MaiCoin Digital Asset Weekly, Nov 1

Commentary
Digital Assets ended the week +4%, down from an intra-week WoW high of +20%. Gains this week were very broad based with 88% of the top 200 Coins and Tokens ending the week up. Trading this week was the most active week of trading on record. President Xi Jin Ping’s announcement drove volume last Saturday to a historic single day total of US$137B across the space. For the week, trading finished at an average of US$100B, +60% vs the previous week.
China was the focus of headlines this week after President Xi Jin Ping’s blockchain comments drove a 15% single day rally in Digital Assets last Friday. Chinese related Coins and Tokens were amongst the week’s strongest with NEO +52% and Tron +25%. Bitmain (Chinese miner) backed BCH +30% gained with China concepts despite reports of very messy management infighting. Miner fund raising was another big story this week with reports that Chinese miners Bitmain and Caanan were both planing IPOs in the US.
Outside of China, top stories included: 1) Bakkt reporting increased engagement with institutional clients, 2) Canada OKing a listed BTC fund for retail investors, 3) Genesis announcing US$870M in 3Q crypto loans, 4) Russia exploring a massive BTC mining facility and 5) Coinbase and Deribit suffering end of week flash crashes.
Last Friday’s +15% BTC jump (intraday high vs low was obviously larger) was the 8th largest single day price move over the last 2,200 days (table below). Looking back at 20 of the largest single day price gains over the past 2,200 days, they tend to be followed by a period of consolidation and then another move higher. 68% of these big, double digit, single day price moves were followed by additional gains over the following 50 day period. The median gain is ~32% (implies $11,400 for this rally). BTC is currently consolidating just north of the 200 day moving average ~ $9,000. There’s fairly significant resistance at the $10,000 level were a lot of volume has traded over the previous 3.5 months. If we can break above that, then there’s a decent chance we can follow the pattern set over previous large, single day rallies and test Fibonacci 78.6% resistance at ~ $11,800 (chart 6).

Thoughts
China comments drive positive October Close
BTC ended the month largely inline with historic seasonality. October 2019 closed ~+11%, bouncing after 3 months of consecutive declines. As highlighted previously, gains in BTC tend to be backend loaded with October, November and December typically 3 of the most consistent and largest gains of the year.


The bulk of annual highs over the previous 5 years are also really tightly clustered (into a 21 day period) and skewed heavily toward the end of the year. 4 of the previous 5 years the annual high has either come in early Jan or late December.
News
- ICE: Bakkt engaged with all kinds of institutional clients on BTC trading
- ICE is the world’s largest operator of exchanges including the NYSE
- Bakkt is ICE’s institutional focused BTC derivative trading platform
“All [kinds] of financial institutions are talking to us and looking at this and trying to figure out where this fits and what the global regulators are going to think about this and so on and so forth. So there’s a tremendous amount of dialogue around it” - BTC hits $1B in all time transaction fees
- $1B under represents the money taken in from transaction fees over the past few years, given that BTC has spent the bulk of its 10 year history well around $1,000. - Germany, Italy, Spain and Netherlands to block Libra
- Effort said to be led by France. The countries’ deputy finance ministers have presented their unified position against Libra to other EU ministers at a private meeting on Oct. 28 in Brussels - Canadian regulator OKs 3iQ’s publicly traded BTC fund
- Gives retail investors access to a regulated, publicly-traded BTC fund - Genesis facilitated US$870M in 3Q19 crypto loans
- Breaks the previous record of $746 million set in Q2 2019
- Demand was focused in stable coins like USDT, PAX and US dollars
- Points to demand from clients that have large crypto balances, but need access to USD and proxies - US Congressman proposes bill to clarify crypto issuances
- Would provide regulatory exemptions compliant with securities laws - Former Bitmain CEO said to have retaken control in messy takeover
- Bitmain has been very quite since efforts to IPO in 4Q18
- Reports also that the company has relaunched IPO plans and is now looking at the US (vs previously targeting Hong Kong)
- Valuation is thought to b e significantly lower than the US$15B whisper from 4Q18 — likely a low single digit billion valuation - Stablecoin Dai launches Visa integration
- ’Collaborative financial platform 2Gether’ has added support for DAI
- Allows users to spend DAI like euros anywhere Visa is accepted - Russia official discusses opening massive BTC mining facility
- Abandoned UC Rusal factory will be revamped as major BTC mining facility
“Now the factory is unprofitable for Rusal, the electricity supplied to it is barely utilized, and people living in the single-industry town near the plant have nowhere to work,”
- Article claims that the facility could account for 20% of BTC hash rate - Chinese BTC miner — Caanan — launches US IPO
- Company hopes to raise $400 million, valuation is rumored to be $2–3B
- This is Caanan’s 3rd try at IPOing, follows earlier attempts in HK & China - Google BTC searches hit 3M high
- Current interest is at the highest level since $11,700 - China: support for blockchain, not crypto
“The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.” - Binance plans to establish China presence for the first time since 2017
- Follows positive Chinese gov announcements over the past week
- Binance is widely thought to already provide CNY services within China via a network of unregulated broker dealers / OTC desks as well as facilitating transactions via Alipay and WeChat - Bloomberg: Crypto Futures now account for 50% of spot volumes
- Data comes from an analysis of 13 major futures markets
- Derivative trading platforms will likely continue to see high growth given that derivatives in traditional markets are ~5x larger than spot trading - Coinbase and Deribit flash crash
- As Delta Exchange points out index constituent creation / management is essential to maintaining healthy markets - Harbour receives transfer agent license from SEC
- Harbour is a security token issuance and trading platform
- Will help security token issuers pay out dividends - Italians use BTC for online payments more often than Visa or Mastercard
- BTC is the 3rd most popular method for online payments in Italy
- BTC is reportedly used for more than 215,800 transactions / month
- Visa, Mastercard, and other credit cards lag with only 33,950 / month
Charts
Chart 1. WoW %
- NEO +52% one of the most liquid China Concept Coins leads gains

Chart 2. WoW % — Major Thematics
- BTC, Exchange Tokens and Big Caps were the best this week

Chart 3. Price performance
- Chinese projects the bulk of the top gainers this week
- BCH. China based Bitmain is the largest holder of BCH
- BNB. Binance is the largest exchange out of China
- TRX. Founder Justin Sun and most of the team is from China

Chart 4. This time last year…
- BTC and BNB prices still the highest ever for this point in the year

Chart 5. Average Daily Volume — By Month
- Volume up across the board in most Digital Assets
- Most trading at 3 to 5 month highs

Chart 6. Support and Resistance
- Think from both a volume and Fibonacci perspective ~$10,000 is a fairly significant resistance level. If we can break above that, then ~$11,800 is probably the next level.

