Daily Bit #174: Slipping, Sliding ETH

Daily Bit

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The Daily Bit

4 min readSep 10, 2018

Industry Updates

Decentralized exchange Altcoin.io raised ~$930k from 1,125 investors via WeFunder.
Iceland landed their first Bitcoin / Icelandic Krona (ISK) trading pairthrough Skiptimynt exchange.
Vitalik believes opportunities for 1,000-times growth in crypto are behind us.
‘Cash is still king’ when it comes to criminal activity, says FBI’s Steve D’Antuono.
A $3 million investment into Bitcoin Australia will help KuCoin expand their market reach by tenfold (30 total), with the UK being a main target.

Top Story

Slipping, Sliding ETH

More was body slammed this weekend than folding tables at Bills Mafia (0–1)tailgates. Ethereum dropped below the $200 mark on Saturday afternoon, dipping as low as ~$185 before regaining some footing.

Naturally, that rekindled the conversation: what is/are the driving factor(s) behind ETH’s decline?

ICO and dApp treasury balances are one catalyst. With Ethereum serving as the proverbial watering hole for blockchain development, teams are effectively playing a game of chicken, questioning who can hold out the longest as the price continues to fall.

Thanks to blockchain’s publicity, we can monitor the showdown in real-time through Santiment and Dapp Capitulation. Both sites display the total ETH that was transferred to exchanges from a project’s treasury address in the past 30 days.

Granted, transfers are by no means a guarantee that projects are liquidating ETH to cover costs, but we think it’s a fair assumption. After all… most business expenses still can’t be covered with crypto.

A couple jump out on the high end:

Digix: 44,187k ETH
Metronome: 70.6k ETH
Etheroll: 32.31k ETH

But honestly? We think the transfers are less interesting than ETH sitting in project’s coffers. By our count, there is north of 3 million ETH locked up by the 37 projects on Dapp Capitulation alone. That’s a substantial amount of firing power on the sell-side.

Then there’s Arthur Hayes’ casino, BitMEX
The exchange that needs no introduction. Here’s the deal — BitMEX added Ethereum perpetual swaps at the start of August. Since then, it’s become the highest volume ETHUSD product, outpacing total Bitfinex volume by over 300%.

The price of ETH has also fallen by 57% since the listing. Along with being a great way to lose money (looking at you, 100x leverage), BitMEX offers people a simple way to “short the corn”. Coins that were previously listed on BitMEX took similar tumbles.

Similar to Saquon Barkley’s arrival into an NFL end zone, ETH’s perpetual swap-triggered collapse is considered (in hindsight) a matter of when, not if.

Other News

Citigroup Exploring Bitcoin Security Product

Wall Street’s clients want exposure to Bitcoin — they just don’t know how to get it. Regulatory impediments have kept the digital asset out of arm’s reach for investors that are limited in their abilities to use certain investment products.

So news about Citigroup’s proposed Bitcoin security product is turning heads. The Digital Asset Receipts (DARs) would be issued by Citigroup while the assets themselves are held by a partner custodian. It’s a spin on American Depository Receipts (ADRs), which allows US investors to invest in foreign stocks not offered on US exchanges.

And compared to non-deliverable forwards (NDFs), DARs fit existing regulatory and legal molds. NDFs are OTC derivatives, which don’t offer investors as much flexibility as securities.

SEC Freezes Crypto Products Amid Confusion

The SEC pulled the plug on two cryptocurrency products on Sunday due to misinformation regarding their labeling as exchange-traded funds (ETFs). ETFs are a touchy subject due to beliefs of rampant manipulation in the crypto markets, and likely won’t be approved until there is improved oversight.

More on the freeze: Per Reuters, “Application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as ‘Exchange Traded Funds.”

So… the proper lingo was either lost in translation or companies were driving demand for the products by slapping on an ETF sticker. It wouldn’t be the first time smoke and mirrors were used in the industry. As for the products — they’ll be offline until September 20th at the earliest.

Dodgers Swing at Digital Bobbleheads

The Los Angeles Dodgers are eleven days out from hosting their first Digital Bobblehead night, which has us asking: do most fans even know what that means? With one of many twitter reactions to the news reading “Brain hurts”, probably not.

Which is fair. But, someone has to test the waters, and the Dodgers are simply the first team to step up to the plate. Of the 56,000 that can be housed inside Dodgers stadium, 40,000 fans will receive a card that ultimately allows them to download one of three collectibles to an Ethereum wallet.

If it’s a home-run? Well, the virus will continue to spread. They may not bobble — literally — but deploying digital bobbleheads is cheaper and less of a logistical headache than their physical counterparts.

Brain Fuel