Welcome back to the ninth edition of ‘The Digital Asset Digest’. Last week, we saw some strange market behaviour after rumours that some Satoshi-owned BTC was liquidated. This week we saw Bitcoin fundamentals improve and the market claw back to normalcy and enjoy some healthy gains. As always, we will be diving into all key markets to provide a holistic overview of what went on across the blockchain and financial markets last week.
Digital Assets – Bitcoin closed at $9,548 Monday morning, up 8.3% for the week and ending the month of May approximately 10.4% higher. Newsflow in the crypto space was relatively light over the week, with Goldman Sachs denouncing cryptocurrencies on Wednesday and India’s Supreme Court lifted the central bank’s ban prohibiting banks from dealing with cryptocurrencies. Ether was up a staggering 17.0% while XRP followed Bitcoin, gaining 5.3%.
Indices – The S&P 500 closed up 3.4% for the week on Monday, crossing the 3,000 mark again for the first time since early March. Canadian stocks followed suit, with the S&P/TSX Composite up 2.2%. The narrative last week was highlighted by Financials, as the sector drove S&P 500 returns and all Canadian Big Five banks reported earnings over the week.
Commodities – Oil continued its rally as WTI July futures rose 6.7% and Brent August futures trailed slightly behind at 6.1% last week. Newsflow centered around global relations this week as Russia supported plans to start easing supply cuts in July and U.S.-China trade tensions came to the forefront once again. On the side, Alberta informed OPEC that it had cut oil output by about 1 million bpd.
“Mining bitcoin is a competitive industry. The mining competition grows stronger each and every year. After the Bitcoin (BTC) network’s third halving, a number of miners dropped off the network. During the worst of it, the overall SHA256 hashrate lost around 47 exahash per second (EH/s). Since then the hashrate has increased around 15 to 20 EH/s, depending on which monitoring tool you use. For instance, Blockchain.com’s data shows the hashrate measured on May 27, 2020, is around 92 EH/s. According to the web portal fork.lol, which gives a closer look at today’s current hashrate, data shows the BTC hashrate is above the 100 EH/s zone.”
“Amazon, a kingmaker of e-commerce and shipping, has patented a distributed ledger-based (DLT) system for proving the authenticity of consumer goods. The U.S. Patent and Trademark Office approved the Seattle tech giant’s nearly three-year-old “Distributed ledger certification” filing on Tuesday. The patent describes using DLT to infuse “digital trust from the first mile of an item’s supply chain” to the last. Amazon’s system compiles data from distributors, manufacturers and shippers on an “open framework” that builds a product provenance across information silos. This data could be neatly packaged for the consumer, as shown in the patent drawings.”
“Unsurprisingly, professional services giants are among those taking a larger role in tackling new market challenges. The Big Four firms and Fortune 500 companies are working with a number of blockchain and crypto companies on ways to combat regulatory uncertainty, interoperability challenges, consensus models and development of the technology. Henri Arslanian, PwC’s global crypto leader, told Cointelegraph that the Big Four firms specifically have a very important role to play in the advancement of the cryptocurrency ecosystem, saying: “Although Bitcoin was designed with a trustless ideology, the reality is that the industry still requires trusted entities to catalyze the development of the ecosystem.””
Source: Harvard Business Review
“Unfortunately, today’s chaos may prove to be a practice run for even more concentrated pressure on our health care supply chains. When we do produce effective treatments or, eventually, a vaccine, millions — and even billions — of people around the world will simultaneously want the same thing, and it will be in limited supply. To fix some of these supply chain vulnerabilities, the industry is turning to blockchain technology. With a blockchain — which can make it cheaper, easier, and faster to verify what is true when a business process spans organizations with competing interests — companies can safely work together in a shared, permanent ledger. They can do this without giving up control of or even revealing their data, as mathematical proof of data can stand in as a trustworthy proxy for actual data.”
StormX is a rebranding of prior AdTech leader BitMaker. The company capitalizes on the freelancer market and aims towards building a more transparent market using blockchain. Currently, centralized players such as Upwork, Fiverr, and Amazon charge high transaction fees, making it inefficient for freelancers who use their services. By using blockchain, StormX has designed a network that gamifies micro-tasks and minimizes fees between participants. StormX users must transact with each other in Storm tokens, an ERC20-compliant token developed by the team. Storm tokens can then be sold, exchanged for other crypto, or recirculated in the Storm market. According to its whitepaper in 2017, the Storm platform had over 250,000 monthly active users across 187+ countries.
StormX is based in Seattle. Its co-founder and CEO Simon Yu is a finance graduate from the University of Washington who previously worked as a financial analyst at KeyBank and Amazon. The company completed their ICO in December 2017, raising almost $31 million. In September 2019, two men were arrested for extorting an unnamed cryptocurrency startup for ~$8.75 million in Ether. Given how closely the firm fit the bill, it is widely agreed across the space that the firm in question was StormX. Storm tokens currently trade for less than $0.01 at a market cap of $19.6 million.
Cryptocurrency Weekly Performance
Indices & Commodities
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“With the destruction of the fixed income markets, the search for investable alpha has already begun. The banking system has lost an asset class that represented a huge share of its annual fees. Bitcoin, young and maturing quickly, is already being offered to select clients by several global asset managers and international banks. It’s when, not if the asset class that cryptocurrency goes mainstream. Bitcoin hit its high in December, 2017 at $20,000/BTC. With accelerated adoption, the current entry point of roughly $9k/BTC seems like a value proposition.”
Technical Review – Bitcoin Fundamentals Improve
We are bullish on Bitcoin this week. BTC had a spectacular rally this week and we believe that this momentum is likely to continue. Last week, we took a neutral stance and argued that if BTC closed below $8,500, we would change to a more bearish stance. However, support was successfully tested on Thursday, and the cryptocurrency is now consolidating between the $8,500 to $10,000 range. With RSI above 50 and MACD poised for a crossover, our bullish conviction is strong. We believe that we are currently in the middle of a bullish rectangle, so we are waiting for Bitcoin to close above $10,000. If this happens this week, we would consider this a confirmation of our bullish thesis.
After a week where BTC was crushed by speculation and rumours, it rebounded based on bitcoin fundamentals. Difficulty rates are up and the network is functioning similar to pre-halvening levels. With a solid week of momentum at its side, we are bullish and excited about where bitcoin can move this week.