OSL Trader View | Weekend Digest

Friday, August 21, 2020

China builds as the US votes

Digital asset market data firm, Santiment, called the top on Chainlink ($LINK) perfectly with some pretty nifty stats: 

 

Movement of coins to and from exchanges is starting to become a more widely adopted metric and you can clearly see from the graph it can indeed serve as your canary. 

But then again some things can be so obvious in hindsight. With all the hype over DeFi causing gas fees to flirt around ATHs, it is not surprising that second layer solutions have started basking in the limelight. Omisego is certainly perceived to have tight connections with the foundation and that perception amidst a backdrop of uptick of interest in scalability solutions has left $ETH backing off a double top at $440 with $ETH options open interest ticking in at ATHs ($481M), as $OMG pumps into the stratosphere. 

 

 

It's surprising to see both $ETC and $BCH hold steady despite the looming threat of a potential hardfork for both. Mandatory fees will always be contentious and also the root of the riff. ETC’s network hashrate never recovered and some are left to wonder if it ever will as OKEx threatens to delist after losing $5.6M from the 51% attacks.   

In South Korea, both Woori FG (316140 KS) & Shinhan FG (055550 KS) have joined the tech savvy first movers in the form of KB FG (105560 KS) and NH Nonghyup Bank (the Credit Agricole of Korea) in setting up virtual asset custody offerings. This leaves Hana FG (086790 KS) the odd one out of the top five financial holding companies as the nation awaits the enforcement decree (required to be released by the assembly no later than 1.5 years after the original bill comes into force). However in this case, the Special Financial Information Act was passed March 5th earlier this year, two painful years since Congressman Jae, Youn Gyung initiated. The bill essentially requires Virtual Asset Service Providers (VASPs) to implement the usual AML and CFT measures, but also ISMS implementation in an effort to curb the all too frequent hacks and scams. The clock is ticking.

Speaking to a counterpart based in North America, the usual geopolitical strife being a boon for the space, it was surprising to learn his view that USDC had a chance to dominate the USD-pegged segment in Asia. There may be some merit in the thinking given the insatiable appetite for the green-back that the Chinese have, coupled with the continuously closing doors to access to it with court rulings (see NYAG) or the recent protectionist calls to have leading Chinese internet companies sell their US-based businesses to American companies (i.e. Tik Tok). It may be a stretch to think that the Chinese will welcome USDC - backed by Circle - with welcome arms. But then again, despite it all, there still remains an insatiable appetite for the greenback in China.  It would be great to hear your views too… whether in agreement or not… shoot us a line and maybe we’ll address it in the future and it allows us to curate themes that matter most to you. 

Following the historic CNY settlement of iron ore with Australia back in May, there have been a plethora of rumblings about test launches of payment rails, trades, system enhancements being powered by blockchains, crypto assets and smart contracts. It should not be a surprise to anyone if the uptake on the to-be-launched Chinese DCEP is smooth sailing. And while Americans remain busy with the upcoming presidential election, hopefully moving forward digital asset policies do not slip down lawmakers’ agenda amidst all of the other grievances and fixes the nation needs. However, that's not to say nothing is being done, Walmart has inked a deal with StormX launching a crypto-back rewards service because everyone loves collecting them stamps. Cryptomom had a more serious proposition as she revealed collaborations between the Fed and MIT just weeks into her second term. Additionally, Congressman Tom Emmer worked with the Chamber of Digital Commerce PAC to host a cryptocurrency townhall. Still, there is much catchup to be done as China expands pilot programs to Tianjin, Hebei and its capital, Beijing. And given the hostility that the rest of the world faces being at the whims of the American correspondent banks in the SWIFT network, it might not be too far-fetched a possibility that much of the clearing moves to European fiat rails given they’ve been pumping out much more level-headed reactions to the events of late. The European Council has also continued with their research in stablecoins and CBDCs and while the ECB tends to shadow the Fed’s policy actions the rate of inflation has been much tamer. 

More luminaries have joined the choir.  The latest to sing the hymns of digital assets are former Prudential Securities CEO George Ball advocating the “safe haven” while Jim Rogers laments  not having picked up on bitcoin earlier.  Money speaks louder than all, and one of the OGs Pantera’s discloses a $165M raise, 3x the amount they clocked with their previous fund last year. 

Some scathing accusations surfaced against mining company Layer1. First with a lawsuit claiming patent infringement and now accusations of falsely representing team members that were actually not part of the team... that’s a bit awkward.  

Also a sobering reminder from the UK as the NCSC reveals having removed over 300K spam URLs that we have a long way to go. And while Goldman Sachs has many baffled as to what the intention is in hiring a Head and VP of digital assets, after comparing $BTC to tulips, they might want to have a look at $YFI which after having launched their insurance platform, powered on to surpass $BTC in price…  

 

Other news that caught our eye:

  • Litecoin ($LTC) tacks +10.4% for the week after pulling back from highs ahead of mimblewimble testnet launch guided Sept. 
  • Chainlink ($LINK) fades from ATHs despite uptake in oracle contributors
  • Grayscale reports $217M inbound following ingenious TV campaign  
  • Bitcoin network hashrate dips 15% on speculation of impact from floods 
  • Algorand ($ALGO) joins the DeFi bandwagon as they roll out “stateful” smart contracts.
  • Retail investors contribute additional $200M into Yam Finance after a fatal error was discovered. 
  • Binance USD ($BUS) received approved for listing by the DFS 

 

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

 


 

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