which will allow eligible users to use up to 3x leverage to trade across 9 asset pairs (CCN). Binance’s recent release could not come at a better time as Bitmex is now being investigated by the US Commodity Futures and Trading Commission for allowing US residents to use its platform. Bitmex’s bitcoin volume has fallen 33% since the investigation (NEWSBTC). However,  Bitmex has no reason to worry as it has just recently hit an astonishing $1 trillion in annual trading volume (CCN). On the other hand, Latin America’s largest investment bank Banco BTG Pactual S.A., has announced plans to launch Security Token Offerings (STO’s) on the Tezos blockchain. Furthermore, BTG Pactual and Dalma Capital will work together to host a deal pipeline of $1 Billion for token issuances on the Tezos blockchain (CCN).

In conclusion, we are seeing the global macro environment fostering a bullish outlook for cryptocurrencies. While digital asset technology was initially met with scrutiny by regulators, we believe Congress will acquiesce to promoting blockchain and cryptocurrency technology from fear of missing out and continuing to lag pro-regulatory digital asset countries. Meanwhile, as blockchain technology becomes more seamless, we will continue to see emerging market countries afflicted by dictatorships and hyperinflation follow in the footsteps of Venezuela and Zimbabwe and flee to bitcoin as a safe haven. More importantly, like the Winklevoss twins, we believe this is only the “bottom of the first inning” in the digital asset revolution (Yahoo Finance).

August 2019
Market Overview

It was an interesting month for digital asset markets as we saw an unprecedented amount of cryptocurrency and blockchain developments within the sports entertainment sector. On one hand, several English Premier League football clubs have partnered with blockchain and cryptocurrency firms. Newcastle United (CCN) has partnered with cryptocurrency StormGain to give out unique promotions to fans, Manchester City (Token Post) has partnered with the blockchain gaming firm Superbloke so users can now build a digital football team by training and trading Manchester City digital player cards, and Leicester (Cointelegraph) and Everton (Everton FC) have partnered with the trading platform, Etoro, to promote cryptocurrency markets to football fans. On the other hand, the NBA has also made its way into the cryptocurrency space. The NBA has partnered with Dapper Labs, the creators behind CryptoKitties, to release a new cryptocurrency collectibles game where users can collect, trade and own “some of the greatest moments in league history on the blockchain” (NBA). If the NBA’s platform is successful, it could pave the way for a new alternative asset industry where we could see the tokenization of professional athletes, teams, and franchises.

In places encountering social, political and/or economic turmoil, bitcoin continues to act as a safe-haven asset. Although this has become such a trite reoccurring theme in cryptocurrency markets, the importance of bitcoin acting as a safe haven asset cannot be overlooked. Once again, in Venezuela, bitcoin trading has hit another all-time high as “the number of Venezuelan Bolivars that were exchanged for Bitcoin rose to nearly 67 billion” (CCN). Meanwhile, in Hong Kong, bitcoin was trading at a premium of as much as $5,000 revealing that there was an enormous amount of demand to exchange the Hong Kong dollar for the cryptocurrency in the midst of the Hong Kong anti-extradition protests (CCN). Seeing this type of price action in a developed country like Hong Kong reinforces the legitimacy of bitcoin as an alternative asset.

Walmart, following in the footsteps of Facebook, is now planning to release their own cryptocurrency (Forbes). Although we are still unsure of the utility of Walmart’s cryptocurrency, several expect it to be more successful than Libra as Walmart’s cryptocurrency seems to be flying under the radar of regulators, while Libra continues to encounter regulatory scrutiny. In fact, several of Libra’s backers are now considering withdrawing from the project (Cointelegraph).

Lastly, we are witnessing the final days of fiat as a means of exchange as the PBOC has stated that it is ready to release their own cryptocurrency (Futurism). Alibaba and Tencent are two of seven entities that will first receive the cryptocurrency (Forbes). Several analysts believe that China’s cryptocurrency will make the private banking technologies Alipay and WeChat obsolete, which currently processes every 9 out of every 10 transactions in China. Additionally, China’s cryptocurrency will, unsurprisingly, not be anonymous or decentralized as the government will have full control over the centralized ledger (Block Publisher). Likewise, the capital city of South Korea, Seoul, is also releasing their own cryptocurrency, which is planning to launch this November. The cryptocurrency, dubbed S-Coin, will be used to encourage citizens to participate in governance, facilitate cooperation between citizens and collect information. The cryptocurrency will be programmed so that authorities can decide exactly how the cryptocurrency can be spent (Cointelegraph). As global powerhouses continue to adopt cryptocurrency, this begs the question, will the US fall behind in the cryptocurrency revolution? While foreign governments are integrating cryptocurrency into its citizens’ everyday lives our regulators continue to stall on releasing a bitcoin ETF (Cointelegraph).

September 2019
Market Overview

Cryptocurrency markets dipped in September as it appears that regulators will not approve the VanEck/SolidX Bitcoin ETF until 2020 (Cointelegraph). The approval of a bitcoin ETF in 2019 was anticipated to be a major catalyst that would propel cryptocurrency markets higher as it would render investing in bitcoin easier for both retail investors and institutional investors. Meanwhile, Bakkt’s disappointing release of its bitcoin futures contract exchange added to the negative sentiment among investors in the digital asset space. Compared to the initial release of the CME bitcoin futures, which processed 420 million dollars in its first week of trading, the highly anticipated Bakkt product only processed a measly 6.8 million dollars in its first week of trading (Decrypt). The lack of liquidity in Bakkt futures along with the VanEck/SolidX Bitcoin ETF flop can greatly be attributed to investor’s uncertain expectations about US crypto regulation, a reoccurring theme we continue to see plague crypto markets. US regulators continue to hesitate on regulating digital assets, yet global innovation within the digital asset space continues to prosper.

We are seeing an increase in US regulated exchanges adapting to the growth of digital assets. Nasdaq is making its first step into the decentralized finance (DEFI) space by issuing an index for digital assets. The index, Defix (DEFX), will track projects belonging to “Proof-of-Work blockchain Amoveo (VEO), decentralized exchange protocol 0x (ZRX) and prediction market Augur (REP), as well as the governance token of the decentralized autonomous organization behind the DAI stablecoin and MakerDAO (MKR)” (Cointelegraph). This an interesting move by Nasdaq as most institutions tend to stay away from DEFI as it is direct competition to their centralized business models and lacks government regulation. Furthermore, the Chicago Mercantile Exchange Group (CME), well known in the digital asset space for their successful bitcoin futures contracts, is planning to release bitcoin options contracts in early 2020 (Cryptoslate). This product will likely drive an increase in demand by institutions focused on the bitcoin derivatives space.

The tokenization of real estate, where ownership of real estate can be portioned into cryptocurrency, has finally come to fruition.  Blockchain real estate firm, Asset Block, is tokenizing 60-million-dollars worth of luxury real estate on Algorand’s blockchain platform (Cointelegraph). On the other hand, Harbor, a startup with the goal of transforming the alternative asset experience, has tokenized 100 million dollar’s worth of real estate on Ethereum’s blockchain (The Tokenist).  In other words, on both platforms, investors now have access to invest in what was previously a very illiquid and high barrier to entry marketplace.

In government digital currency news, North Korea, the Democratic People’s Republic of Korea (DPRK), is joining Iran and Venezuela in issuing its own national digital currency to avoid international sanctions. This is not DPRK’s first interaction with digital currencies. DPRK hackers have been responsible for stealing $2 billion from foreign banks and digital exchanges to fund its weapons of mass destruction program (Cointelegraph). Meanwhile, across the border, the People’s Bank of China (PBOC) has denied rumors of launching its cryptocurrency in November and confirmed that it does not have an official launch for its digital currency (Coindesk). Lastly and unsurprisingly, Binance continues to make headlines as it is now marketing its Venus stablecoin as a government-friendly digital currency as an alternative to Libra. Once again, Binance continues to push the boundaries of digital asset innovation (Cointelegraph).

October 2019
Market Overview

Bitcoin and altcoins got squeezed in October causing cryptocurrency markets to finish the month with a positive performance. Meanwhile, in digital asset news, altcoins finally reclaim headlines after several languid months of inactivity, Grayscale capitalizes on a reluctant SEC, Bakkt futures make a “come Bakkt” and China leads the way in digital asset and blockchain innovation.

Brave, the firm that rewards their web browser users in Basic Attention Tokens (BAT) for their data, released the world’s first whitepaper outlining a distributed virtual private network (VPN), dubbed VPN-0. VPN-0 will allow users to connect with each other over a peer-to-peer network while preserving their online identities (Cryptoslate). If successfully implemented, this would be a major, but also controversial innovation in the tech-privacy space as it will allow users to search dodgy things without their identity being revealed (Decrypt).

Justin Sun, the founder of Tron (TRX), is once again teasing a major announcement for his cryptocurrency. Sun tweeted that Tron is partnering up with a billion-dollar tech mega-corporation that will distribute Tron dapps and tokens to billions of customers (CCN). If Tron makes the right partnership, the potential synergy could render Tron to be the first mainstream adopted cryptocurrency.

Lastly, in altcoin news, DeFi is making new headwinds, as there is now $420 million worth of Ethereum being utilized throughout DeFi platforms. Although MakerDao is the most popular DeFi platform to lockup Ethereum for lending and borrowing, dydx, the Andreessen Horowitz backed derivatives platform, has grown its share of locked up Ethereum from $14.2 million worth to $25 million worth in just two months. Likewise, InstaDApp, another less popular DeFi platform, now has $32 million worth of Ethereum locked up for lending and borrowing (Decrypt). We continue to monitor the DeFi space closely as it is one of the fastest-growing and most promising niches within the digital asset space.

Not everyone is complaining about the SEC’s decision to delay a bitcoin ETF until 2020, in fact, Grayscale, the firm behind the successful Grayscale Bitcoin Trust (GBTC) and several altcoin trusts, has seen $85 million in capital inflows in Q2 or twice as much capital inflow as in Q1. More interestingly, 25% of capital inflow in Q2 targeted altcoins (Cointelegraph). In addition, while the SEC stalls, Grayscale continues to gain market share in the digital asset management space. In fact, Grayscale has just released a new FINRA approved product for OTC retail trading, the Digital Large Cap Fund (DLC). DLC is an index fund that tracks a basket of nine of the most popular cryptocurrencies. At the beginning of October, there were around 3.2 million shares of DLC outstanding (Coindesk).

After a disappointing launch, Bakkt futures are gaining traction. Only a month after its release, Bakkt futures volume exploded to 10x its first-day trading volume, hitting an all-time high daily trading volume of $10.3 million on October 25^th  (Cointelegraph). “Piggy-Bakkting” off of their most recent success, the custody and futures platform has also announced that they will be entering into the mobile payment industry. Although Bakkt has released minimal details about the new endeavor, we know Bakkt is releasing a consumer app, which will allow users to transact and track digital assets. Starbucks has already announced that they will be partnering up with Bakkt on the project (Cointelegraph).

Finally, China has officially confirmed that it will release its own digital currency electronic payment system (DCEP). The Peoples Bank of China (PBoC) revealed that they have been studying digital currencies for the last five to six years. The PBoC boasts that “DCEP can achieve the real-time collection of data related to money creation, bookkeeping, etc., providing a useful reference for the provision of money and the implementation of monetary policies”. The launch of DCEP will mark the first digital currency issued by a central bank (u.today). While China leads on the digital currency innovation front, China is also leading the way in blockchain development. According to the China Electronic Information Industry Development (CCID), there are over 700 blockchain firms in China. Although China lacks large scale implementation of blockchain technology and has not released any “killer blockchain applications”, it is only a matter of time before China gains significant market share in the digital asset space. (Cointelegraph).

November 2019
Market Overview

Bitcoin rolls-over in the month of November as investors abandon “buying dips” to “sell rallies”. Although bitcoin joins altcoin markets in succumbing to the bears, we continue to see exponential growth in digital asset markets. In the cryptocurrency mining space, we see that the growth of mining farms not only proves the sustainability of the digital asset space, but it could also be an alternative source of revenue for energy producers. Furthermore, we see several digital asset investment firms continue to make a significant push to educate the masses and make investing in digital assets for retail and institutional investors more seamless while focusing on meeting all the prerequisites of existing regulations.

The popular lending and borrowing platform Celsius has surpassed an astonishing $4 billion in crypto loans. This is a 93% increase from the $2.2 billion in crypto loans recorded at the start of 2019 (Cryptoslate). Meanwhile, the DeFi crypto credit protocol, Compound, has raised a $25 million Series A led by the popular crypto Venture Capital firm A16z. Compound has $103 million worth of crypto locked up in its platform. Although this is only a fraction of capital utilized on Celsius’ platform, it is still very impressive as it shows people’s trust in peer-to-peer DeFi lending (Coindesk). On the other hand, popular DeFi smart contract platform Tron (TRX), has announced that it has officially partnered up with tech giant Samsung. There are now over 4 million accounts registered on Tron’s platform, however, it is unsure how many are actually active (Cointelegraph). Nevertheless, this partnership exposes Tron to Samsung’s near one billion user base (Cointelegraph).

In other crypto-mining news, it was unveiled that data center developer Whinstone US is currently in the process of building a 1 Gigawatt Bitcoin Mine in Texas. This mining farm is planned to dwarf Bitmain’s mining farm, also located in Texas, which has the capacity to only ramp up to 300 Megawatts. The datacenter costs $150 million to build and furnish (Coindesk). Realizing the opportunity cost of not having a bitcoin mining industry, China, has finally ruled to not ban crypto mining. This comes as no surprise, as in recent months, China made a complete U-turn regarding the regulation of digital asset and blockchain technology (Decrypt).

On the contrary, mobile data centers in the US and Canada have found a way to help oil and gas producers to help save on the costs of producing energy commodities. Upstream Data, for example, allows oil and gas companies to buy or rent data centers so, they can utilize their energy to also mine digital currencies. As a result, energy companies are able to produce a higher income for gas then any market price could return (Bitcoin.com).

Digital asset investment firms continue the push to make digital assets a ubiquitous asset class for both retail and institutional investors. In fact, Grayscale Investments has filed its most popular investment vehicle, the Grayscale Bitcoin Investment Trust (GBTC), with Form 10 of the SEC. If approved by the SEC, GBTC will become the first publicly traded digital asset trust to be an SEC reporting company and be compliant of section 12(g) of the Securities and Exchange Act of 1934 (Medium).  Meanwhile, Canadian based firm 3iQ is convinced that the Ontario Securities Commission (OSC) will approve their Bitcoin ETF claiming that they have solved the “pricing, custody, audit, and public interest issues”. If 3iQ gets approval for its ETF, it will have successfully become the first company to release a digital asset ETF (Cryptoslate).

Finally, last month’s unveiling of China’s digital asset currency has opened up the floodgates for the global digitization of fiat currency. Ghana is exploring a digital currency (Cointelegraph), Saudi Arabia and UAE are jointly issuing a digital currency (Cointelegraph), the Association of German Banks, a lobby group of over 200 private German Banks, are vouching for a digital Euro (The Block Crypto), the Federal Reserve is evaluating a digital dollar (Coindesk), Tunisia is launching their own digital currency, dubbed E-Dinar (Cointelegraph), the French Central Bank is developing a digital currency (Coindesk) and Turkey is planning on launching their own digital currency next year (The Block Crypto). The race to digitize fiat currency in 2020 has officially begun.

December 2019
Market Overview

Although many digital asset investors were hoping for a “Christmas rally” in December, they were left disappointed as altcoins continued their downtrend, while the price of bitcoin remained fairly constant losing a trivial 2.65%. Although it was more of a “Blue Christmas” for crypto asset investors, digital assets continue to remain uncorrelated to traditional assets. In other words, a great source of diversification for a traditional investment portfolio.
In industry news, we continue to see the rise of crypto derivatives, mainstream multi-billion dollar corporations find opportunities in non-fungible tokens (NFT’s), the largest digital asset exchanges strategically position themselves for the new year and once again, central banks are continuing the push to issue their own digital currency.

OKEx, the second-largest crypto derivatives exchange (FTX), has launched options trading, which will initially allow only selected users to try the service (Crypto Globe). Likewise, Bakkt has also launched its own options trading product, which will be the first Bitcoin Options contract regulated by the Commodities Futures Trading Commission (CFTC) (Cointelegraph). Although the options market is considered an esoteric market for most retail investors, the trillion-dollar market is adored by institutions because it gives them the ability to generate consistent low volatility returns.

Nike has finally unveiled more details about its patented cryptocurrency project, CryptoKicks. One of the ways the technology will be used is by authenticating and transacting a physical shoe using Ethereum non-fungible tokens. Basically, the system provides a way to ensure the authenticity of its sneakers (Cointelegraph). Additionally, CryptoKicks’ technology has immense utility outside of the primary retail sneaker market. In fact, the sneaker resale market is expected to have a market size of over $6 billion in 2025, while its current market size is estimated to be about $2 billion (Business Insider). CryptoKicks could play a large role in helping authenticate resold sneakers, which is one of the largest retail markets flooded by counterfeits (Las Angeles Times). Meanwhile, Microsoft is also “dipping its toes” into the non-fungible token space. It is rewarding its developer community with a program called “Azure Heroes”. Developers who are nominated by the Microsoft community as social leaders will be rewarded an Ethereum “Badger” collectible token. This token will be able to be exchanged on a secondary market (Microsoft). Although this project seems trivial, most likely it is being used as a proof of concept for more practical applications of NFT technologies.

Several of the most well-known cryptocurrency exchanges have been making strategic moves leading up to the new year hoping to gain a competitive advantage in 2020. Gemini is collaborating with State Street to launch a digital asset pilot. State Street, a well-respected investment bank in the traditional financial services industry, is using Gemini’s cryptocurrency expertise to help them implement digital asset technology into their product offerings (Business Wire). Additionally, Kraken has just acquired Circle’s OTC trading desk in an attempt to offer more liquidity and tighter spreads to its users. Circle, on the other hand, is doubling down on its most notable product, its stablecoin, USDC, and believes stablecoins will reach widespread adoption in 2020 (Cointelegraph). Lastly, Binance the largest spot cryptocurrency exchange has made a multi-million-dollar investment in its rival exchange FTX. CFO of Binance Wei Zhou, says this move encourages “positive competition as well as partnerships” in the space (Cointelegraph).

Finally, and as stated in the previous newsletter, Peoples Bank of China’s entrance into the stablecoin industry has sparked a wave of interest across the globe, inciting central banks to develop their own stablecoin technologies. This month Russia’s Central Bank is testing a real asset-backed stablecoin (Cointelegraph), South Korea is forming a task force for central bank digital currency research (Bitcoinist), Sweden’s Central Bank is planning to launch the “e-krona”(Bitcoinist), British Virgin Islands is launching a dollar-backed stablecoin (FX Street), the Bahama’s already began testing their own digital currency (Coindesk) and Iran is planning to create a cryptocurrency to confront “U.S. economic hegemony” (Coindesk).

November 2018
Market Overview

This month the crypto markets were a sea of red. As of November 29th, 2018 Bitcoin had lost around 30% of its value since the start of November. Likewise, the alt-market followed in lockstep encountering an even more volatile decline. The contentious Bitcoin Cash Fork greatly contributed to the crypto market’s steep decline. The fork has ignited a “hash war” between Bitmain, the largest BCH mining manufacturer in the world and CoinGeek, one of the largest Bitcoin cash mining pools. The quarrel has caused both parties to lose a significant amount of cash and could potentially have a devastating effect on the profit margins of crypto exchanges.

On the other hand, the decline in global markets has also contributed to the sell-off in crypto markets. As liquidity tightens we are seeing investors shift from a risk-on to a risk-off mentality. This is causing institutional investors to de-risk their holdings which has lead to a drop in prices across equity markets, fixed income markets and cryptocurrency markets. Our near-term outlook continues to be bearish, however, a favorable SEC ruling on the status of Bitcoin ETFs could ignite a bullish rally in Q1 of 2019.

December 2018
Market Overview

Cryptocurrency markets posted minor losses in December 2018 with most cryptocurrencies finishing either flat or down on the month. Jerome Powell’s decision to hike interest rates another 25bps, the trade tension between the US and China, global economic growth concerns spiraled equity markets around the world into turmoil and have caused investors to panic and flee to less risky assets like treasuries and gold. Likewise, instability continues to fester in Washington as the government shutdown and continuation of the trade war have caused increased uncertainty in the financial markets.  To add to the bearish sentiment in cryptocurrency markets, the Bakkt Bitcoin Daily Future contract, which was expected to be launched on December 12th, 2018 has gotten its launch date pushed back to January 24th, 2019.

On a positive note, Ohio businesses can now pay taxes with bitcoin and there are widespread rumors that Facebook is currently developing their own blockchain payment protocol. In other words, although we continue to witness a bear market in cryptocurrencies, both blockchain technology and cryptocurrencies are becoming even more embedded in our society. This reinforces our confident long term bullish outlook on cryptocurrency markets, although in the short term we continue to remain bearish.