Global Digital Assets News
Welcome back to GDA’s official industry newsletter. After last week’s partnership announcement with MYNTD, we have begun to roll out a global portfolio of financial, consulting and advisory services. Now, we have a new partnership to announce with Aquifer, a financial consultancy.
Aquifer Partnership Announcement
To perform these tasks to the best of our abilities, objectivity is always required. That is why this week we will be formalizing an agreement to work with one of Canada’s leading financial consultants, Aquifer Services. This engagement allows GDA to provide clients with objective corporate due diligence from a non-biased third-party.
Aquifer is a part-time/fractional CFO consulting firm catering only to startups and SMB’s. The firm offers to set up accounting processes and systems, VC standard financial modeling while also providing 24/7 support for any CFO related questions regarding operations and capital fundraising.
To date, the Aquifer team has over +15 years of financial experience, has raised $60M of Venture Capital, and executed several M&A transactions. Assisting small and medium-sized businesses across a spectrum of industries, including fin-tech, blockchain, payments and many more, Aquifer understands the fluid nature of tech businesses in today’s economy and works with them to scale or reposition their resources in a lean and efficient manner.
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Digital Asset Digest – Volume 8
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.
If you missed last week’s newsletter, welcome back! To quickly recap, last week we kicked off our official summer and fall internship programs, so this past week was filled with introductions, interviews, and resumes with the next wave of eager young blockchain professionals!
If you would like to apply to be an intern at GDA during the summer or fall months, kindly send your CV and cover letter to email@example.com.
As projects in the blockchain industry race to market, one thing becomes very clear. To stand out against your competitors, human, financial, and technological capital is required. Our goal at GDA is to be the vehicle that drives compelling blockchain projects to the top of their sectors. To do this, we need to ensure our network has the aforementioned resources to meet any obstacles our clients may face.
With this in mind, we are thrilled to announce a strategic partnership with MYNTD, Australia’s leading consulting and advisory firm for digital assets.
MYNTD offers a full suite of services with a focus on driving extra liquidity to projects through institutional-grade market-making, marketing & comms, and strategic business development.
This partnership allows both GDA and MYNTD to expand their respective networks, expanding each firm’s service capabilities while offering clients a global portfolio of financial services.
If you have technology or IP and you are unsure of how to get it into the marketplace, get in touch with us here!
Additionally, if there are any students who have yet to submit their applications for the GDA internship programs and are still interested in doing so, kindly send over your CV and cover letter here.
Digital Asset Digest: Volume 7
Almost three weeks ago, we provided our readers with a pre-halvening market analysis. Now, with the halvening in the rearview mirror, it is time to present our post-halvening findings relating to miner revenue, hash rate, and price swings!
Today’s edition of the Digital Asset Digest will be dedicated to bitcoin’s halvening as we dive into several key metrics including trading volume, mining revenues, and hash rates, amongst other trends.
On May 11th, bitcoin underwent its third halving, paving a new era as its block reward was cut from 12.5 BTC to 6.25 BTC. The event was widely anticipated across the crypto market, and in a time when interest in Bitcoin seemed to be waning by the day, the halvening was a much-needed reminder to investors about its long term potential and the truly disruptive nature of blockchain and decentralization.
Since the BitMEX incident on March 12th, bitcoin has been steadily on the rise. In fact, since the low of $4,107 YTD, bitcoin is up over 135%, dwarfing the returns of the equity market so often reported by the media.
Let’s start with mining. During our pre-halvening newsletter, we pointed out that the total hash rate on the network tends to fall drastically post-halvening as marginally profitable miners are pushed out of the network. The halving this year was no different, as we saw mining activity fall to late-April levels.
Miner Revenue & Hash Rate
Also as expected, miner’s revenue sharply fell post-halvening given the lower block reward. Interestingly, miner’s revenue also took a dive after BitMEX’s DDoS attack on March 12 and only recovered to March levels before plunging again after the halvening. In the chart above, you can see how miner activity dramatically increased in the week prior to the halvening as miners were racing to earn the last few 12.5 BTC blocks before the reward sum was irreversibly halved.
Unlike the hash rate, you’ll notice in the graph below that miners’ revenue tends to recover much more slowly than the hash rate. This is because although the block reward is reduced, the major miners will continue to mine as long as it’s profitable, propping up the hash rate. On the other hand, the number of blocks mined per day is determined by difficulty, which is adjusted every 2,016 blocks. This means that total revenue from mining is also more or less fixed, leaving transaction fees as the main driver of miners revenue.
After the second halving, it took around eight months for the total revenue from miners to return to their pre-halving level. Driving this was a massive rally in BTC, which boosted profitability for miners on the network. We forecast that this halving will be no different. Unless we see a massive surge in BTC as we did in 2018, we expect miner’s revenue not to return to this year’s level until the end of 2020/early 2021.
As we mentioned in our pre-halvening Digital Asset Digest, now that mining only returns 6.5 BTC per block, hobbyist miners can no longer expect to mine profitably. Mining pools and institutional players are now the dominant force in bitcoin mining. Due to the monopolization of the mining sector, we expect concerns surrounding a potential 51% attack to become a much more common narrative in the coming years.
On the trading side, we saw increased volumes across the board as the halvening approached. However, we note that the increase in trading activity was particularly close to the BitMEX DDoS attack in mid-March.
Which brings us to the key question: Was BTC’s rally really caused by the halvening? Or was it a natural recovery from the damage of the BitMEX attack? Based on volume, it would certainly seem like the DDoS attack in March had a much greater impact than the halvening. However, both events occurred suspiciously close to one another, so we are reluctant to definitively attribute the increase in trading volume to either situation until more data becomes available.
While we wait for the market to continue adjusting to a post-halvening environment, we will keep a particular eye on how large mining operations and institutions will adjust their strategies. Since bitcoin’s supply has been irreversibly diminished, this presents a lucrative opportunity for the firms who are not sleeping behind the wheel and are ready to act.