Binance Hacked, Bitcoin Higher

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We launched a new website this week! The new site opens up our investment platform, index data, and informational materials to the public. Below are some of the new features:

- Index methodology, daily holdings, and real-time performance

- Fund strategy, features, and investment offering terms

- Investor portal for electronic KYC/AML, investor onboarding, and funding

- Resources — investor letters, newsletter library, fund fact card, index guide, etc.

Weekly Market Recap

May 9 — Crypto assets jumped 5.8% this week ($10.3 billion), bringing the total market cap to $187 billion. The Crescent Crypto Market Index (CCMIX) was up 8% while BTC gained 11.6% over the same period.

After last week’s uptick in intra-day volatility, the crypto market has come roaring back, shaking off both the fallout from the NYAG news as well as Binance’s reported hack a couple days ago (see story below). Bitcoin has breached the psychological $6,000 level for the first time since mid-November despite a number of seemingly negative events recently. It still boasts a 3% premium on Bitfinex and is currently trading around $6,015.

Bitcoin vs. CCMIX

May 2nd — May 9th, 2019

Crescent Crypto Market Index (CCMIX)

Constituent Performance

May 2nd — May 9th, 2019

Summary

  • BTC was once again the big winner this week, gaining over 11%. Bitcoin has gained more than 60% year-to-date.
  • ETH and BCH were the runner ups, each rising more than 4% as larger valued crypto assets led this week’s gains.
  • Return dispersion emerged among constituents as NEO and XLM both fell more than 10% week-over-week.
  • ADA was down almost 9% after the Cardano team delayed the release of its Shelley update once again.
  • BTC dominance rose from 54.5% of the total crypto market cap this time last week to 57.2% today.

Notable News

The Binance Hack

What Happened? The first major hack of Binance occurred on Tuesday as 7,074 BTC were stolen from Binance’s hot wallet. In a press release, Changpeng Zhao, Binance’s CEO stated: “We have discovered a large scale security breach today, May 7, 2019 at 17:15:24. Hackers were able to obtain a large number of user API keys, 2FA codes, and potentially other info. The hackers used a variety of techniques, including phishing, viruses and other attacks. We are still concluding all possible methods used. There may also be additional affected accounts that have not been identified yet.”

Why Does This Matter? Crypto exchange hacks certainly have precedent, but a brand like Binance carries significant weight. The positive here is that Binance can and already has replaced all of the stolen funds. That’s not a sustainable solution, however. Although aspects of their operational security failed, all of their cold storage balances remained safe. The takeaway here is central to the mantra of long term crypto investors: “not your keys, not your coins.” Investors should never store assets on an exchange they are not prepared to lose. Crescent holds all assets in cold storage as part of its mandate. Here is a great write up on what happened from our friends at Airfoil: Read more…

Fidelity to Roll Out Crypto Trading ‘Within a Few Weeks’

What Happened?

It was finally revealed this Monday that Fidelity will reportedly roll out bitcoin trading for institutional clients in the coming weeks. A spokeswoman for Fidelity told Bloomberg “We currently have a select set of clients we’re supporting on our platform. We will continue to roll out our services over the coming weeks and months based on our clients’ needs, jurisdictions, and other factors. Currently, our service offering is focused on Bitcoin.” Bloomberg also reported that Fidelity’s service will focus on institutional, not retail, customers.

Why Does This Matter?

Just last week, Fidelity published a survey saying that institutional investors are increasingly open to adding digital assets in their portfolios. Around 22% of investors already have some exposure to digital assets, while 40% said they are open to taking the plunge in the next five years. It’s clear that Fidelity is taking this seriously. They also launched cryptocurrency custody service earlier this year as well as hiring a former head of digital assets project from Barclays. Bitcoin has passed $6,000 this week despite news about a Binance hack, so it will be interesting to see how much demand Fidelity sees when it kicks off.

WeChat Bans Crypto Transactions In Its Payment Channels

What Happened?

Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy. The news comes from Dovey Wan, founding partner of the crypto investment firm Primitive Ventures, who tweeted the news out on May 7th. A screenshot of the policy changes was included which suggests users who engage in cryptocurrency trading will have their accounts terminated. The updated rules are apparently coming into force on May 31st and stated that “merchants may not engage in illegal transactions such as virtual currency.” Community members discussed whether or not this would “impact local liquidity to some extent”.

Why Does This Matter?

According to Dovey, WeChat is a dominant channel for over-the-counter (OTC) cryptocurrency transactions in China. While we don’t know which currency, WeChat Pay reportedly registered a total daily transaction volume of over $1 billion. Meanwhile, Binance CEO Changpeng Zhao commented that he believes the restrictions have been forced on the company. He also stated “It is inconvenient for people short term, and they take a hit. But long term, it is precisely this type of restriction of freedom that will push people to use crypto. Not a bad thing.”

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