This week in Crypto (Mar. 10–15)
This is a weekly analysis and digest of the most important events that happened throughout the week in the crypto, blockchain and digital assets industry.
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What Happened This Week in Crypto?
1) Are we in Alt Season?
While we haven’t seen a lot of action this week on the Bitcoin front, more and more Altcoins have started to pop back up on the radar with an increase of double and sometimes even triple-digit gains. While the word Alt season has been thrown around more than a few times in the last week or so, along with a somewhat surprising interest in “Altcoins” as a topic on Google Search, This means that not only is Google taking the exact search term “altcoins” into consideration when aggregating the total interest in a topic, it’s also taking related search terms such as “Litecoin,” “XRP,” and “Ravencoin,” into account in aggregate.
During the bear market, it didn’t really matter what announcements projects made and even if they were huge, they didn’t reflect almost anything on the price of the coin. In the last couple of weeks, starting with Samsung’s announcement on its new Phone-embedded crypto wallet, we saw tokens like Enjincoin, jumping with over 750% gains in less than a week. In the last week or so, we’ve been seeing more and more announcements, which, no matter how insignificant, such as partnerships, sponsorships or small feature releases that cause unexplainable gains in the relevant coins and tokens.
Why is this important? There are more than a few evidence that suggests that we are in what is so-called “Alt season”, and as those have become “a thing’ in the crypto trading community and mark periods of high volatility when traders can make huge gains, they are also a signal for an upcoming drop in both value of the said coins/tokens and the entire market. Post the last two “alt seasons” (April-June 2017 and December 2017-January 2018) we saw a huge dip in market cap, the last one with almost 85% drop, with some of the coins dropping as much as 99% in value. At the moment, we don’t see anything significantly different on the market macro front, nor the fundamentals of any specific assets. It doesn’t mean you can’t make a quick buck if you know what you are doing, but if you are risk-averse we would recommend staying on the sidelines for now.
2) Are IEOs the next ICOs?
Following the so-called success (How else would you call two ICOs who raised 7 figures in seconds/minutes and then gave investors up to 8x on their money before crashing back down) of Binance’s new Launchpad program, more and more exchanges are starting to launch their own versions. This week it was Bittrex, OKex, and Huobi which announced their equivalent programs. Bittrexx was supposed to be the first copycat to launch with its debut Initial Exchange Offering (IEO) supposed to launch last night at 1AM UTC. But a few hours before the token sale was supposed to have opened, Bittrex published a short message on their twitter canceling the upcoming sale, due to “last minute” changes done by the project. As it seems, the real reason behind the cancellation was that the team at Bittrex jumped the gun with their new program, rushing the due diligence process, just to find out later that the project isn’t what they had initially thought it would be.
Why is this important? Obviously, This marks the beginning of mainstreaming a trend that most people outside of Asia never heard about. In fact, it has been in existence for the last 18 months and started mainly in native Chinese and Korean exchanges a couple of months after China banned ICOs back in 2017.
Could this be one of the catalysts for the Alt season? Maybe. Will it last? Probably not. Even if IEOs solve one of the greatest issues that ICOs (most ICOs never made it to an exchange listing, sticking their investors with illiquid tokens), these are still the same shitty projects, with no real business model/value to investors.
I did a short segment on IEOs for Block TV earlier this week, so if you want to catch the full (10 minutes) take on the topic click the link below to view the full segment.
🍀 The Good News
Cosmos, a much-anticipated blockchain interoperability project is now live. After two years of significant R&D, the launch has been eagerly awaited by cryptocurrency enthusiasts since the project’s 2016 ICO ($16 million was raised). The project is deployed by company Tendermint Inc, which is also working on additional developer tooling, including an SDK which will enable other companies and projects to interact with the product, including Binance (which is using it for their non-custodial exchange).
Post-Trade Market Infrastructure Giant DTCC Publishes Guidelines for Tokenized Securities. The paper — targeted at regulators and other market participants — identifies the characteristics that are unique to the emerging tokenized security asset class and its market structure.
Coinbase Completes First OTC Crypto Trade Directly From ‘Cold’ Storage. Previously, a trader would have to withdraw assets from cold storage to a “hot,” or online, wallet at a trading platform in order to execute a trade (it can take 24 to 48 hours just for the withdrawal part). Connecting the two departments means clients can leverage the OTC desk without needing to move funds out of cold storage. Clients “can buy OTC and settle assets directly into Custody,” Coinbase added. The integration came about due to client demand.
SEC Chairman Confirms Cryptocurrencies Like Ethereum Are Not Securities. On March 12, the cryptocurrency and blockchain legislative advocacy group Coincenter published correspondence between the Securities and Exchange Commission (SEC) chairman Jay Clayton and representative Ted Budd. The letter explains that Clayton and the SEC’s staff analysis confirms that Ethereum and similar cryptocurrencies are not subject to securities laws.
IBM Quietly Enters Crypto Custody Market With Tech Designed for Banks. Later this month, Shuttle Holdings, a New York investment firm, will launch the beta version of a custody solution for digital assets built on IBM’s private cloud and encryption technologies. The companies won’t be storing cryptocurrencies and tokens themselves, but offering tools for others to do so.
Swiss Exchange to List XRP Exchange-Traded Investment Product. Besides XRP, Amun has also obtained clearance to issue ETPs linked to four more single crypto assets, including bitcoin cash (BCH), litecoin (LTC), stellar lumens (XLM) and EOS. While the exact time to launch these products is not yet fully finalized and will be based on buyer interest, he said the firm plans to list all the eligible and approved crypto ETPs on SIX by the end of this year.
Samsung Unveils Cryptocurrency Wallet, Dapps for Galaxy S10 Phone. the Samsung Blockchain Wallet is currently compatible only with ether (ETH) and ethereum-based ERC20 tokens. Bitcoin is not yet supported, despite the logo appearing on earlier pre-release presentation images. The wallet also supports four decentralized apps (dapps) at launch: crypto gaming platform Enjin, beauty community Cosmee, crypto collectibles platform CryptoKitties and merchant payments service CoinDuck.
‘World’s Biggest’ Blockchain-Focused ETF to Start Trading on London Stock Exchange. The blockchain-focused exchange-traded fund will include upon launch a portfolio of 48 different companies with exposer to blockchain technology.
Fidelity’s Cryptocurrency Arm Starts Offering Institutional Investor Services. The unit, Fidelity Digital Assets, began operations earlier this quarter but didn’t make any noise about it. It has already started offering trade execution and crypto custody services to institutional investors such as hedge funds and private wealth management firms.
The number of developers working on public coins has doubled in the last 2 years. 4k+ developers/month contribute code across 2.8k public coins. This is undercounting the number of developers in the crypto ecosystem; some of the most active projects are private (e.g. BNB), un-launched (e.g. Coda), or not a coin (e.g. Lightning).
🥀 The Bad News
Tether Updates Website, Says USDT Backed by “Reserves,” Not Just Cash. Now, the website instead reassures its patrons that it’s always “100% backed by [its] reserves.” It clarifies this vague language, even legalistic language, by saying these reserves “include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”
Bittrex Int’l Scraps ‘IEO’ amid Controversy over Crypto Startup RAID. The cryptocurrency exchange announced the halt to the sale on Twitter, explaining that it made the decision to boot RAID from its platform after the project made “significant, last minute changes.”
Suspected wash trading rife at major exchanges, per study. 2 of the top 5 reported liquidity pairs have less than 1 percent of their actual reported volume. True liquidity is in bitcoin pairs on exchanges that have been operating since 2015 and have low API driven trades.
📙 Best Long reads for the weekend
Schnorr Signatures & The Inevitability of Privacy in Bitcoin. This article provides a general overview of the multiple implementations of Schnorr signatures and their corresponding benefits, explores MuSig, a new multi-signature standard that serves as a building block for novel Bitcoin technologies like Taproot, and describes how the fully realized version of Schnorr can break the heuristics used in blockchain analysis and, at the same time, help develop a strong fee market in Bitcoin’s main layer.
The Convergence Stack. The Convergence Stack is a further refinement of the Outlier Ventures investment thesis first published in 2016 anticipating the convergence of blockchains with IoT, AI and eventually robotics. Over the last three years, as the industry has matured, they have developed a more granular view of the specific technologies and protocols that make up Convergence and that informs how we invest.
How Binance Could Become the First Decentralized Autonomous Corporation. Tushar Jain and Kyle Samani, managing partners of Multicoin Capital, discuss Binance, Binance Chain and BNB token, and why they believe Binance will become the first centralized company to successfully decentralize itself and migrate the value in itself to its token.
Is Facebook Plans to Become World’s Biggest Central Bank? Between Messenger, WhatsApp and Instagram, which Facebook owns, there are a collective 2.7 billion users. If Facebook decides to back the value of its own digital coin with a basket of foreign currencies, then it could potentially become the largest central bank in the world — because that’s what central banks do; print money backed by their country’s economy and foreign currency reserves. Not only will this become monumental in world economic history, it is also going to become a serious and rapid threat for the existing giants of the finance industry.
Price War: A new type of attack on stablecoins. Different stablecoins use different business models and these differences open up new types of attacks which have not been discussed and of course have not happened yet.
Why Open Source Finance Will Win. Explaining why 50% of all assets will live on an open source financial protocol in 50 years.
Blockchains are not companies. This post mainly addresses blockchain governance. It was written mainly with blockchains in mind rather than blockchain based protocols. However, points made can be applied to both.
Crypto in 2019: Kleiner Perkins 5 Focus Areas. Given the breakneck pace of evolution in crypto, the ideas below could become obsolete overnight. That said, here’s a snapshot of what KPCB are thinking as they enter 2019 driven by what happened in 2017–2018.
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