ICU Quarterly
Report | Q3 2018
Market overview
In Q3 2013, cryptocurrency market continued to drop, if only at a slower pace. Total market capitalization went down from $254 bln to $221 bln. Altcoin market cap went down from $146 bln to $109 bln. Bitcoin virtually didn’t lose anything, while the altcoin market felt a significant retracement.
Ethereum, the altcoin flagship, became the prime asset to go experience price pressure. The cap of the cryptocurrency second only to Bitcoin went from $45 bln to $24 bln.
The ICU team believes this is related to two processes:
− Dissolution of short-term expectations and transference of large capital from Ethereum to Bitcoin as a more conservative tool.
− New panic-induces deflux of “questionable” money from altcoin market.
Events
The ICU team highlights the following cryptoindustry events of Q3 as the most significant:
July 02nd: Coinbase, the largest American cryptocurrency exchange platform, has announced the launch of their custodial service intended for a wide range of institutional and individual investors in the US and EU.
July 10th: Litecoin Foundation, a nonprofit group, has announced their purchase of 9.9% of the German WEG Bank AG for development of the multipurpose platform TokenPay.
July 16th: Bitplay has become the first processing center to receive BitLicense, which allows the company to work with virtual currencies in the state of New York.
July 16th: BlackRock, one of the world’s largest investment firms, has announced the drafting of their corporate team, whose task will be to study cryptocurrency market.
July 19th: The number of lightning-channels within the Bitcoin network has exceeded 10 000 for the first time in history.
July 20th: Coinbase advertisement ban on Facebook and Google has been lifted.
August 03rd: Intercontinental Exchange in partnership with the New York Stock Exchange, Microsoft, Starbucks, and Boston Consulting Group has announced the development of the Bakkt platform. Bakkt enables its user and institutional investor to buy, sell and hold digital assets in a universal ecosystem.
August 30th: Submarine Swaps testing has begun on the main Bitcoin network. Submarine Swaps makes it possible to establish a direct connection between the main Bitcoin network and Lightning Network, an instant payment platform.
August 31st: Ethereum developers have agreed to a proposal EIP-1234, concerning the reduction of new coin emissions per block from 3 ETH to 2 ETH.
September 08th: Coinbase has been discovered considering the launch of a new Bitcoin ETF and consults with BlackRock on the matter.
September 13th: BitGo, the leading Bitcoin security expert and wallet provider, has announced their license to provide digital asset custodial services for institutional clients in the United States.
September 14th: Vlad Zamfir, one of the leading Ethereum developers, has proved the concept of sharding for Ethereum scaling.
September 17th: The main network for the Tezos smart contract platform has been launched.
September 17th: Ripple has announced the full-on launch of XRapid, an XRP-based instant international payment system.
September 21st: The French government has announced its intentions to create a legal basis for all digital asset providers.
September 26th: Circle, the owner of Poloniex, has announced the launch of USD Coin, a stablecoin tethered to the United States dollar.
The events of Q3 indicate that the development of blockchain and market cap growth gave enough reasons for traditional investors to take interest in cryptoassets. The institutional investment segment is still being developed, despite the regulative obstacles.
It is notable, that the leading role in this process is taken up by the large cryptocurrency companies, such as Coinbase. Currently, these firms expand their infrastructures and gain the rights required for major entry into the global financial market. It is quite possible, that the traditional players on the financial market will adopt blockchain in cooperation with those who have already proven themselves in the cryptoindustry.
Technology-wise, the project development is currently focused on scalability and mass usability.
A number of negative news related to the decrease in the price of Ethereum should also be noted. The ICU team perceives in this a high probability of intentional exploitation of the circumstances in order to create pressure on the Ethereum price and cause panic leading to mass selling of altcoins.
ICU Indexes
Base indexes
Satoshi’s Fifteen displayed a 3% better performance compared to the overall altcoin market and a 22% better performance than Ether.
Trendsetters displayed a 9% better performance compared to the overall altcoin market and a 27% better performance than Ether.
Sector indexes
Flash Banking displayed a 52% better performance compared to the overall altcoin market and a 71% better performance than Ether.
Smarter Money displayed a 7% lower performance compared to the overall altcoin market and an 11% better performance than Ether.
Content Markets displayed a 5% lower performance compared to the overall altcoin market and a 13% better performance than Ether.
Both basic indexes, Satoshi’s Fifteen and Trendsetters, that reflect the market overall, have had a better result than just passive ownership of altcoins.
Among the sector index, Flash Banking has had the best result and made a 22% profit, despite the overall retracement.
The assets of Smarter Money and Content Markets indexes have had a performance below the overall market. It is related to a large percentage of Ether in Smarter Money and low total capitalization of assets in Content Markets.
Nevertheless, all five have had a better result than Ethereum, the flagship of altcoins.
ICU service updates
Integration of Bittrex has become a valuable element of the ICU infrastructure, as it has allowed adding promising assets to our indexes while keeping the counteragent risks at a minimum.
The lunch of TezosHODL will enable to take part in maintaining the consensus within the Tezos network at the optimal conditions and get value from 19% per annum in XTZ.
Projections
The decrease of price on Ethereum and transference of capital from Ethereum to Bitcoin in Q3 playas into the hands of big investors, who can use these circumstances to increase the amount of finance put into altcoins. Diversification and automatic rebalancing of assets make ICU indexes a viable and efficient tool for hedging risks related to holding separate cryptocurrencies for long-term cryptoasset ownership.
