Your daily snapshot from the OnChainFX markets dashboard.
To celebrate the beginning of Q3, our 10,000+ subscriber milestone, and the imminent launch of Messari Pro next week, we’re providing free editions of these Unqualified Opinions all week long. Thanks for your support to date. It’s going to be a wild ride the rest of this year.
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Trump Tweets about Crypto
I have so many thoughts on this, but we’ll save the hot take aggregation for tomorrow’s weekend reads newsletter. In the meantime, we’ll recap some of our top Q2 highlights.
Now that the second quarter is over, we take a look back at what was a momentous quarter for the crypto markets.
At the end of last year, some analysts were calling for a market cycle bottom in Q1. It looks like they will likely be proven correct.
“Bitcoin may face additional selling pressure in the near-term, but we believe prices will bottom in Q1 2019 based on our analysis of holder dynamics during prior boom-bust cycles”
Delphi Digital, The State of Bitcoin (12/4/2018)
Every top 10 asset ended the quarter positive with $BNB leading the charge as it tripled in the quarter, up +236%. $XRP brought up the rear, but still lagged its other top 10 comps, up a mere +32%.
The general sentiment in the industry seems to continue skew positive. Have we made it out of the trough?
On to the biggest stories from the quarter…
Q2 may have seen the announcement, but Facebook’s Libra project is likely to dominate Q3 conversations as well. Particularly in light of Trump’s tweets this evening. NLW worked overtime last week to put together a board full of top Libra them. If you didn’t catch TBI’s Libra newsletter on Monday, check that out as well.
Then there was Bitfinex.
If you’ve been around the space for any amount of time, this will not be the first time you’ve heard about potential solvency and legal troubles with them and their partner-in-crime Tether Ltd. This time, though, the NYAG dropped a bombshell report alleging Bitfinex lost $850 million as a result of a shady financial service provider Crypto Capital. They allegedly turned to Tether, engaging in “undisclosed, conflicted transactions to cover Bitfinex’s losses by transferring money out tether reserve funds.”
Obviously there are some conflicts of interests here and far reaching implications given tether’s prominence in the markets as the most liquid stablecoin ($3.8 billion outstanding). Despite the accusations, the peg has held strong. Most people are still betting on tether’s solvency. If you want the full download on Tether’s history we wrote about it in May.
Q2 also gave us the mainstreaming of the Initial Exchange Offering (IEO), a close cousin of the ICO.
An IEO is a public sale of tokens where the project goes directly through an exchange who acts, essentially, as an underwriter for the deal.
We wrote about IEOs at the end of May, and how they offered incremental improvements on the original ICO model since they require a baseline of due diligence performed as/ well as immediate liquidity through the exchange. Nearly major exchange has set up a launchpad to perform these offerings.
Another long awaited project that launched was Algorand, a next-generation blockchain designed to achieve greater scalability. They released tokens through a dutch auction, and raised $60 million at an eye-popping $24 billion valuation. On the other hand, they only let 0.5% of the total outstanding supply initially, and investors have an option to re-sell back to the Foundation at 90% of the purchase price in one year which led many to question that valuation (Algos have lost more than half its value already).
The most prominent company in crypto, Binance, also launched their own Binance Chain which will be powered by the native exchange token BNB and will facilitate decentralized exchange. It is maintained by 11 pre-selected validators which isn’t exactly “decentralized,” but plans are to gradually increase the validator set. On the surface this appears to be self-cannibalizing Binance’s business, but this is evidently something CZ has thought through. Given the prominence of BNB at the company (90% of employees reportedly receive part of their salary in BNB), it could be an effort to shift value accrual from the equity of the company to token holders in order to further decentralize the company.
A few other notable stories in case you missed them:
The pace of development is picking up again. The amount of development happening with projects is staggering and points to the next bull-market being driven by real adoption rather than pure speculation.
We’ve been heads down working to clean up the space and provide standardized disclosures requirements for token teams. This quarter we added dozens of projects to our registry as well as integrated our data with partners such as Blockfolio.
Strap in because the rest of 2019 is shaping up to be YUGE (as our fearless leader, President Trump, would say.
P.S. Have questions? Want to troll us? Let us know on Twitter.
Messari Compression Algorithm
Content and thoughts from around the web as summarized by the Messari team.
🛣 [Analysis] Pathways for DeFi on Bitcoin - Mohamed Fouda (July 2019)
Ethereum ($ETH) is the most popular DeFi platform but the flippening could be near with Bitcoin ($BTC)-based DeFi according to Mohamed Fouda. Bitcoin DeFi lending is broken into four areas: current Bitcoin features, federated sidechains, interoperable platforms, and Layer 2 systems. Current Bitcoin features include typical P2P lending and the development of DEX lending. Federated sidechains and interoperable platforms like Blockstream's Liquid and Cosmos ($ATOM) respectively are bridges purposed DeFi systems with Bitcoin often used as the native currency. Layer 2 options like Lightning or Omni Layer are newer non-custodial DeFi options still being explored. With the possible addition of the MAST BIP, Bitcoin's DeFi dreams could be right around the corner. (share or read more)
😴 [Analysis] Bitcoin Average Dormancy - Adaptive Capital (June 2019)
Bitcoin ($BTC) Average Dormancy measures Bitcoin days destroyed over the on-chain volume giving a clearer indication of general market sentiment, according to Adaptive Capital. By measuring how often and how much old BTC HODLers are releasing coins into the ecosystem, a picture of market bullishness versus bearishness appears. Multiple metrics jump off from Average Dormancy as well including Supply Adjusted Dormancy, Dormancy-to-UTXO-Age Ratio, and Dormancy Flow. When dealing with on-chain value transfers, the rise of off-chain systems like Lightning must be taken into consideration. (share or read more)
Quick Bits (Don't read that, I read it for you)
Choke Points (Exchange News)
🛑 New York's Metropolitan Bank and Signature Bank asked Tether ($USDT) to shut down accounts it held at the banks after only five months, according to CoinDesk. New York's Office of the Attorney General says the accounts give the office authority to charge parent company iFinex over an alleged funds cover-up between Bitfinex and Tether. (share or read more)
🇨🇦 Canadian crypto exchanges must register with the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) by June 1, 2020, under new anti-money laundering rules per CoinTelegraph. Exchanges will also have to keep transaction records and hire a compliance officer. The FinTRAC regulations are part of an effort to bring banks and crypto onto the same plain. (share or read more)
Startup Signals (ICOs, Cryptos, and Startups)
💻 Decentralized internet project Blockstack ($STX) has received the green light from the SEC to conduct a token sale in the U.S under Regulation A+. According to an SEC filing the offering will allow Blockstack to raise up to $28 million from both accredited and non-accredited investors while a concurrent Reg S could raise an additional $10 million from non-U.S. investors. (share or read more)
⚓️ Visa and Blockchain Capital have thrown their weight behind Anchorage with participation in a $40 million Series B funding round. Anchorage is working toward custody for all digital asset types through its hardware security module (HSM), an alternative to cold wallet systems used by main competitors Coinbase Custody and BitGo. As Twitter user Ryan Todd points out, two-fifths of Visa's 2019 capital investments have been into crypto firms. (share or read more)
The Powers That Be (Legal/Reg/Policy)
🏛 Federal Reserve Chairman Jay Powell answered questions before the House Financial Committee head by Rep. Maxine Waters (D-CA) on Libra saying the central bank has been in contact with Facebook. Powell says the bank is in favor of "responsible innovation" but still harbored fears over money laundering and privacy concerns. Powell says both the Financial Stability Oversight Committee (FSOC) and the Federal Reserve have established working groups on the private crypto. (share or read more)
⛏ Governor of the Central Bank of Iran Abdol Nasser Hemmati says the Iranian government is set on authorizing cryptocurrency mining, according to The Block. Crypto mining has become popular in the middle east nation due to subsidized energy. A governmental condition of crypto mining is feeding back the value into the national economy. (share or read more)
Did I miss something?
Send me the link, your twitter handle and your best imitation compression algorithm write up. If I like it, I’ll include your bit next issue (with attribution).
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