Welcome back to eighth edition of ‘The Digital Asset Digest’. Last week, we provided our network with an exclusive post-halvening analysis, ensuring all of our readers can follow the market in the days following the historic update to bitcoin’s consensus protocol. As we progress toward the end of May, we will be providing an overview of the markets and how they look as we prepare for June.
Overview of the Markets
Digital Assets – Bitcoin closed at $9,110 on Friday morning, cooling off after almost crossing the $10,000 again on Tuesday. This represented a fall of 4.46%, driven by rumours that Satoshi Nakamoto may finally be cashing out after forty early-mined Bitcoins traded hands for the first time last Wednesday. The crypto market as a whole was relatively unmoved, with Ether sitting just above the $200 mark rising 1.3% while XRP trailed Bitcoin down 1.0%.
Indices – The S&P 500 closed up 3.2% after a volatile week as Sino-U.S. trade tensions came back to the forefront. Industrials drove equities as optimism surrounding airlines improved after TSA reported higher traveler throughput throughout the week. On the Canadian side, the S&P/TSX Composite rose 1.9%, although the Health Care sector saw massive gains as cannabis names got a boost from Aurora’s Q3/F20 earnings and the closing of its $40 million acquisition of Reliva.
Commodities – Another stellar week for oil as WTI futures rose 12.6% with Brent trailing slightly behind at 8.1% on improved investor sentiment and optimism around storage and demand shortages. For precious metals, bullish sentiment is brewing around silver as futures rose 3.6% while gold was down 1.1%.
“Crypto Twitter was ablaze Wednesday after the sale of some Bitcoin was reportedly linked to the account of the token’s mystery founder. The price of the largest digital token plummeted on speculation its anonymous creator, who goes by the pseudonym Satoshi Nakamoto, was moving coins mined in early 2009, an act perceived by some as a near-sacrilegious offense. Twitter account @whale_alert, which posts real-time transaction data, was among the first to report of the sale, tweeting that the coins in the transaction were mined in the first month of Bitcoin’s existence.”
“The bitcoin network just fine-tuned a key parameter to coax back miners who quit after last week’s halving hammered their profits. More than 20 exahashes per second (EH/s) of computing power – the equivalent of around 1.5 million older-generation mining machines – has been switched off from Bitcoin since the network’s halving. The seven-day rolling average of bitcoin’s hashrate has dropped over 20% from around 122 EH/s just prior to the halving on May 11 to now 97 EH/s. The once-in-four-years event reduced miners’ block rewards from 12.5 to 6.25 bitcoin (BTC) per block.”
“National People’s Congress, China’s parliament and Chinese People’s Political Consultative Conference, the most powerful political advisory body in the country, have recently begun their annual sessions. These are widely referred to as the “Two Sessions” or “lianghui” meetings. These meetings have been ongoing since May 22. The National People’s Congress, or NPC, is China’s top legislative body. Nearly 3,000 delegates from around the country meet once a year to submit proposals during the meetings. According to a Beijing News’ report on May 23, Jieqing Tan, deputy to the NPC, suggested setting up a special fund for blockchain industry development. If accepted, this fund would be led by the government.”
“Bitcoin (BTC) miners earned 44% more in transaction fees in the nine days since the halving than they did for the whole of April. If this continues miners will have more than doubled their income from transaction fees going forward. According to data from Coinmetrics, miners have collected the equivalent of 1,176 BTC in transaction fees since Bitcoin’s third supply cut on May 11. That compares with 818 BTC earned as fees in April and 1,251 BTC in March, the figures show. Miners reap fewer bitcoin with each halving. The latest event slashed rewards paid to miners by 50% to 6.25 BTC, leaving some operators on the brink of collapse. The bonuses are a major revenue source for mining companies.”
OmiseGO is a network built on speed. With transaction speeds of up to 4,000 TPS, OmiseGO’s P2P network is one of the fastest networks on the market today. The company’s eWalletSuite is an open-source, complete digital asset management tool built for institutional use that allows businesses to manage their digital assets. By engineering the infrastructure in advance, OmiseGO focuses on UI/UX, allowing businesses to integrate seamlessly and get set up nearly instantaneously. OmiseGO also boasts lower operational costs, claiming that users pay up to 90% lower fees than Ethereum, but uses Ethereum-level security to guarantee the safety of users’ assets. Clients already on the platform include Burger King Thailand, Shinhancard, and Hoard Exchange.
The company is run by CEO Vansa Chatikavanj, a former consultant at the World Bank and a graduate of Columbia University. On Thursday, OmiseGO officially launched on Coinbase, and on its first day of trading saw significant premiums over Binance before crashing, sparking accusations of insider trading. OmiseGO officially launched in June 2017 and trades at $1.75 with a market capitalization of $245.8 million.
Cryptocurrency Weekly Performance
Indices & Commodities
Source: Anthony Pompliano
“A big difference between Silicon Valley and Wall Street is that Silicon Valley actually encourages failure. The idea is that if no one is failing, then the pace of innovation is not being pushed fast enough. This is a mindset throughout the technology industry. It is also built into the business models of the financial backers. Venture capital funds are predicated on the idea that majority of the companies they invest in will likely lose their money, but the select few that end up working out will create enormous economic value that makes up for the losses.”
On the technical side, indicators are neutral for Bitcoin coming into the week. RSI, which we treat as one of BTC’s most important indicators, as at an unmoved 50, which indicates that the trend is weakening slightly. Our eyes are on the $8,500 level this week as a clear double top has formed over the last two weeks. If BTC manages to close below support, we will change to a more bearish stance, although for now we are on the sidelines. Indicators are not giving a clear signal this week, which is why we have opted for a neutral position.
As the halvening eliminated the profitability of several small mining groups, it wasn’t a surprise that the price of bitcoin went down. However, the next few weeks are critical for the health of the bitcoin network as investors will carefully be awaiting to see if the network can surpass the notorious $10,000 marker.