Weekly Cryptocurrency and ICO Market Analysis [December 4–10, 2017]

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This report presents data on the cryptocurrency and ICO market changes that took place in the third and fourth quarters, with special emphasis on an analysis of the changes that have taken place since the beginning of December 2017, including over the last week (December 4–10, 2017).

1. General cryptocurrency and digital assets market analysis (by week, month, quarter). Market trends.

1.1 General cryptocurrency and digital assets market analysis (by week, month).

Table 1.1. Trends in the capitalization of the cryptocurrency market and main cryptocurrencies from August 1, 2017, to December 10, 2017

During the period from December 1–10, 2017, total cryptocurrency market capitalization increased by more than $100 billion, from $305.1 billion to $416.9 billion (as of December 10, 2017, 00:00 UTC, see Table 1.1). Over the past week (December 4–10, 2017) market capitalization increased by $87.8 billion. Bitcoin alone accounted for $68.5 billion of this increase, as its capitalization increased from $185.3 billion to $253.8 billion. The growth in altcoin capitalization over the week equaled approximately $20 billion (from $143.8 billion to $163.1 billion).

During the period from December 4–10, the exchange rates of Bitcoin, Ethereum and Litecoin increased by 36.9%, 2.0% and 55.3%, respectively, while the exchange rate of Bitcoin Cash showed a slight fall of -1.6%.

Up to December 8, 2017, the growth in the cryptocurrency market was mainly due to the intensive growth in the dominant cryptocurrency, Bitcoin (see fig. 1), the market capitalization of which exceeded $300 billion. The Bitcoin price reached several milestones over the past week. Over the course of five days (December 4–8, 2017) the price appreciated from $11,000 to $18,000. Over the subsequent three days, the price underwent a downward adjustment and the exchange rate fell.

Figure 1. Price trends of Bitcoin over the past week (December 4–10, 2017)

Data source: coinmarketcap.com

When looking at the trends in the top seven cryptocurrencies in terms of capitalization over the past week, one can see the tradeoff between the growth in the Bitcoin exchange rate during December 4–8, 2017, and the drop in the exchange rates of Ethereum, Bitcoin Cash, Ripple, Litecoin and Dash over this same period. Conversely, when the Bitcoin exchange rate adjusted downward during the period from December 8–10, 2017, a growth surge in the exchange rates of these altcoins was seen (see fig. 2). The vigorous growth in the IOTA exchange rate up to December 6, 2017, was partially halted by the growth in the Bitcoin exchange rate.

Figure 2. Trends in the top seven cryptocurrencies on the cryptocurrency market over the past week (December 4–10, 2017)

Data source: coinmarketcap.com

All of this points to the high liquidity of the cryptocurrency market, and the traders’ readiness for its rapid change in order to profit from short-term changes in exchange rates. For the moment, the overwhelming majority of traders on the cryptocurrency market are individual traders, with very few institutional buyers. However, when these institutional buyers appear, the economics of the cryptocurrency market may undergo significant changes due to the appearance of the new mechanisms of risk hedging (futures contracts), the emergence of high-speed bots that perform transactions in microseconds using developed trading algorithms, and an increase in the influence of financial funds. It is well known that Goldman Sachs, one of the world’s largest firms, will help its clients to buy and sell Bitcoin futures contracts. Going forward the number of financial derivatives on the cryptocurrency market will increase, which will attract the large funds and require more clear-cut rules on its regulation.

Over the past week, the structure of market dominance of the top seven cryptocurrencies by capitalization changed, with IOTA overtaking Ripple, Litecoin, and Dash and climbing to fourth place with a total capitalization of more than $11.9 billion at December 10, 2017. Especially strong growth in the IOTA exchange rate took place from December 4–6, 2017. Its capitalization increased from $5.3 billion to $15.4 billion, accompanied by a 194% appreciation in its exchange rate from $1.89 to $5.55 (see fig. 3).

Figure 3. Price trends of IOTA over the past week (December 4–10, 2017)

Data source: coinmarketcap.com

What’s behind the growth in this cryptocurrency? IOTA has a few differences from other cryptocurrencies that determine its value: a) the possibility to make micropayments; b) there are no miners, meaning there is no commission fee for transactions within the network; c) scalability, which prevents transaction failures; d) as the number of users increases, so does the transaction speed; e) future partnership (Microsoft Azure) and projects (development of high-capacity microprocessors); f) a fully decentralized system.

The main reasons for the changes in the exchange rates of the leading cryptocurrencies during the week are given in Table 1.3.

The Smith + Crown Index increased considerably over the last week of November from 20,456 to 25,891.

To analyze trading activity on cryptocurrency exchanges, the ZAK-n Crypto index is calculated (see the Glossary). The values of the ZAK-3 Crypto and ZAK-7 Crypto indices are presented in Tables 1.1, 1.2.a, and 1.2.b. For example, on December 8, 2017, the 24-hour trading volumes (Volume 24h) for the three dominant cryptocurrencies (Bitcoin, Ethereum, Bitcoin Cash) exceeded $26 billion for the first time (Table 1.2.a). The value of the ZAK-3 Crypto equaled 7.2%, which attests to the extremely high liquidity and market dynamism of the dominant cryptocurrencies.

Table 1.2.a. Daily ZAK-3 Crypto index calculation (from December 1, 2017, to December 10, 2017)

The 24-hour trading volumes (Volume 24h) for the seven dominant cryptocurrencies (Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dash, and IOTA) reached $17,874 million at the end of the past week (Table 1.2.b), i.e. 5% of their market capitalization. The ZAK-3 Crypto and ZAK-7 Crypto indices are considered in more detail in Tables 1.2.a and 1.2.b.

Table 1.2.b. Daily ZAK-7 Crypto index calculation (continuation of Table 1.2.а)

Table 1.3 shows the key events of the week (December 4–10, 2017) having an influence on the exchange rates of the dominant cryptocurrencies and on the cryptocurrency market in general, with an indication of their nature and type of impact.

Table 1.3. Key events of the week having an influence on cryptocurrency exchange rates, December 4–10, 2017

The high trading volume (Volume 24h) relative to market capitalization contributes to increased volatility and wild price changes on the cryptocurrency market.

Below is an analysis of the daily changes in the Bitcoin, Ethereum, and Bitcoin Cash exchange rates since the start of the month (Tables 1.4.a, 1.4.b, and 1.4.c).

Table 1.4.a. Daily change in the Bitcoin (BTC) exchange rate, trading volume (Volume 24h) and capitalization, USD (from December 1, 2017, to December 10, 2017)

Table 1.4.b. Daily change in the Ethereum (ETH) exchange rate, trading volume (Volume 24h) and capitalization, USD (from December 1, 2017, to December 10, 2017)

Since the start of December, the Bitcoin exchange rate has appreciated from $10,198.60 to $15,455.40, while the Ethereum exchange rate has changed from $445.21 to $441.72 (Tables 1.4.a and 1.4.b). The highest Bitcoin and Ethereum exchange rates ($18,353.40 and $504.20) were recorded on December 8, 2017, and December 9, 2017, respectively. The largest fluctuations in the daily range (Range) of the exchange rates of Bitcoin ($4,016.50) and Ethereum ($47.90) were also recorded on the same days, i.e. the Ethereum price increased against the backdrop of a downward adjustment of the Bitcoin exchange rate. Since the start of 2017, the Bitcoin and Ethereum exchange rates have increased by a factor of 15.48 and 54.07, respectively (see Tables 1.4.a, 1.4.b).

The price trends of Bitcoin, Ethereum, and Bitcoin Cash in December 2017 are given in figures 3, 4, and 5.

Figures 4, 5, 6. Price trends of Bitcoin, Ethereum, and Bitcoin Cash

According to the data given in figures 4, 5, and 6, the intensive growth in the Bitcoin exchange rate during December 6–7, 2017, was accompanied by a drop in the exchange rates of Ethereum and Bitcoin Cash, while the downward adjustment of the Bitcoin exchange rate on December 8, 2017, led to an increase in Ethereum and Bitcoin Cash. All this attests to the fact that some market participants are periodically changing their preferences (see Tables 1.4.a, 1.4.b, 1.4.c) amid an overall positive capitalization trend on the cryptocurrency market and the appearance of interesting new cryptocurrencies. Figure 7 shows the lively pattern of change in the IOTA exchange rate since the start of December 2017.

Figure 7. Price trends of IOTA

Over the first ten days of December the IOTA exchange rate fluctuated from $1.20 to $5.60. The posting of development results and plans by the developers on the website raised confidence in the project and influenced demand for the cryptocurrency. In particular, on November 28, 2017, IOTA published the Data Marketplace, which presents a number of services for the “smart city” project (https://blog.iota.org/iota-data-marketplace-cb6be463ac7f).

Table 1.4.c. Daily change in the Bitcoin Cash (BCH) exchange rate, trading volume (Volume 24h) and capitalization, USD (from December 1, 2017, to December 10, 2017)

The overall index of Bitcoin Cash exchange rate change from August 1, 2017, equaled 3.48 (the rate of $380 at the close of the day on August 1, 2017, was taken as the basis for the calculation), i.e. during the period after the Bitcoin hard fork and the appearance of the new Bitcoin Cash cryptocurrency its exchange rate has increased by 248%, with most of this growth taking place since the beginning of November. During the first days of December the exchange rate ranged from $1,226.20 to $1,731.30. As mentioned earlier, Bitcoin Cash now holds third place in terms of capitalization, which equals $23.8 billion.

December 10, 2017, marked the beginning of trading in Bitcoin futures on the CBOE Global Markets exchange. The principles of trading are given on the website http://www.cboe.com/blogs/options-hub/2017/12/11/hedging-bitcoin-with-xbt-bitcoin-futures.

Bitcoin futures will allow market participants to lock in a selling price for Bitcoin as of a future date (see fig. 8).

Figure 8. Bitcoin futures

Figure 9 shows the trend in the weighted average exchange rate of Bitcoin on coinmarketcap.com during the first day of trading. The average exchange rate increased over the analyzed period, and was documented at $16,800.

Figure 9. Change in the Bitcoin exchange rate on December 10–11, 2017

Data source: coinmarketcap.com

Table 1.5 gives a list of events, information on which appeared last week, which could impact both the exchange rates of specific cryptocurrencies and the market in general.

1.2 Market trends

The weekly cryptocurrency and digital asset market trends from July 2, 2017, to December 10, 2017, are presented as graphs (Fig. 1.1–1.5)*.

Table 1.6. Legends and descriptions of the figures

Figure 1.1. Total cryptocurrency market capitalization**

** Average daily data

Figure 1.1 shows a graph of the weekly cryptocurrency market change from July 2, 2017, to December 10, 2017. Over this period, market capitalization increased from $94,716 million to $383,020 million, a growth of 2,064% relative to the start of the year. Over the past week, total market capitalization grew from $333,820 million to $383,020 million (as of December 10, 2017). At the start of the day on December 10, 2017 (00:00 UTC), cryptocurrency market capitalization equaled $416.9 billion (see Table 1.1), but by 04:00 UTC it had fallen to $363.6 billion. Therefore, figure 1.1 presents average daily values, including for December 10, 2017 (based on the data of coinmarketcap.com).

Figure 1.2. Change in market capitalization

Despite the significant growth in cryptocurrency market capitalization in Q3 2017 and over the entire year to date, the market is susceptible to sudden and drastic fluctuations. Significant drops were seen during the week of July 9–16, 2017 (-28%), and over the first two weeks of September (September 3–10 and September 11–17, 2017), when the market lost $25,203 million (-15.1%) and $20,817 million (-15%), respectively. The highest growth rate in Q3 was 39% (the week of July 16–23, 2017).

For the third week in a row the weekly growth in market capitalization equaled around $50 billion. Over the past week (December 4–10, 2017), total cryptocurrency market capitalization increased by $49,201 million, or 15% (using average daily data). The growth was mainly due to an increase in the market capitalization of Bitcoin, but Altcoins, including IOTA (on the strength of the increase in its market capitalization from $5 billion to $12 billion during the period from December 4–10, 2017), were also a factor.

Figure 1.3. Number of cryptocurrencies and digital assets

The total number of cryptocurrencies and digital assets listed on exchanges has grown since July from 881 to 1,274. Their number increased insignificantly over the past week. Average cryptocurrency and digital asset capitalization increased from $262.2 million to $300.6 million over the analyzed period.

Figures 1.4 and 1.5. Forecast of total cryptocurrency market capitalization

Over the four weeks of October (October 1–29, 2017) the cryptocurrency market grew by $23 billion, from $147 billion to $170 billion, and over the following four weeks of November (October 30-November 26, 2017) it reached $283 billion, i.e. it increased by another $113 billion. Over the next two weeks (November 27-December 10, 2017) the growth totaled another $100 billion. Total market capitalization exceeded $450 billion for the first time on December 8, 2017, and currently stands at $383 billion (the average value on December 10, 2017).

Last week (December 4–10, 2017) was characterized by market growth of 15%, with this growth being driven primarily by the increase in the Bitcoin price. New market trends are possible with the appearance of Bitcoin futures. That being said, the cryptocurrency market grew significantly, with its capitalization increasing by a factor of 22 since the start of the year (from $17.7 billion to $383 billion on December 10, 2017).

2. General analysis of the ICO market (by week, month).

2.1 Brief market overview, news of the week

  • How Governments Are Reacting to ICOs [source: Сoindesk]
  • ICO Delayed by Ethereum’s CryptoKitties Congestion [source: Сoindesk]
  • Alleged ICO Fraudster Pleads Not Guilty in New York Court [source: Сoindesk]
  • South Korean Government to Allow Institutional Investors to Participate in ICOs [source: Сryptocoinsnews]
  • Bitcoin ‘Looks Like a Bubble’, We’ll Be ‘Friendly’ to ICOs: Israel Securities Regulator [source: Сryptocoinsnews]
  • Bitcoin-Friendly Philippines Plans ICO Regulation [source: Сryptocoinsnews]
  • China was Right to Shut Down Bitcoin Exchanges & ICOs: PBoC Official [source: Сryptocoinsnews]
  • Five Reasons Why KYC Is Crucial for Your ICO Investment [source: Сryptocoinsnews]

2.2. Aggregated trends and performance indicators of past (completed) ICOs

A set of tools is proposed to assess the trends and performance of successfully completed and/or listed ICOs (see Table 2.1).

Table 2.1. Tools to assess the market performance of successfully completed and/or listed ICOs

Table 2.2. Aggregated trends and performance indicators of past (completed) ICOs4

Since the start of December (December 1–10, 2017), the amount of funds collected via ICOs equaled $282.9 million. This amount includes the results of the 21 most successful completed ICOs, with the largest amount collected equaling around $52 million (Blockstack ICO). The average amount of funds collected per project was $13.5 million. More detailed information on the 21 ICOs completed since the beginning of December is given in Table 2.5.

2.3. Aggregated indicators to assess the market of active and planned ICOs

Table 2.3. Aggregated indicators to assess the market of active and planned ICOs

The number of projects conducting active ICOs as of December 10, 2017, is 285. There is presently information available on at least 274 planned ICOs to be conducted after December 10, 2017, including at least 20 ICOs which will start next week.

2.4. Quantitative analysis of the ICO market

1. Amount of funds collected and number of ICOs

Table 2.4. Amount of funds collected and number of ICOs

Table 2.4 shows that the greatest amount of funds was collected via ICOs in June 2017. In that month, the average collected funds per ICO was $33.17 million.

The data for the first days of December (December 1–10, 2017) may be adjusted as information on the amounts of funds collected by completed ICOs is finalized.

Figure 2.1. Trends in funds collected and number of ICOs since the start of the year

2. Top ICOs

Table 2.5. Top 21 ICOs in terms of the amount of funds collected (December 1–10, 2017)

Table 2.5 shows the top 21 ICOs which were successfully completed since the start of December. The leader was the decentralized Internet browser Blockstack. The token of the Blockstack project will be used for the registration fees to be paid directly within the network. Figure 2.2 shows the ten largest ICOs completed since the start of December 2017.

Figure 2.2. Top 10 ICOs in terms of the amount of funds collected (December 1–10, 2017)

3.Top ICOs in their categories

The list of top ICOs for the week includes the following categories of ICO projects.

Table 2.6. Top 10 ICOs in terms of the amount of funds collected, Infrastructure category

Table 2.6 lists the top 10 ICOs in the Infrastructure category. Nearly all of these projects were performed in 2017.

Figure 2.3. Top 10 ICOs in terms of the amount of funds collected, Infrastructure category

The ratings of ICOs in the Trading & Investing and Gaming & VR categories are given below.

Table 2.7. Top 10 ICOs in terms of the amount of funds collected, Trading & Investing category

At present, all projects from the top 10 in the Trading & Investing category have a token performance indicator of 0.42x to 4.95x. The exchange listing of the 0x ICO can be considered one of the most successful, as this project has a current token price to token sale price ratio of 4.95x. When considering this indicator, it is important to remember that the 0x ICO was completed on August 16, 2017, i.e. the 5x growth took place over approximately 3.5 months, and the market capitalization of 0x currently exceeds $116 million.

Figure 2.4. Top 10 ICOs in terms of the amount of funds collected, Trading & Investing category

Table 2.8. Top 10 ICOs in terms of the amount of funds collected, Gaming & VR category

Table 2.8 shows the top 10 ICOs in the Gaming & VR category. Half of the projects presented are selling their tokens on cryptoexchanges. The capitalization of the leader in this category (the MobileGO project) is $60 million.

Figure 2.5. Top 10 ICOs in terms of the amount of funds collected, Gaming & VR category

Over the past period (December 1–10, 2017), 21 ICO projects were successfully completed, each of which collected more than $100,000, with a total amount of funds collected of at least $282.9 million. The week’s leader was the Blockstack project ($52 million). The total amount of funds collected by a number of ICOs failed to reach even the $100,000 mark (the information for some projects is still being finalized). At least another 20 ICOs are planned to take place next week.

The Glossary is given in Annex 1.