Welcome back to the 12th edition of ‘The Digital Asset Digest’. Last week we saw crypto’s resiliency as the market finally came out of the red and we entered a crypto recovery. Upon the heels of some exciting announcements, we hope the markets return to green is sustainable.
In the last edition, we shared some exciting news announcing that GDA Capital and Proof Capital are launching a $2 Million investment fund to accelerate the launch of the “Rhodium Mining Facility’. If you want to learn more about the Rhodium Mining Facility, kindly reach out here.
Market Summary – Crypto Recovery
Digital Assets – Bitcoin was up 3.12% on Monday amidst another week of slow newsflow. As opposed to price, volatility seems to be the highlight of discussion as Bitcoin hit its lowest volatility levels in eight months. Ether took the spotlight this week, gaining 6.5% as Ethereum miners increased the network’s gas limit by 25% in response to increased network utilization, while XRP trailed the broader crypto market at 1.9%.
Indices – The S&P 500 crossed the 3,100 mark again this week, rising 1.7% despite uptick in coronavirus cases in California, Texas, Florida, and Arizona as economies began to reopen. U.S. jobless claims fell slightly less than expected, renewing fears that the worse is not yet over. Information technology drove returns in Canada, as both Enghouse and Shopify saw double-digit returns.
Commodities – The momentum in commodities continued. Oil saw another spectacular week, as WTI futures finally crossed the $40 mark, representing a 9.0% rise this week, driven by reports that Iraq was cutting oil production to comply with its OPEC+ quota. Gold and silver were both up 2.1% and 2.9%, respectively, as investors returned to a more risk-off sentiment.
“With major digital coins failing to break out meaningfully in recent weeks, crypto markets can’t seem to pull out of a funk. Based on the DVAN Buying and Selling Pressure Indicator — which depicts bull/bear trends — the Bloomberg Galaxy Crypto Index appears to be stuck in a negative trend and is heading further away from the 400 level that’s previously acted as a point of resistance. In order to breach it, the index — which tracks major cryptocurrencies — would need to see its two largest components, Ether and Bitcoin, rally, though the latter has seen difficulty in taking out its own resistance level of $10,000. The gauge could post further declines if it does not see a trend reversal.”
“Miner outflows of bitcoin have dropped to decade lows, with analysts suggesting a hoarding mentality is partly responsible. The seven-day average of the total amount of bitcoin transferred out of miners’ addresses declined to 987 on Thursday, hitting the lowest level since Feb. 3, 2010, according to data source Glassnode. The previous decade low of 988 was registered on May 23. The number of coins being sent by miners to exchanges is also at its lowest point in over a year, as noted by Glassnode in its weekly report. “It is a sign of efficient miners continuing to hoard (only selling a proportion of BTC),” said Asim Ahmad, co-chief investment officer at London-based Eterna Capital.”
“Some Bitcoin (BTC) miners might become unprofitable again as a result of the latest difficulty adjustment. Earlier this week, the network mining difficulty adjustment saw a 14.95% spike, its largest increase since January 2018. The regular update, which occurs every 2016 blocks, has been pre-coded into the blockchain to keep mining speed at approximately 10 minutes for a block. The latest adjustment might thwart an emerging trend in the mining sector: older generation machines coming back online after the halving. In May, the Bitcoin block reward was halved, causing a substantial number of miners to pull the plug on older machines, looking to sell their equipment or relocate to places with cheaper electricity.”
“If, in the compressed time of blockchain existence, the “crypto winter” of 2018-2019 was Ethereum’s Dark Ages, then we’re now in its Renaissance. But it’s an open question whether the blockchain platform and its enthusiastic community can take the wider world into the next era: the decentralized equivalent of the industrial revolution. As Ethereum prepares to celebrate the five-year anniversary of its mainnet launch on July 31, billions of dollars in value rest on that question. Specifically, on whether the all-important Ethereum 2.0 scaling project can be successfully launched and integrated into its existing architecture.”
Nimiq is a decentralized payment protocol dedicated to censorship-resistance and ease of use. The cryptocurrency describes itself as a “browser-first” blockchain, allowing users to connect directly to the blockchain without installing additional software. The Nimiq Mainnet was launched in April 2018 and has been operational since. By focusing on simplicity and user experience, the Nimiq team hopes to achieve adoption by the masses, particularly those who are not familiar with blockchain to start off with. The company argues that frictionless payments are the key driver of token adoption and prior tokens were built with software developers in mind. The team believes that their focus on building intuitive interfaces will bring their token to the forefront.
While originally built on a PoW protocol, Nimiq is transitioning into a PoS framework through Albatross, its custom-build consensus algorithm. Albatross is based on speculative Byzantine-fault-tolerant (BFT) algorithms, but attempts to optimize performance without compromising on security. Nimi was founded by Philipp von Styp-Rekowsky, a former PhD student at the Information Security and Cryptography Group at CISPA, and Elion Chin, co-founder of MoodLogic Inc. NIM currently trades for less than a cent with a market cap of $16.7 million.
Cryptocurrency Weekly Performance
Indices & Commodities
Source: Medium // Sajjad Hussain
“The phenomenon of Ethereum options rebounding in the second quarter is not unique to altcoins. It generally goes hand in hand with BTC options and crypto derivatives. In May, the trading volume of the cryptocurrency derivatives market hit a record high of $602 billion. Interestingly, after May, investors’ interest in BTC futures (the largest BTC derivative) began to decrease. On June 12, BTC futures fell to a 2020 low, while the open positions of Ethereum options continued to rise to record highs… The rise of altcoins such as ETH, Komodo (KMD) and Cardano proves that cryptocurrency investors are looking for other speculative channels besides BTC.”
We are again bullish on Bitcoin this week. When we published our last Technical Review two weeks ago, we were bullish then and pointed towards consolidation between $8,500 and $10,000 as the levels we were watching BTC to break out from. While the $10,000 resistance level has been firmly established, the cryptocurrency is making new highs and an ascending triangle has clearly formed. We would consider this an extremely bullish signal and anticipate the momentum to carry on until at least the $11,500 mark within the month. As for today, we continue to wait for Bitcoin to break from the $10,000 level as a confirmation for our thesis.
Unfortunately, several states saw dramatic increases in the number of COVID-19 cases. While our hearts go out to the families, we were pleased to see that there was a weak correlation between the increase in COVID-19 outbreaks and market performance. We hope this points to the economies growing resistance against COVID-19 and its ability to still function, even in the midst of a crisis such as this.