Team GSR | Oct 2019
The Market
Bitcoin started the month off trading in the range of $8,000 to $8,500 and showed support at the $8,000 level for the first few weeks of October. A large sell-off then occurred on October 23rd as bitcoin dropped to $7,500 in a matter of minutes. Volatility is a common occurrence in crypto markets, however, the resurgence two days later, that would propel bitcoin to briefly hit the $10,000 mark was remarkable even by bitcoin’s standards. Bitcoin rose an unprecedented 40% in one day, finishing the month up 10.2%.
According to Skew, liquidations on BITMEX have reached $21 billion over the last 12 months. The record sell-off was $751 million in a single day in November of 2018. On October 23rd, during bitcoin’s drop to the $7,500 range, liquidations almost hit $700 million. BITMEX offering 100x leverage is obviously a major factor in the number of traders being liquidated, as it is clearing adding fuel to volatile market moves. Recently, Binance questionably rolled out a whopping 125x leverage.
All cryptocurrencies in the top 10 saw gains in October. BTC is up (10.24%), BCH (24%), BSV (48%), EOS (10%), ETH (1.8%), XRP (15%), BNB (26%), LTC (4.3%), and XLM (10.2%). Tron at number 11 also had a substantial gain of 36%.
The biggest losers in the top 70 in October were LEO (-4.5%), XTZ (-1.47%) ZEC (-2.3%) DCR (-8.9%) HEDG (-8.3%) VSYS (-18%) ALGO (-10.6%), EKT (-18%), LISK (-5.5%), and QNT (-6.8%). Other projects of note, such as BEAM and GRIN, both of which are based on the Mimblewimble protocol, lost over 34%. Additionally, KIN is down 57% in October, as it continues to battle with the SEC.
As bitcoin celebrated its 11th birthday in October, all-time fees also reached a new milestone of $1 billion, the cumulative amount of fees that have been paid on the BTC network.
China Narrative Re-emerges
The biggest news of the month came from comments from President Xi Jinping of China about blockchain technology. China has had an interesting history with the cryptocurrency market. On the 5th of December 2013, the People’s Bank of China (PBOC) made its first step in regulating bitcoin by prohibiting financial institutions from handling bitcoin transactions. Many exchanges were banned by regulation in September 2017 with almost 200 platforms closing down by July 2018. Despite this, it was arguably a positive sign for crypto at the time, as the last widespread technology to get the ‘banned’ stamp of approval from the Chinese government was the internet in 1996.

On October 23rd President Xi said China must make a “greater effort” to develop and apply blockchain technologies and gain an “edge over other major countries.”
“Major countries are stepping up their efforts to plan the development of blockchain technology. Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative and industrial aspects of this emerging field,” said Xi.
These are optimistic comments for the future adoption of blockchain technology, from the man who sets the rules for 20% of the world’s population.
The Inevitability of DCEP (Digital Currency Electronic Payments)
It is clear that the question is when not if China will release its own digital currency backed by the state.
This release will stir a lot of interest from not only the digital asset space but also global macro markets. The hesitation and lack of progress from the US in this area has been highlighted by the focus from Congress on Facebook’s project Libra and its questionable history of data breaches. A wider conversation about ensuring the future of the US dollar as the world’s reserve currency still remains on the fringes. Mark Zuckerberg uses the lack of innovation and his concern for the US being left behind as the focus of his arguments, but the answer surely isn’t a cryptocurrency run by a monopoly of centralized technology institutions, the very structure bitcoin was built to compete with. The private sector has the resources and manpower to innovate faster than the government, so it is no surprise Libra came to fruition before any digital government currency. However, the combination of ‘Zuck Bucks’ and the murmurs of DCEP should get the US exploring a digital currency in a hurry, at least behind closed doors.
The Moral Question
There will be many long conversations that are only just beginning about the use of DCEP. It is clear China will use blockchain to advance their authoritarian rule through mass surveillance. Blockchain’s immutability could be ideal for tracing consumer spending and giving clear oversight of the financial system. It is sadly ironic that the values cryptocurrency was founded on are very far away from why the first state has decided to implement it. It’s arguably more about policing than technological progress. Either way, these comments should at the very least make it clear to the wider financial world and to global consumers that digital assets are here to stay, and that if governments ignore crypto assets they will get left behind.
GSR Update
GSR has partnered with Blockstack to provide overseas liquidity for the Stacks token (STX). Blockstack is the first-ever project to receive SEC approval for a blockchain token offering under Regulation A+. The agreement has been filed with the SEC on Form 1-U.
Blockstack is a full-scale decentralized computing platform that was founded at Princeton University in 2013 with the aim of putting Internet users in control of their data and identity. Blockstack’s team includes computer scientists from Princeton, Stanford, and MIT, and they have raised over $75 million from a reputable list of investors that includes Union Square Ventures, Y Combinator, Harvard University, and Digital Currency Group.
GSR is looking forward to the Digital Asset Summit on November 13th, created by BlockWorks Group (BWG). Co-Founder of GSR Rich Rosenblum will be speaking on the panel ‘Integrating Institutions into Crypto’.
Events the GSR team will be attending in November:
The Capital CMC Conference — Singapore, November 12th.
SWELL by Ripple — Singapore, November 7th.
Convergence, The Global Blockchain Conference — Malaga, November 11th.
Consensus Invest — NYC, November 11th.
DAS: Markets — NYC, November 13th.
Please reach out to markets@gsr.io if you wish to arrange a meeting with our team.
The Market
- Visa, Mastercard, Others Reconsider Involvement in Facebook’s Libra Network
- Morningstar Is Building A Blockchain Bridge To The $117 Trillion Debt Securities Industry
- Pantera Leads $5 Million Round for Decentralized Derivatives Market
- Asset Manager Stone Ridge Files SEC Prospectus for Bitcoin Futures Fund
- Crypto Custodian Bitgo Launches Staking for Dash, Algorand
- Amun and Bitcoin Suisse Launch First All-Swiss Crypto ETP
- Bitcoin derivatives come under FCA scrutiny; plans for a blanket ban for consumer protection
- PayPal withdraws support for Facebook’s Libra cryptocurrency
- Hong Kong ATMs Run Out of Money As Bitcoin Trading Volume Balloons
- Good News, Facebook Doubters: You Can Bet on Libra Being Delayed
- Class action lawsuit against Bitfinex and Tether filed by lawyers who successfully sued Craig Wright
- Hong Kong Securities Watchdog Issues Rules on Funds Investing in Crypto
- Tiny $217 Options Trade on Bitcoin Blockchain Could Be Wall Street’s Death Knell
- Bitfinex and Tether Limited Sued for Allegedly Printing $2.8 Billion of ‘Fake’ Tether (USDT) and Causing the Crypto Market Bubble of 2017–2018
- Bank of England Sets Out Rules for Libra Launch in the UK
- UNICEF Will Not Convert Bitcoin and Ethereum Donations to Fiat, but are still accepting crypto
- Bitcoin ‘Maybe Is a Partial Store of Value,’ Concedes Nouriel Roubini
- Fidelity CEO Abigail Johnson says operation that started ‘just for fun’ is here to say
- Crypto brokerage Bitcoin Suisse invests $3M in trading software provider CoinRoutes
- Research: Over 40% of Blockchain Industry Employees Work at Crypto Exchanges
- Breaking: Bakkt announces the launch of Bitcoin options contract in December
- Polish Police Arrest Head of Payment Processor Tied to Bitfinex Crypto Exchange
- Lebanon Banks’ Shutdown Is ‘Most Potent Case’ for Crypto: Nassim Taleb
- President Xi Says China Should ‘Seize Opportunity’ to Adopt Blockchain
- Avalon Bitcoin Miner Maker Canaan Officially Files for $400 Million US IPO
- China: WeChat Searches for ‘Blockchain’ and A-Share Stocks Skyrocket
Projects
- The World’s Most-Used Cryptocurrency Isn’t Bitcoin, its Tether
- Kik Announces It’s ‘Here to Stay’ in Apparent Reversal of Fortunes
- CoinShares, Blockchain Launch Gold Token Network on a Bitcoin Sidechain
- NY District Court Postpones Telegram’s TON Hearing to 2020
- Algorand Wins Sharia Compliance Certificate to Enter $70 Billion Market
- Stacks Tokens Available This Week on Binance, Hashkey Pro
- Why Enterprises Are Paying Attention As Ethereum 2.0 Unfold
- Low engagement from Bitcoin SV developers
- Blockstack Will Pay Liquidity Provider GSR to Trade Its STX Token
Exchanges
- Bithumb Global to Launch Regulated Crypto Exchange in India: Report
- Coinbase just hiked their fees for retail and became the most expensive exchange (tied with Bitstamp)
- Coinbase Reinstates Full GBP Support for UK Clients
- Binance Futures Increases Maximum Leverage to 125x and Launches Leverage Adjustment Function
Regulation
- The IRS Just Issued Its First Cryptocurrency Tax Guidance in 5 Year
- The SEC has rejected Bitwise’s bitcoin ETF proposal.
- CFTC chair says ETH is a commodity; anticipates ETH derivatives to trade in the US soon
- The IRS Will Now Ask if You Own Crypto in the Most Widely Used US Tax Form
- Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets
Other Articles
- Confessions of a Reformed Crypto Doubter
- Andrew Yang’s America Should Be Built On The Blockchain
- Global economy faces $19tn corporate debt timebomb, warns IMF
- Trump Administration Popped 2017 Bitcoin Bubble, Ex-CFTC Chair Says
- Fed to increase repo market interventions again ahead of month-end
- Amazing work being accomplished at Chain analysis
