Crypto Weekly (Sept. 11th, 2019)

Weekly recap…

• Ahead of the Bakkt launch on 9/23, the Fed Chair Powell piled on to the negative sentiment currently permeating crypto-markets.
• Network data monitoring tools have improved significantly over the past year — a big plus for data transparency in the space.
• Our model suggests total breakeven BTC mining cost = $8500; cash breakeven cost = $7300.

Center Story

1. Fed’s critcism of crypto overshadows first stage of Bakkt product launch

On the same day Bakkt began accepting deposits and withdrawals (last Friday, September 6), Jay Powell was in Zurich where he expressed skepticism on behalf of the Fed towards the viability of and demand for cryptocurrencies.

Recently it seems like good news helps less than bad news hurts. Still, the Bakkt launch at the end of this month is a very good development in the markets for improving price discovery.

What else to know…

• Bakkt’s futures product launches September 23. 
• Trading hours: 8:00 PM – 6:00 PM (next day) EDT; daily settlement window between 4:58 PM and 5:00 PM.
• The contract size = 1 BTC with a minimum price fluctuation of $2.50 per bitcoin ($2.50 per contract).
• Block trades may be executed at $0.01 per Bitcoin ($0.01 per contract).
• Contracts are settled with Bitcoin (not USD).

Network Monitor

2. Crypto monitoring tools are getting GOOD!

It’s easier than ever before to monitor and analyze the crypto ecosystem
Something that has not been acknowledged enough is how good network monitoring and analytics tools are getting in crypto. The resources available to compare data across chains or measure quality of exchange data are far superior to even 1 year ago.

Below are recently launched tools by some of our favorite data providers that are improving data transparency in crypto. Despite bearish sentiment (BMI falling towards 50) products in the space continue to improve.

Announcing Messari Pro and release of a comprehensive Messari Methodology

• The Messari methodology is a comprehensive set of methods to compute metrics and to classify assets. 100+ quantitative metrics and 15+ classifications.

Transparent Volume Indicators on Nomics.com

• Transparent volume represents the amount of volume deemed “trustworthy” and high quality by Nomics. 

Coin Metric’s beta version of its CM Real-Time Reference Rates

• Pricing source for valuation and calculation of NAV. The reference rates use a longer time window of 61 minutes.

Fundamentals

3. Bitcoin miners are profitable with BTC ~$10k

Miners are profitable with total breakeven cost ~$8500, cash cost ~$7300

Cash costs per BTC = $7300. Our model suggests the cash cost of mining each BTC on the legacy Antminer S9 is now $7300 (assuming $0.06 / kWh), up from $3900 at the beginning of the year. 

Total costs per BTC = $8500. All in breakeven cost (which includes rig depreciation) is now $8528 on same S9, compared with $4563 at the beginning of the year.

Next generation mining rigs all have cash costs in the $2800-3300 range, with total breakeven between $5100-6300. Bitmain’s Antminer S17 Pro is the least efficient of the new rigs, while Strong STU-U8 and Innosilicon’s T3+ 57T are the most efficient. Nonetheless, we believe the S17 will likely win a large market share owing to Bitmain’s scale and ability to procure sufficient wafers starts at its supplier, TSMC (meaning they can build enoug units to meet demand).

BTC’s rally starting in April coincided with crossover point for miner profitability

Technicals

4. Accumulate pending near-term pullback for a Q4 acceleration

A bounce back to resistance sets the stage for another opportunity to accumulate BTC

BTC’s recent bounce is showing early evidence of stalling around 11-11.2K resistance near the 50-62% retracement of the August decline and the summer 2019 downtrend.

Our intermediate-term outlook remains unchanged as BTC unwinds the overbought condition that developed into the June peak following a 340% surge from a cycle low at its rising 200-week sma.

Markets

5. Market Movers (over past 7 days)

Cryptocurrencies
Bitcoin -0.1% to $10334.97
Ethereum +1.6% to $181.15
XRP -0.5% to $0.259562
EOS +16.9% to $3.88
Litecoin +4.9% to $70.19
Bitcoin Cash +3.9% to $305.43
Binance Coin -2.1% to $22.29
Stellar -5.4% to $0.059846
TRON -1.1% to $0.015742
Dash +6.8% to $87.13

Fiat Currencies
Dollar Index (DXY) -0.6% to 98.37
EUR +0.6% to 1.1 USD/EUR
GBP +2.2% to 1.23 USD/GBP
JPY -1.5% to 0.0093 USD/JPY
CNY Onshore +0.9% to 0.1406 USD/CNY
CNH Offshore +1.0% to 0.1407 USD/CNH
CHF -0.5% to 1.0082 USD/CHF

Commodities
Gold -4.0 to $1485.64
WTI Crude +7.3% to $57.87
Brent Crude +7.7% to $62.75

Education

6. Twitter says Blockstack, Bakkt, and Bitcoin

Some thoughts on crypto – Fred Wilson

In some ways, Bitcoin is the one protocol that has found lasting product-market fit. In terms of a censorship proof digital store of wealth, there is nothing that comes close to Bitcoin. There are some protocols, like the privacy-focused ones, that offer similar and in some cases better use cases. But for the most part, Bitcoin is our digital gold..

Interoperability in the Age of Siloed Blockchains Pt. 1 – Lucas Nuzzi

Blockchain Interoperability has become a convoluted, somewhat mythical topic. For an idea that originated with the simple premise to develop ways for two blockchains to exchange information, the interoperability field today is flooded with technical complexity…

Introducing the Difficulty Ribbon, signaling the best times to buy Bitcoin – Willy Woo

Introducing the Bitcoin Difficulty Ribbon. When the ribbon compresses, or flips negative, these are the best times to buy Bitcoin. The ribbon consists of simple moving averages on mining difficulty so we can easily see the rate of change in difficulty.

Events

8. What’s happening in next week

Wednesday, September 11
Invest:Asia
DeFi Summit Londong

Thursday, September 12
Kyber Network (KNC) Global Hackathon

Friday, September 13
Empowering Blockchain Summit 2019

Monday, September 15
Shanghai International Blockchain Week (through the 18th)

Tuesday, September 16
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Wednesday, September 17
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