Financial Research



Crypto sells down in risk-off marketVietnam plans to investigate the crypto industry and develop regulatory policiesSquare acquires Tidal streaming service with plans to disrupt music industry Mining Stock Performance🅱️Many investors have been looking to publicly traded miners as proxies for bitcoin. While BTC is up 425% over the past year, mining stocks have outperformed the underlying coin price with returns as high as 3000%. That said, there is real concern that miner pricing is frothy due to their valuations based on future hashing capacity (something I will address next week). For now, I want to take a look at the impact of the recent market resetting and how the miners have fared. Below you will see last night’s closing price for each of the North American publicly traded miners compared to their respective 52-week highs and corresponding decline percentage. As a comparison bitcoin has declined 17% since its $58,000 high on February 21st. The Headlines Market Data Exchange, Custody and Product News Thoughts on the Ecosystem

  • BitDigest
Mar 20, 2020

March 20 · Issue #619

Crypto markets jumped overnight gaining $33 billion in total market-cap, an increase of 21.8%Another Japanese lawmaker has expressed the need for Japan to issue a central bank digital currency to maintain the strength of its currency in global marketsNumerous reports are appearing warning consumers to beware of fake websites and malware I heard a rumor earlier this week that a major bank (my bank) had limited cash withdrawals from ATMs. This turned out to be false, but banks are closing allowing employees to go into self-quarantine (Chase announced it was closing 20% of its branches and I expect more banks to follow) and there are already stories of people either withdrawing large amounts of cash (Bill Ackman) or banking systems being closed prohibiting cash withdrawals altogether (Venezuela). This obviously gives me fears of the Cyprus bank shut-down of 2013. I do not think this is going to occur – I think the same financial regulators I have questioned over their acceptance of digital currencies are actually doing a good job to help support the global financial system – but going shopping and seeing the empty shelves at my local market adds to my concern that further corona virus fears and market uncertainty could cause a mini run on the banks. The obvious risk avoidance strategy is self-custody of assets. We spoke about this in the office this week, volleying back and forth the benefits of self-custody with the cumbersome processes that still exist and the weaknesses of having a quasi-bearer instrument. The reality is that this technology has improved. We now have dashboards to help manage our assets and systems connecting your wallet to your computer no longer require a cord. More improvements are coming to digital wallet technology, but the question I am asking myself is do we actually want to live in a world where we self-custody all assets?  It certainly gives me an added sense of security to know I am in full control of my assets – assuming I do not lose my wallet or forget my password – but our economy has evolved into a service oriented environment, trusted third parties do exist, and they offer great service and drive innovation with new features. For now I remain the master of my own domain and am in full control of all of my own digital currencies. I did withdraw some additional cash this week, but my fiat holdings are still held by a third party and as I sit here today, I think that although the idea of self-custody appears to be utopian, many of us will likely ask our same financial partners to custody our digital assets with our traditional market securities. Maybe using multi-sig will provide us with a false sense of security that we are still in control, but the reality is its no different than what we are doing today; we are still relying on that trusted third party to facilitate our transactions. Weekend ReadingBitcoin’s 48-hour increase coincides with $180 million of new tether (USDT) being minted. Past studies have argued that bitcoin spikes, including the 2017 run, occurred around new large issuances of USDT. The theory was that the new tether was being minted without 1:1 USD reserves. In response tether published a transparency update with a proof of funds report by Delaware based law firm Freeh, Sporkin & Sullivan LLP. Unfortunately, as of last night, the latest update to this is from June 2018 so this argument will definitely be repeated in the coming days. Here is a copy of the University of Texas study (updated) that raised the initial argument and a rebuttal from the University of Queensland that argues it is unlikely tether manipulation caused the large bitcoin moves. The Headlines Japan Needs a Digital Yen to Maintain Global Position apanese Liberal Democratic Party member Kozo Yamamoto believes his countries must issue a central bank digital currency or face a loss to ‘its sovereignty.” “"We must protect it (the role of a unit of account) no matter what. If Japan doesn’t issue a digital currency and people in the world use other digital currencies, the Japanese yen will be forgotten and lose its sovereignty,” he declared. Argentina Releases Blockchain for Gas Distribution Argentinian gas regulator Enargas has launched a blockchain for the country’s has distribution system. The RSK-based blockchain records all transactions for certification of new gas installations and reconnection of services eliminating the paper process monitoring the consumers on the network. UK Sees Growing Crypto-Blackmail Cases More than 560 reports of bitcoin ransom attacks were reported in the UK in 2018 and 2019. The hackers used the same tactics in almost all cases–blackmail and fear intended to not only cause economic damage but also psychological damage by using threats, intimidation, and other high-pressure tactics to achieve their goal. 1.2 million Italians Accessing Bitcoin with Bank Private Italian bank Banca Sella has brought the ability to trade bitcoin to its clients and already has over 1.2 million users. Interestingly, the bank has created a basic plan targeted at younger, more digitally savvy, investors starting at the age of 12. Scammers Are Stealing COVID-19 Aid With Fake Sites National media have followed on the initial reports by Sophos security research Chester Wisniewski to report that criminals are taking advantage of good samaritans looking to support corona virus aid by releasing fake donation links. Storj Cloud Storage Platform Launched Storj, a decentralized cloud storage platform, has launched. The open-source network, which currently has 19 petabytes of available capacity, is hosted on thousands of nodes run by individuals and partners based all around the world. Vitalik Provides Future Roadmap Ethereum founder Vitalik Buterin tweeted a roadmap of what eth2 may look like over the next 5 – 10 years. Buterin explained that research for ethereum has evolved from “blue sky” to concrete R&D allowing for complexity and scalability to be addressed. Market Data Bitcoin Sentiment Understandably Weak The Crypto Fear and Greed Index, a monitor of investor confidence, is being driven by uneconomic uncertainty and has been at its lowest levels since last August posting an “Extreme Fear” rating this morning. Fortunately, the market pick up has had a positive impact on the index and shown a positive swing in its rating over the past 24-hours. Bitcoin Still Outperforming S&P 500 Grayscale Investments’ Brooke Stoddard twitted an interesting metric to keep crypto investors level headed in this period of overall market weakness. “In 2019, bitcoin (+92%) outperformed the S&P 500 (+32%). In 2020, bitcoin (-14%) is outperforming the S&P 500 (-25%).” Sell-Off Driven by Newbies A study by Coin Metrics suggests that the recent crypto sell-off was driven by short-term holders. By looking at the “revived supply” the number of “hodl’d” coins brought back into circulation, the crypto data firm was able to show that the vast majority of bitcoin sold on March 11th and 12th was held for 30, 90, and 180 days. Exchange, Custody and Product News Tether Launching on Bitcoin Cash Network Tether has announced it will begin to use the Simple Ledger Protocol built upon the Bitcoin Cash (BCH) network for issuing its tokens. This will add BCH to other networks supporting the leading stablecoin including Ethereum, Algorand and Tron. Kraken Warns of Malware and Fake Sites Kraken has released a new posting on malware warning investors to be aware of fake apps. The US based exchange stresses its users should to verify the authenticity of any site before providing log-in credentials and recommends using the official iOS and Android Kraken apps to access your account.

March 4 · Issue #854

Crypto prices inch downwards in overnight trading activityIranian think-tank recommends country use digital currenciesNew York to pilot COVID-19 tracking on blockchain Weekly Stock Update BTCC Interest declines Bloomberg is reporting that interest in Canadian Bitcoin ETF Purpose Bitcoin (CSE: BTCC.U) has declined since tracking began last month. The Headlines Mergers & Acquisitions Market Data Exchange, Custody and Product News Thoughts on the Ecosystem

March 3 · Issue #853

Bitcoin jumps back above $51,500SEC Chairman nominee Gary Gensler told the Senate Banking Committee that if confirmed he will work to protect investors, and promote technological innovations while remaining neutral on such technologiesChina expected to highlight DCEP in upcoming National Party sessions The Headlines Mergers & Acquisitions Market Data Exchange, Custody and Product News Thoughts on the Ecosystem

March 2 · Issue #852

Bitcoin and ether trading back at $49,000 and $1,570 respectivelyNew York’s Attorney General issues separate crypto warnings to investors and operating businessesGoldman Sachs looking to offer bitcoin trading to institutional clients Sorry, but Coinmarketcap. com API’s are not linking this morning. Hopefully the daily chart will return tomorrow. The premium to NAV returned positive for Grayscale’s Bitcoin Trust (OTCQX: GBTC) and Ethereum Trust (OTCQX: ETHE) but remains negative for Canada’s Purpose Bitcoin ETF (TSE: BTCC.U). Crypto Fear & Greed IndexThe Fear & Greed Index for bitcoin and other large cryptocurrencies is at 78 after falling and recovering from a 5 month low of 38 as bitcoin closed at $45,000 to end February. Surprisingly, the index did not drop as much as expected last week when bitcoin slipped to a similar level and after sliding from the mid 90s posting in a neutral range between 50 and 60 for most of the week.🅱️ It appears this index is more weighted to the closing price of bitcoin than daily trading ranges. The Headlines Market Data Exchange, Custody and Product News

March 1 · Issue #851

Crypto prices recover following weekend sell offBank of Jamaica to begin piloting digital currencyInner Mongolia proposing ban of crypto mining Premium to NAV for leading trusts and Canadian ETF remain negative. The Headlines Thoughts on the Ecosystem

February 26 · Issue #850

Crypto prices endure difficult week with new late night slide driving prices down 8%The Financial Action Task Force is releasing updated guidelines on virtual assets and plans to address regulatory requirements and new stipulations on stablecoinCoinbase files S-1 ahead of direct listing 👀🅱️Premium to NAV for top crypto products Grayscale’s Bitcoin Trust (OTCQX: GBTC) and Ethereum Trust (OTCQX: ETHE) as well as the new Purpose Bitcoin ETF (TSX: BTCC.U) are all negative as of the close of market last night. The Headlines Market Data Thoughts on the Ecosystem

February 25 · Issue #849

Digital asset pricing regains support at $1.5 trillion levelPowell says Congress must approve digital dollarEast Caribbean Central Bank announces first digital currency transaction Weekly Stock Review Fed needs to learn from decentralized networks🅱️Yesterday, we observed the Federal Reserve’s system for interbank payments experience technical failures causing payment delays across the system. Hopefully as Fed Chair Jerome Powell and Treasury Secretary Janet Yellen continue to comment on the evolving  role of digital currencies, they can also address the fact that decentralized networks do not have single-points of failures like they just experienced. The Headlines Mergers & Acquisitions Exchange, Custody and Product News Thoughts on the Ecosystem

February 24 · Issue #848

All aboard the crypto roller coaster, bitcoin back above $50,000 as crypto market gains 10.9% over nightECB looking to regulate stablecoinsUS Fed Chair calls investigation into digital dollar “appropriate” and commits to open and transparent discussions Investors will be watching closing pricing on GBTC and BTCC today as the premium to NAV for the Grayscale Bitcoin Trust fell into negative territory at yesterday’s close, dropping below the premium for leading Canadian ETF Purpose Bitcoin. The Headlines Market Data Exchange, Custody and Product News Thoughts on the Ecosystem

February 23 · Issue #847

Crypto market cap falls 16% in overnight sell offSouth Korea reportedly ready to ban trading of privacy coinsChina and UAE join Thailand and Hong Kong’s CBDC study I have added the Purpose Bitcoin ETF (TSX: BTCC.U), the first and largest bitcoin ETF (so far) to the daily market recap. Of interest to many is the premium to NAV of BTCC.U compared to the premium to NAV for the Grayscale Bitcoin Trust (NASDAQ: GBTC). Crypto Fear & Greed IndexIt may surprise you that the Fear & Greed Index for bitcoin and other large cryptocurrencies is basically unchanged on the week posting a one-point decline to 94, but it should be noted that the index is updated daily and was last adjusted before the current crypto market sell off saw a significant effect. Based on historic movement, I expect the index to drop below 50 later today. The Headlines

February 22 · Issue #846

Crypto prices trade down after bitcoin and ether hit new highs of $58,000 and $2,000 respectivelySouth Korea plans to impose crypto tax crypto on trading, gifts and inheritanceMorocco and Nigeria say that cryptocurrencies can no longer be ignored and plan to conduct research into the issuance and regulation of digital assets Laser Eyes Appearing on TwitterIf you looked at Twitter over the weekend you may have noticed a change to numerous profile pictures. Numerous bitcoin supporters added laser eyes to their profile pictures to signify the recent price appreciation and a laser focus on the next major target of $100,000. #LaserRayUntil100K. The Headlines Market Data Exchange, Custody and Product News Thoughts on the Ecosystem

FSInsight logo
150 East 52nd St, 3rd Floor, New York, NY 10022

Subscribe to our Free Weekly Report

An insitutional-grade report delivered to your inbox every week.

© 2021 FSInsight. All rights reserved. Developed by HANGAR115.

Illustrations by Karl Wimer.