Weekly Market Update 10/17 — Market drops slightly
Weekly Market Recap
Oct 17- Crypto assets dropped ~4% this week, bringing the total crypto market cap to $220.1bn. The Crescent Crypto Market Index (CCMIX) was down 4.7%, while BTC lost 5.4% over the same period. The CCSMART was the only index to underperform Bitcoin, with a -7% move. The CCDARK index outperformed all other indices up 4.1% over the last seven days. Particular altcoins (SNX, XMR) started to see some life despite trailing BTC throughout much of the year.
Bitcoin vs. CCMIX vs. CCALT vs. CCDARK vs. CCSMART
Oct 11th — Oct 17th, 2019
Market Index Constituent Performance
Oct 3rd — Oct 10th, 2019
- BTC performed in the middle of the pack this week, as XRP saw sizable gains. XLM was the only other constituent in the green, up 2.7%.
- The CCMIX was supported by these gains from the couple large-cap outperformance, resulting in the index gaining +0.3% more than Bitcoin over the past week.
- CCSMART underperformed Bitcoin, generating returns of -5.4% and -7% respectively. This is primarily due to ETH and EOS’s poor performance.
- After XRP and ETH led the surge last week gaining 10.5% and 9.8% respectively, the two assets moved completely opposite this week. ETH ended up down more than 7%.
- BTC, BCH and LTC were all negative, with returns ranging from -5.2 to -6.7%.
- Bitcoin dominance declined to 66.1% of the total crypto market cap, down from 66.9% last week.
There have been numerous headlines on Libra developments this week. Notably, regarding the exits of both Visa and Mastercard form the Libra Association. With that said, Libra’s original vision is still a go, with the plan to have 100 members set. Libra held their inaugural meeting in Geneva earlier this week. David Marcus, Calibra CEO and Libra Association board member, stated on Twitter, “I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way, it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.” It is reported that some 1,500 firms have expressed interest in joining the project with about 180 meeting the given criteria. Read more…
Why Does This Matter?
As stated last week, Libra has unique qualities that position the network for strong disruption. The central concern remains in the extent of Libra’s innate censorship-resistant qualities. On the heels of regulatory pressure, David Marcus stated, “It’s an idea. It’s a white paper. Nothing is operating yet. It’s kind of sad in a way to see all the issues that we currently have with the current [financial] system,” Marcus says. He’s not wrong; digital fiat currencies have come into focus from nation states and central banks alike. Libra represents corporate competition in the domain of money and value. For all of the payment processor and “fin-tech” services we have today, they use exactly the same rails and are built on top of fiat. Libra could represent a different money — backed by various stores of value with increased freedoms. Libra would never be competitive with Bitcoin — but it could be with USD and other sovereign monies — hence the pressure from US Senate members on Facebook and their proposed partners. Brian Armstrong, CEO of Coinbase, called the pressure “un-american”. Read more…
Last Friday, the SEC has halted Telegram’s $1.7 Billion ‘unlawful’ token issuance. The SEC secured an emergency restraining order preventing Telegram from distributing its token within the U.S. With already missing delivery deadlines, and the Oct. 31 mainnet launch, Telegram will almost certainly delay its launch. Steven Pekin, co-director of SEC Division of Enforcement, stated “We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token. Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”Read more…
Why Does This Matter?
The reasoning behind Telegram’s harsh decision is most likely due to the centralized control of the Telegram Network. As Avichal Garg of Electric Capital put it, “For the same reasons ETH is not a security (Ethereum is sufficiently decentralized so there is no common enterprise) GRAMs are a security (Telegram is a clear common enterprise with clear managers driving GRAM value).” This reveals further insights into SEC’s decision framework for future token listings. Per the SEC, Projects should try to avoid, 1) having the company and foundation controlled by the same people, 2) use funds to finance an existing company 3) have only company employees committing code.
The IRS released new guidance on cryptocurrency tax treatment — with some good and some bad news. On the bad end, taxpayers will owe income tax every time someone hard forks a cryptocurrency they hold. The IRS stated in their report, that when a network forks the taxpayer had “dominion and control over the cryptocurrency so that [he/she] can transfer, sell, exchange, or otherwise dispose of the cryptocurrency.” On a more positive light, taxpayers now have clear guidance on how to determine the fair market value and basis for cryptocurrency they’ve purchased. The IRS also cleared up accounting standards.
Why Does This Matter?
While cryptocurrency holders have more guidance and clarification to avoid unnecessary headaches, the taxable event on network forks has potentially serious implications. Forking a blockchain or airdropping could create new tax obligations for holders of coins on the old chain. It is worth noting that most airdrops and hardforks have little value and are difficult to claim and liquidate. Additionally, it only applies if and when the asset is claimed. James Lopp brings up more unanswered questions regarding this rule, “1. What if you have keys but no software from which to spend the asset? 2. What if you never sell or transfer the asset and it drops 90% in value? 3. What’s the value of the asset isn’t even trading at the time of fork?”