OSL Trader View | Weekend Digest

Friday, October 9, 2020

Playing to win

Another Bart Simpson of a week was triggered by a series of mishaps. With the WTE Mnuchin package laying the backdrop, the CFTC dropped a landmine filing indictments, John McAfee got detained, Trump caught COVID and was also called out on his claim of having paid millions in income taxes… NOT true; all contributing to $BTC pulling away from the elusive $11,000 handle- a level that it has yet to prove it is capable of holding. Yet, the inklings of a completely new segment of demand is starting to emerge as Square deploys $50M into Bitcoin. It’s the second high profile injection in as many weeks (see MicroStrategy) from the fifteen trillion plus global corporate cash stockpile and for Square this may be a mere one percent of the company's total assets but clearly, this is just the beginning. What’s the alternative for these mind-boggling cash piles stacking up against near zero and increasingly, negative yield bearing deposits? 

So there was some reprieve from this joyous news offering a bounce back for $BTC to levels before the dip. Back on the upper end of the Bollinger bands with RSI approaching 65, expect a breather for now. 

Rep. David Scheweikert introduced a bill to the House of Representatives that would make digital signatures on the blockchain legally binding and Senator Pat Toomey (Banking Committee member) has taken a somewhat brazen approach as he appeals to the digital currency community in his campaign to be the Committee’s next chairman all read like positive trends until the ugliness returned with recent actions by the CFTC - this time BitMex were caught in the cross-hairs. 

It has to be said though, Bitmex has, without a doubt, played a massive role in expanding adoption. They have blazed the trail when a regulatory framework was non-existent. Being called out by one of their very own, it’s not difficult to see something is clearly amok. Year to date, we have seen Renaissance Technology (a pioneer of the very HFT/quant fund); Paul Tudor Jones (one of the GOAT hedge fund managers); Fidelity International (a $300bn asset manager); and Charles Schwab accumulating exposure through listed digital asset miners, hardware makers, and platforms like OSL’s (via BC Technology Group, HKSE 863). Regardless, the battle continues to be played out on multiple fronts as the IRS also has a $625K bounty out for anyone that can crack the privacy coin Monero ($XMR).

Across the Atlantic, the Europeans have furthered their haste to get on the bandwagon themselves, as the ECB published a 55-pager pushing the envelope to keep apace with China’s much heralded and publicized beta DC/EP. TLDR? They will have a decision sometime mid-2021 whether a Euro-CBDC is indeed what they need. 

Meanwhile, the Brits seemingly taking note from their American brethren after the Bitmex actions, have taken an aggressive approach of their own with the FCA outright banning derivatives and exchange traded notes- despite the latter providing zero leverage.

The Chinese are clearly in the midst of a significant breakaway from the peloton of major market talkers and dreamers. The DCEP has made humongous progress as Fan Yifei, People’s Bank of China (PBOC) Deputy Governor revealed more than 113K consumer digital wallets and over 8.8K corporate wallets in pilot cities Shenzhen, Suzhou and Xiongan - clearing CNY 1.1B during April to August. According to @AdaPSEIS at Coindesk, “Hooked up to facial recognition, barcode scanning and tap and go payment technologies, the digital yuan transactions spanned over 6,700 types of use cases”.

On the topic of China’s DCEP pilot, in a few days time several lucky applicants in the shopping mecca of Shenzhen’s LuoHu (Lo Wu) District, will receive 200 RMB in their “Private Luohu Digital RMB Red Packet” as part of 10 million Digital RMB “Shopping Voucher” scheme.  The kicker?  It’s issued not by one of the four participating pilot banks nor utilizing their banking apps, but rather by the PBOC (People’s Bank of China) in its own app - instantly removing third party merchant fees.  That’s some serious Lance Armstrong pedalling away from other major economies right there.

The hype in the digital art/NFT space is brewing once again with Dapper Lab’s latest venture NBA TopShot attracting $2M in CBT sales for the digital collectibles. Boomers with their physical collector cards, millennials with their NFTs… how times change!  

Some heartwarming news for KuCoin as the hacked exchange tweets of having recovered 204 of the $281M that was cleared out of their coffers, as the entire industry came through to support them in seizing the assets without any regulatory coercion. To those that contributed, we salute you all. 

The publicity had peeked as the OGs of Bit Torrent threw in the towel and split but @theVerge came out with some damning anecdotes of “Hype Man” Justin Tron - for the weekend

More news that caught our eye:

  • Binance walks away from talks with Tao Tao; Z Holdings affiliate seeking collaboration in Japan
  • Ripple ($XRP) small win on the outstanding securities fraud class-action lawsuit.
  • Square acquires $50mn in Bitcoin expecting it to be a “ubiquitous currency in the future” 
  • Deribit recorded record volumes for 3Q20 expiry $840mn +13% QoQ, with both $BTC and $ETH closing prices (3Q20) at ATHs


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



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.

Feedback is important to us, and we’re keen to learn more about the types of insights and intelligence that matter to you most. Please share your thoughts with us.

And be sure not to miss future OSL news and insights by following us on TwitterLinkedinFacebook, and Telegram.



Please refer to OSL's relevant disclaimers and disclosures associated with this note, including restrictions on redistribution.