Digital Assets Weekly: Feb 28th, 2020
Summary
Market Strategy:
- Crypto markets had a tough week as global risky assets sold off on coronavirus fears but crypto investors shouldn't panic.
Winners & Losers:
- Winner: Argon's Tim Draper investment may hold promise for future crypto legal governance.
- Loser: Ripple's illegal security lawsuit claims may mean potential upside isn't justified by regulatory risks.
Weekly Rant:
- Why the announcement "Startup Tokenizes $2.2B in Commercial Real Estate Through Polymath" makes me cringe.
Financing Activity:
- Copper.co raises an $8M Series A round to build out its London based crypto custodian platform.
Recent Research:
- Check out our recent report on the Bitcoin SV (BSV) Genesis protocol upgrade if you missed it.
Market Strategy
Bitcoin sold off nearly 10% on the week and brought most other crypto assets in to the red along with it. Among the 10 largest crypto assets, the biggest losers were BSV (-25%), XTZ (-20%) and LTC (-18%), while the best relative performers were BTC (-10%), ETH (-12), and EOS (-13%).
The risk off sentiment seen broadly across global markets is the most proximate cause for the move, as fears of the coronavirus spreading and causing an economic slowdown crushed the S&P 500 by 13% on t...
Reports you may have missed
FLOWS RETURNING TO THE MARKET Last week, we discussed how our base case remained that conditions for liquidity-sensitive assets like crypto would improve in the near term, and we continued to lean on our "Buy in May" thesis, given the constructive setup. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors’ expectations contributed...
MACRO SETUP STILL LOOKS GOOD FOR CRYPTO As discussed last week, we achieved the favorable setup we were anticipating. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors' expectations contributed to a decline in rates during the first week of May, alongside a rebound in crypto assets. However, crypto investors remain cautious, and...
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
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