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.
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:
NET, QNT, WTC, REN
Coins that dropped out of the top 100 coins compared with last week:
PAI, CCCX, ELA, XMX
Rolling Returns of Top 100 Tokens by Sector
Returns of the top 100 Tokens by sector from June 4, 2019, to July 4, 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 June 4, 2019, to July 4, 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 April 3, 2019, to July 4, 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. The correlation between the data/storage sector seems to have dropped significantly over the past week. From the rolling returns by sector, we see a price jump on June 26. This is mainly caused by the extreme price movement of Insight-Chain (INB). However, according to CoinMarketCap, the token had almost no trading volume during the price surge.
Focus Spotlight — Anti-Crypto Countries
In mid-June 2019, Facebook’s Libra Association released its whitepaper on Libra Coin, a cryptocurrency designed to revolutionize the global payment system. Following the announcement, regulatory agencies around the world voiced their concerns about the project’s impact on the global economy. On July 2nd, the United States House of Representatives Committee on Financial Services called for a moratorium on the project, as the project “risks a new Swiss-based financial system that is too big to fail.”
With blockchain being a decade old technology, many nations around the world have embraced their interest in the crypto. Meanwhile, some have remained skeptical about the concept. Though crypto is becoming more and more popular, governments around the world have yet to reach a consensus on how to regulate them. In the following, we will look at some of the countries that have imposed the most stringent regulations on crypto.
Bolivia stands out as the world’s first country to ban cryptocurrencies. Since 2014, the country has treated all cryptos as pyramid schemes.
In 2017, a pyramid scheme named “Bitcoin-Cash” surfaced, which promised investors revenue generated from crypto mining. However, once the money was collected, their website failed and the group disappeared. This scheme reportedly affected more than 100,000 Bolivian citizens.
Later that year, in a separate incident, Bolivian authorities arrested 60 people that had participated in a training program for crypto investing. Following the event, the central bank doubled down on their stance by reminding citizens about the illegal status on crypto.
With the country’s troubled history with pyramid schemes, it is unlikely that the ban on crypto will be lifted anytime soon.
China has had a long history of outlawing cryptocurrencies. As early as 2013, the People’s Bank of China has prohibited financial and payment institutes from buying and selling Bitcoins. In 2017, PBOC outright banned initial coin offerings. As a result, many crypto firms had to operate through off-shore entities, while crypto traders moved to foreign exchanges.
Though China seems to take a tough stance on crypto, the government is supportive of blockchain technology. In late 2018, China.org.cn reported that there were 263 blockchain projects underway in China, representing 25% of the global total. Furthermore, China holds the first place in terms of blockchain patents ownership.
As for the mining industry, the country is currently the world’s largest market. With relatively cheap electricity, China has proven to be one of the world’s most attractive regions for crypto mining. As of today, around 70% of the mining farms are located in China. Sichuan alone, a province in China with the lowest electricity costs, accounts for nearly 50% of the global hashrate.
In April 2019, China’s top economic planning body proposed a plan to ban crypto mining within its borders in an attempt to reduce energy waste and pollution. Although the announcement appears to have loomed over the crypto mining industry, many pointed out the government’s intention to acquire greater control of the market instead of restricting the industry’s development.
Back in 2017, the Indian government stated that crypto was not deemed legal tender. In 2018, the Reserve Bank of India banned crypto trading and prohibited financial institutions from dealing with entities that transact crypto. In April 2019, a bill was proposed to add a 10-year jail sentence to anyone who mines, holds or sells cryptocurrencies. Once passed, India could become the world’s most restricted country for crypto.
Starting last year, a number of petitions have been filed with India’s Supreme Court to lift the ban. The next hearing scheduled for July 23. However, due to regulatory uncertainty, over the past year, a number of crypto exchanges have already shut down while many crypto startups moved their operations outside of India’s jurisdiction.
Despite the adverse conditions for crypto, blockchain technology is still widely accepted in the country. Earlier this year the RBI revealed a regulatory sandbox to allow blockchain products to be tested on consumers. Alliance University, a top Indian university well known in the field of technological studies, also planned to host the Bangalore Blockchain Summit 2019 later in July.
Though many expect the government to change its stance on crypto, it is unlikely that this will happen in the short run. The country may need more time to address critical issues relating to money laundering, terror funding, and drug and human trafficking before legalizing the use of crypto.
In 2017, the State Bank of Vietnam deemed all cryptocurrencies as illegal payment methods. Users of Bitcoin were to be fined up to 200 million VND, around 8500 USD at the time writing. In the same year, the Ministry of Finance also banned the import of crypto mining equipment.
Despite crypto payment being restricted, the country is working on drafting new regulations. In late 2018, the Ministry of Justice submitted a report reviewing crypto regulations, pointing out both positive and negative aspects of using crypto.
Though crypto is prohibited for payment, currently there no rules for trading crypto. Earlier in March, a local distribution company partnered with a Swiss blockchain company to launch a crypto exchange in Vietnam. The successful launch of Vietnam’s first authorized crypto exchange could help push the legalization of crypto in the near future.
The volatility of crypto, and more importantly the fact that they cannot be controlled by a central power, have scared many countries from adopting them as a form of payment. Though the use of crypto is prohibited in major developing countries, most of them are working towards creating new frameworks for future regulations. At the same time, almost all nations around the world are open towards the development of blockchain technology. While this report provides a general picture of countries that impose strict rules on crypto, it is important that readers conduct further research before conducting crypto-related activities in these countries.
Thank you for reading this week’s report! Please leave a comment below to share your thoughts and ideas on crypto trading!
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; BitInfoCharts for Bitcoin Hashrate and average transaction value visualizations; CME official twitter page for Bitcoin Futures information; Grayscale official site for Grayscale Investment Products Q1 results; and Messari OnChainFx for top ten coins’ ATH data.
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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.