OSL Trader View | Weekend Digest

Friday, July 3, 2020

Bitcoin punched in a range-bound session for the week albeit drifting lower including a resilient bounce back above $9K heading into the weekend. A few things have been weighing on $BTC:  

  • One prominent trigger looks to have been miners liquidating in the goldilocks market. Their actions have sent nearly 3K $BTC into the exchanges, a 52-week high, as network difficulty edges up 14.9% and is set to increase by another 6.5% July 13th. 

  • Additionally, we just saw the biggest notional amount of Bitcoin options expire last Friday and while it’s nice to have a $1B (across the major exchanges) milestone, given that most of the volume was writing calls in the $10~11K range, we saw the end of the event with little fanfare. 

Average daily volumes have tapered off from $25~30B range to c.$15B. And part of the explanation stems from the explosion of yield farming with the new DeFi platforms taking-off left right and center. Compound eclipsed the value of virtual assets locked in Maker the day they released a trove of governance tokens and has maintained the top seed taking the total tally up to $1.75B.


$COMP however, clearly seems to have problems of its own as the count of the native token in smart contracts exceeds that on-chain. Re-deposit are likely being double-counted as every John Doe takes a page out of the feds fractional banking policies. 

Synthetix has also been chipping away at the incumbents more than doubling the collateral parked to more than $300M. Yield farming is starting to become a thing and the desk is seeing more demand for borrowing the coins that these shiny new tools accommodate.



Grayscale’s Ethereum trust was subject to a brutal 87% correction off an 877% premium vis-a-vis $ETH. The 140% rally over the month ahead, Ethereum miners spanning the network to raise the fees users pay and succeeded in flying colors as gas fees popped 500%. OR, could it just be that this is how the perpetrators of the billion-dollar PlusToken scam have been washing their bounty? Amidst the backdrop of the much-hyped imminent Ethereum 2.0 mired with all sorts of speculation seems to have nudged investors in the money to take profits off the table. 

 

The tepid price action has forced the adrenaline-seeking retail punters to look for volatility elsewhere and thus far, they’ve been having a grand time following the likes of @stoolpresidente’s stock picks backed by a Scrabble lottery among others - because who doesn’t want a partner with deep pockets in the trillions (a.k.a. The Fed)?  They’ve made it clear no one fails this time round (vs. too big to fail 10yrs back) and this hoodwinking of the masses has removed all acts of price-discovery. Amazon (AMZN US) is up +77% since the March melt-down and is now throwing distance away from a $1.5T valuation. 

Big aspirations for Ebang (EBON US) following a $100M NASDAQ IPO as the ASIC manufacturer looks to diversify into mining and launch a digital asset exchange offshore. No wonder the stock drifted lower, not even able to finish above subscription price $5.23 on the first day of trading; despite a 2.9mn green shoe. 

While it was unfortunate to see Estonia tighten the leash after being the first sovereign to issue a cryptocurrency license, overall I’d say it was a good week. Here’s some news that caught our eye for your July 4th weekend:

  • Aussies are now cleared to purchase crypto through the 3,500 strong retail network of the Australia Post 
  • US Banking Housing & Urban Affairs senate committee welcomed delegates from Paxos among others to the Digitization of Money & Payments hearing
  • The DC Bar Association which cleared the way for lawyers to lawfully use crypto as payments, the fourth bar association to do so. 
  • Switzerland’s National Council unanimously adopts the Federal council’s proposal to cut red-tape for blockchain startups;
  • Bank of Japan announces plans to experiment with a CBDC 
  • The Bank of Lithuania will be launching the LBCOIN CBDC pre-sale July 9. 
  • Africans are embracing crypto with open arms as the P2P crypto trading volume continues to post triple-digit growth, repeatedly clearing ATHs.
  • Kazakh government looks to double digital currency mining investments by year-end and development of its CBDC will continue. 
  • NYFDS is attempting to make the process of acquiring a BitLicense less onerous by introducing a “conditional license” 
  • US Supreme Court limits the SEC’s enforcement powers relating to disgorgement
  • Riksbank (Sweden) published a 96-pager proposing four different stable coin models with the e-Krona clearly in mind. The world’s oldest bank clearly wants in 
  • FATF plenary session on 24 June 2020 agrees to publish its report on the 12 month review of the implementation of the travel rule 

And to wrap it up, some notable alt-coin developments: 

  • IOTA ($MIOTA) +2.7% IoT blockchain enters the first phase in becoming fully decentralized by 2021 
  • Cardano ($ADA) +3.5% releases new version of the Shelley testnet.
  • Tezos ($XTZ) +1.3% closure on class-action lawsuit by $25mn settlement 

 

Have a great weekend, stay safe to all the Fourth of July revellers, and may the trend be your friend!

 

OSL Trader View and Weekend Digest are contributed by Stefan Chu, SJ Oh, and Santiago Nazaretti

 


 

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