OSL Trader View | Weekend Digest

Thursday April 9, 2020

We’re embarking on a holiday long weekend in Hong Kong so are bringing you our Weekend Digest a little earlier than usual. Stay safe and enjoy the read.


The halves and halve nots

There have been all sorts of time-killing exercises, from getting in shape to shotgunning beer challenges, that have been taking laps over social media as people grapple to stay sane while locked down at home. The obvious beneficiaries Amazon (AMZN US), Netflix (NFLX US), Tencent (700 HK), and Meituan (MPNGF US) have bounced back well, exceeding the broader index. The demand seems to justify the outperformance. 

But the demand for IT and connectivity services has even strained the best of firms. Check out this anecdotal evidence from Azure, Microsofts’ cloud services unit, which has suffered under the volume of enterprise users' need for video and voice services, but moreover the surge in online gaming with Xbox Live. Another ‘work and schooling-from-home’ beneficiary, Microsoft is responding by increasing bandwidth during “off-peak” hours and planning for extended “high-usage” periods.

 Zoom (ZM US) was one technology company that gained significantly from work-from-home and business continuity measures being enacted, but has since been plagued by security issues and class-action suits, that has seen this once golden-child lose a bit of its shine (down 20%) as governments, enterprises and individuals head to alternative conferencing providers. 


Digital assets market:

For the shine on a few spotlight equities, the digital assets sector has broadly recovered from the rout it experienced.  $BTC recovered half of its lost ground and is back to testing $7,500. 

Central bankers were back in the driver’s seat this week, and not to announce more stimulus.  Instead, they’ve been steadily bringing the subject of digital assets back to the fore: 

  • Contrary to the neutral tone China has hitherto been singing, the PBoC issued a notice (in Chinese) in which they report positive test results and vow to undoubtedly pursue a digital yuan;
  • Meanwhile,  both the Malaysians and the French have christened their first exchanges: Luno Malaysia, SINEGY Technologies, Tokenize Technology; and Coinhouse respectively; and
  • The Bank of Korea’s endeavor in “research” (in Korean) looks more of a benchmark exercise of Sweden’s e-Krona guiding for a pilot to be ready Jan 2021.

 

Chainalysis suspects that North Korea has amassed over 3x the previous suspected amount in digital assets over the years. Maybe not altogether a surprising result, given US law enforcement and intelligence agencies have long been Chainalysis’ number one clients.

There has been a lot of talk about the millions of job losses in the US in recent weeks, but the US government is doing its part to create jobs - even in the digital asset space.  The US Government Accountability Office is looking to fill two positions that can  “identify, develop, test and evaluate use case prototypes for blockchain technology”.

While volumes did pump to 2x 30 ADV, Bitcoin Cash ($BCH) -3.6% halenving (blockheight 630,000, 8:19pm HKT) passed largely as a non-event. With the Bitcoin ($BTC) fork just over a month away, the sister coin event was regarded as a prelude to what to expect. The eternal optimists were let down and given the LTC precedent end-2019, expect to see more downside pressure on the backdated derivatives. 

Former Cryptopia users took a win from the High Court of New Zealand as Justice Gendall deems coins held by the now defunct exchange’s trusts as “property” of the users as per the country’s classification of the asset class. If only Mt Gox was based in NZ…

$BTC price action from the recent collapse was cause for significant disappointment, especially given the proximity to the recent halvening which many had hoped to serve as a lightning bulb for many to see through the dilution of wealth by zero-reserve banking, expanding support to main street and the trillions they’ve decided to create out of thin air. We suspect this to be a dead cat bounce and there will be an opportunity for $BTC to prove its mettle down the road. 

May the trend be your friend!   

 


 

OSL is Asia’s most comprehensive digital asset platform providing brokerage, exchange, software-as-a-service and insured custody solutions to professional investors.

Home to one of the world's largest and most experienced digital asset trading desks, OSL has its finger on the pulse of the market. The Trader View newsletter is a short, easily digested summary of market activity and eye-catching news of the day.

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