It is the 16th edition of the Digital Asset Digest and we have lots to report on. In the last edition of the digital asset digest, we reported that lots of key stakeholders were moving closer to enterprise and government adoption of blockchain. Unfortunately, on the heels of such amazing progress, the industry was rocked by a scandal that might have these stakeholders regretting their advancement towards blockchain adoption.
After one of the largest and most coordinated cyber attacks in internet history, bitcoin is top of mind for a lot of people. In this week’s edition, we will dive into some of the news the rocked the industry last week, as well as provide technical analysis to assess how this news affected digital asset pricing.
Digital Assets – Bitcoin fell 1.8% for the week after high profile Twitter accounts such as Elon Musk and Barack Obama were hijacked to solicit payments for the coin on Friday. The effects seem to have rippled through the crypto market as Ether fell 2.8% and XRP dropped 3.6%. Dogecoin saw renewed interest after Musk tweeted a meme in a feigned endorsement of the coin.
Indices – Equity markets were up again as the S&P 500 slipped past the 3,250 mark on Monday. Optimism surrounding coronavirus seems to have been the prevailing driver as the NASDAQ Composite rose 3.6% and the S&P/TSX Composite rose 3.5%. Vaccine trial data drove the narrative as both AstraZeneca and Moderna delivered promising results in early human testing.
Commodities – Hard assets were again on the rise. Oil futures saw modest gains as WTI rose 2.8% for the week on reports that OPEC+ would begin easing production cuts without hurting the recovery in oil prices. Gold was relatively unmoved, although silver saw larger gains as hedge funds began to take profits on the yellow metal.
“Onchain data shows that bitcoin miners are hoarding despite the 50% loss in revenue that started on May 11, during the third reward halving. The seven-day average of bitcoin miners’ outflow volume and mining funds sent to exchanges remains significantly low. Roughly four weeks ago on June 19, the total amount of BTC transferred out of miners’ addresses saw a significant low not seen in over a decade. At the time, miners transferred 987 BTC that day, but six days later on June 25, miners sent nearly 3,000 bitcoin (2,650 BTC sent to Bitfinex) to exchanges that day. Despite that specific movement on June 25, onchain data suggests ever since then miners have been seemingly hoarding coins.”
“China controls much less Bitcoin (BTC) mining power than people think, according to a new survey. Released on July 16 by asset manager Fidelity and crypto research firm BitOoda, the survey reveals that China is actually responsible for around 50% of Bitcoin mining — not 65%. Analysts used what they describe as various sources, as well as “confidential conversations” with miners, who agreed to divulge information on aspects such as power cost on the condition that they remained anonymous. “We were able to locate ~4.1GW of power across 153 mining sites, including 67 sites or ~3GW power capacity, with power price data provided upon condition of anonymity,” they summarized in an accompanying blog post.”
“The total supply of stablecoins in existence has doubled to 12 billion, following an increased demand sparked off by the March 12 (Black Thursday) 50% crypto price crash. The findings from the latest research study by Coin Metrics, which is sponsored by Bitstamp, show that it took a period between March 12 and the first half of July to add 6 billion stablecoins. Before this addition, it had taken five years for global supply to reach the initial 6 billion. The report comments that the March 12th event was spurred by a massive sell-off in the global equity markets as fear over Covid-19 suddenly set in.”
“Does the Twitter hack belong on the list of crypto lowlights? Some of the experts I checked in with this week said that, actually, they saw some advantages to this bout of notoriety. “Unfortunately, the awareness [for Bitcoin] came from a hack of these celebrities and prominent business officials that have millions of followers,” says Joe Vezzani, founder of LunarCRUSH, a platform that monitors social media activity around cryptocurrency. “But the interesting part about it is: Can you imagine if an advertiser wanted to ask all of these people to post about their company in one fell swoop? It would be an impossible purchase; you couldn’t even buy that much media.””
Digitex is a company with the mission of building a commission-free futures exchange for digital assets. Instead of charging transaction fees to cover costs, Digitex mints its own native, Ethereum-based token called the DGTX token in which all trades on the platform are denominated. All traders must use DGTX to participate on the platform. The company funds its operations using the proceeds from its DGTX token with the hope that increased demand for the token would compensate for the cost of running the exchange. Unlike traditional futures exchanges, all trading through Digitex is decentralized and account balances are held by a smart contract on the Ethereum blockchain. Token issuance is done democratically by all DGTX token holders, meaning that all token holders collectively decide on the timing and amount of new issuances.
Digitex’s founder is Adam Todd, a former pit trader and founder of RacingTraders.com, a software application designed for online betting. The company ICOed in 2018, creating an initial supply of one billion DGTX tokens and effectively stopping the creation of new tokens for two years after the launch of the exchange. DGTX currently trades for $0.10 with a market cap of $88.1 million.
Cryptocurrency Weekly Performance
Indices & Commodities
Source: CoinMarketCap Blog
“I’ve said this before, but a lot of people think of Bitcoin as technology and not a money. This is the confusion around why people will go into altcoins. They built a better mousetrap: therefore, this is the one that we should use.. That works if it’s a technology. If you make a microwave and then you make a convection microwave, the convection microwave is better than the normal microwave. But this is a protocol. This is a Schelling point, it’s a network effect kind of thing. And it’s money. It’s better if it doesn’t change, whereas with technology, it tends to be better when it does change and improve. ”
We are neutral on Bitcoin this week. As we have seen over the two months, Bitcoin has reached a period of consolidation without any significant directional moves on either side. RSI and MACD have remained stagnant and with no catalysts on the horizon, we expect BTC to remain slow-moving throughout the week.
For our reader base with a bent on trading this week, we highlight a potential play on ETH/BTC. Resistance is currently being tested at the 0.026 mark and both RSI and MACD are indicating a potential weakening of Ether against Bitcoin. When a similar setup occurred in mid-April, the pair dropped almost 18% in the process. If resistance at the 0.026 level is confirmed, we would consider shorting ETH/BTC an attractive opportunity to compensate for the depressed levels of volatility in BTC/USD.
After a rough media week for the crypto market, our analysts were expecting a more aggressive sell-off. While Bitcoin was down 1.8% over the week, the road to recovery is manageable and negative industry news appears to already be slipping out of the news cycle.
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