Weekly Market Report - 13th April 2019
This weekly report aims to provide an overview of the crypto markets focusing on secondary market trading. Though nothing here is investment advice, we hope this provides some useful and targeted information.
Weekly Market Report - 13th April 2019
The crypto market started the month with an expected turn, with top coins making double-digit returns. However, as the market began to cool off, some coins seemed to have exhibited extreme price movements in the opposite direction. Check out this week’s report to find out which coins made the most gains!
Market Overview
We are focusing our market overview on the top 100 tokens from CoinMarketCap and the sector classification is roughly in line with what MyToken uses with some minor modifications. We will be continuously updating the sectors and their constituents as we develop a deeper understanding of the crypto ecosystem.
This week’s new participants in the top 100 coins:
WICC, TRUE, VEST
Coins that dropped out of the top 100 coins compared with last week:
ETP, REPO, BIX
Rolling Returns of Top 100 Tokens by Sector
Returns of the top 100 Tokens by sector from March 13th, 2019, to April 13th, 2019
Returns vs Volatility
This is a look at the mean and total daily returns vs volatility for the 15 sectors as well as the overall crypto and equity market. Some sectors only contain one or two coins/tokens while others have more than a dozen.
Mean Daily Return vs Volatility from March 13th, 2019, to April 13th, 2019
We abbreviated the names of several sectors to make it easier to view:
M = Market
DC = Digital Cash
CP/MP = Computing Power/Mining Pool
A/M = Advertising/Media
G/E = Gaming/Entertainment
C = Classics
D/GT = Dividend/Governance Token
E/T = Exchange Token
OC/I = Off Chain/Interoperability
Correlation Between Daily Returns of Each Sector
Correlation between daily returns of each sector from January 12th, 2019, to April 13th, 2019 Correlation ranges between -1 and 1. A correlation close to 1 or -1 means a very positive or negative relationship between the two subjects, respectively. A correlation close to 0 means no linear relationship between the two subjects.
The above figure shows the correlation between the daily returns of each sector. Other than Stablecoins, the computer power/mining pool sector once again shows a rather low correlation with the rest of the market. Similar to what we have observed in the past week, such low correlation is mainly due to the extreme price movement of Maximine Coin (MXM).
Focus Spotlight — Altcoin Price Spikes
The cryptocurrency market started the month with an unexpected turn, with top coins experiencing strong surges. Bitcoin broke its $5000 resistance level, Ethereum climbed above $180, while the rest of the altcoins made double-digit returns. However, starting around April 7th, the market turned into a sea of red. While most altcoins started to pull back as they lost momentum, overall the losses were not severe.
As the market began to cool off, we noticed several altcoins making supersized returns during this period. Among those that showed extreme price movements were SNC, EGCC and STK.
As displayed above, for all three tokens, prices remained flat over the past three months with little to no liquidity. Prices were largely unaffected by the sudden bull market around April 2nd but simultaneously jumped on April 7th, accompanied by an abrupt increase in trading volume. Shortly after prices doubled or tripled within that one-day period, they soon dropped to around half from their highest value.
During this period, there were no news catalysts for any of these projects. In terms of the projects themselves, SunContract (SNC) is an energy trading platform that utilizes blockchain technology to create a platform for buying and selling electricity, Engine (EGCC) is a data ecosystem designed specifically for the automobile industry, and Stack (STK) is a crypto payment platform for everyday transactions. It appears that the sectors they operate in are unrelated and given that these projects have not issued any updates lately, it is unlikely that their recent price surges were caused by improvements in their fundamentals.
If we look at their markets, specifically the ETH trading pairs, the majority of the volume has been traded on Huobi Global. In addition, all of these tokens are ERC-20 compatible which run on the Ethereum Blockchain. In the following, we will first take a look at the trading patterns for each of these pairs.
For the SNC/ETH pair on Huobi, we see from the hourly trading volume that for the past few weeks, large trades had been completed at certain time intervals, indicating that the market is likely dominated by a few traders that trade at certain times of the day. On April 7th, around 16:00 UTC there was a sudden increase in volume, which pushed the price up to twice of its original value.
Based on the on-chain data provided by Etherscan, the number of on-chain transactions and transaction value also spiked on the day of the price surge. Transaction counts increased from 3 transfers on April 6th to nearly 250 transfers on April 7th.
For EGCC/ETH, the trading pair has had almost no volume since Feb 2019. Prices for EGCC also jumped at around 16:00 UTC on April 7th. However, there was a gradual increase in price approximately 12 hours prior to the jump.
Similar to SNC, transaction counts and transfer amount also increased on the same day but dropped significantly two days later. However, the number of transfers did not rise as much as SNC did.
For STK/ETH we see that starting mid-January, the market was provided a steady flow of liquidity, indicating that the volume was likely supported by a market maker. After February, the volume disappeared and there were almost no trades on the market until April.
The price surge for STK occurred at around 16:00 UTC on April 6th, exactly one day before that of SNC and EGCC. However, as volume began to decrease, it bounced back 24 hours later, revealing another attempt to push prices upward, which matched the timing of SNC and EGCC’s price surge. Soon afterward the volume returned to its original level as prices continued to descend.
Similar to what we observed from the previous trading pairs, the level of on-chain activity also matched the timing of the price surge.
So far from what we have observed, the three tokens have all experienced a prolonged period of inactivity, followed by an extreme price surge. To be more precise, there was a sudden rise in trading volume between 16:01 and 16:08 on April 7th for these three tokens. The unusual price movements were also followed by an increase in on-chain activity. The three charts below show the 5-minute transfer amounts for these tokens on the Ethereum blockchain.
For SNC and EGCC, the transfer amount spiked immediately after 16:00 on April 7th, while for STK the spike occurred one day earlier. If we further look into individual on-chain transactions on Etherscan, it appears that these transfers were mostly deposits made to the Huobi exchange. A possible reason for such inflow of tokens may be that after the price surge, investors that had kept their tokens in their private wallet had to quickly transfer their tokens to the exchange wallets so that they could liquidate their positions on the trading platform. It is unlikely that those that transferred their tokens after the price surge were involved the price surge, as traders participating in the price pump and planning to dump their positions should have already deposited their funds to the exchange beforehand. Unfortunately, due to blockchain’s anonymity feature as well as the fact that Huobi is a centralized exchange, uncovering the identities of these traders will be a difficult task.
We hope you enjoyed this week’s report. Stay tuned for future updates!
Data Source
We included data from sources such as CoinMarketCap for analyzing price movements, volatility, mean daily return, and correlations between each sector; MyToken for sector breakdown; Huobi exchange for price/volume data; and Etherscan for on-chain data.
Stay Tuned Here
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