Weekly Market Report - 20th 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 - 20th April 2019
Over the past few weeks, we have seen the price of Maximine Coin making sharp rises and falls, recording a gain of over 1200% in March but dropped to nearly half in April. Check out this week’s research report to find out why this token has displayed such price movement.
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:
BIX
Coins that dropped out of the top 100 coins compared with last week:
ETN
Rolling Returns of Top 100 Tokens by Sector
Returns of the top 100 Tokens by sector from March 20th, 2019, to April 20th, 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 20th, 2019, to April 20th, 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 20th, 2019, to April 20th, 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. Within the cryptocurrency market, the computer power/mining pool sector shows the lowest correlation with the remaining sectors. This is mainly due to the extreme price fluctuation of Maximine Coin. In the following, we will explore the project behind this token.
Focus Spotlight — Maximine Coin (MXM)
For three consecutive weeks, we have seen the returns of the computer power/mining pool sector displaying a relatively low correlation with the rest of the market. Taking a closer look at the sector’s constituent tokens, we find that such deviation is primarily due to the price movement of Maximine Coin, which has seen sharp rises and drops since early March.
MXM is the token that powers the MaxiMine ecosystem. MaxiMine is a cloud mining service that relies on a staking process, where users deposit their MXM tokens into a smart contract in exchange for hash power. A percentage of the mining reward is distributed to users at the end of each staking period. Furthermore, the platform allows mining for multiple types of cryptocurrencies, allowing users to switch among a huge selection of coins. Although the whitepaper lists the factors used to calculate the mining reward, the exact formula is not displayed.
The project was launched in July 2017 and its token sale was completed in June 2018, successfully raising around 80,000 ETH, approximately $33 million USD at that time. The token was first listed on HitBTC immediately after its ICO. However, it appears that it is no longer traded on HitBTC and instead, the majority of the volume has moved to CoinBene.
Currently, the MXM/USDT trading pair on CoinBene accounts for nearly 70% of the token’s trading volume, while the MXM/ETH trading pair on the same exchange accounts for another 27%. If we look at the trading pattern of MXM/USDT, since the start of 2019, there seems to be a repeated pattern where trading volume drops to nearly 0 everyday between 19:00 UTC and 21:00 UTC, which is around 3 a.m. to 5 a.m. in China and Singapore (Beijing time UTC +8).
The price of MXM skyrocketed from $0.012 to $0.1478 between March 1st and April 2nd, recording a gain of over 1200%. Taking a closer view at the 15 min trading data towards the end of March, we find that price movement follows the pattern of jumping by a big percentage and remaining flat for a certain period of time afterwards, as if prices have been predetermined by one or few market participants.
In terms of liquidity, although the daily volume remained around $10 million and $25 million during this period, the over 95% of its volume had been traded on CoinBene, which is one of the adopters of trans-fee model. In short, users on the exchange pay transaction fee when making trades but are refunded in the form of the exchange’s native coin. This alternative way of reducing trading fees attracts more investors to the exchange and allows the platform to increase its trading volume and climb in rankings. However, trade washing is more likely to occur on the platform as the trading fee is either completely removed or reduced by a significant degree.
Furthermore, according to a report submitted to the SEC by Bitwise, CoinBene is among the exchanges accused of reporting fake volume, as concluded from its odd like distribution in trade size, unusual rise and fall in trading volume, as well as its unreasonably high average spread on its order book. As a result, it is difficult to determine whether this rise trade volume in 2019 is due to an actual increase in liquidity or simply a result of market manipulation.
As for the project’s fundamentals, the team has not made any announcement recently regarding updates in technical developments. A partnership was formed with Coinbit and Bitforex in late March and the token was listed onto the two exchanges. However, the explosive growth in token value is unlikely to be attributed to these listings as prices began to climb in early March.
Having a closer look at their business model, we find that in late 2018, the team launched a project called M2 SuperNode, which was targeted exclusively towards the Chinese community. Users were instructed to deposit their ETH and MXM to a wallet and in return, they were guaranteed daily returns ranging between 0.05% to 0.25% depending on the account level, equivalent to annual return rates of around 20% to 250%. In addition, users were also rewarded for bringing in new investors.
The project promised full transparency regarding their operations as well as mining performances, yet so far none of these seem to be available on their official websites. As for the team behind MaxiMine, the whitepaper claims that they are composed of more than 300 staffs, and multiple representative members are listed in the document. However, 8 out of the 10 members listed seems to have either closed or deactivated their LinkedIn accounts, while the remaining two members do not seem to be affiliated with the project, according to their profiles.
Given the uncertainty surrounding the project as well as the suspicious trading pattern, investing in this token appears to be highly risky at this point. Taking a quick view at the token’s recent performance, if you invested in the token on April 2nd, a 52% loss would be recorded the next day, as prices fell from $0.1478 to $0.0766 within the 24-hour period. It is important that investors be extra cautious when investing in cryptocurrencies that display such high volatility. We hope users fully understand the fundamentals and risks behind each project before making any investments in the future.
We hope you enjoyed this week’s update. 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; Crypto Exchange CoinBene for price/volume data; and MaxiMine official website and whitepaper for the porject’s background information.
Stay Tuned Here
KRONOS is a leading quantitative research firm based in Taipei, Shanghai and Beijing. We’re bringing new asset management strategies to the crypto world by leveraging our combined decades of experience trading in global traditional markets.
Website: https://kronostoken.com/
Telegram: https://t.me/Kronos_E
Twitter: https://twitter.com/KronosToken
Linkedin: https://www.linkedin.com/company/kronostoken/
