The Hard Fork – Weekly Market Commentary

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This Week’s Topics:
1) On-chain stablecoin volume is more than half the total payment volume at Venmo
2) Cboe withdraws VanEck/SolidX Bitcoin ETF proposal
3) ICOs see weakest fundraising environment since early 2017

Indices Round-up

TradeBlock Index Asset1 Price ($) 7d∆2
LTX Litecoin 32.28 5.51%
XMRX Monero 45.51 4.89%
EOSX EOS 2.36 2.31%
XBX Bitcoin 3545.88 0.51%
BCX Bitcoin Cash 122.38 0.47%
ZCX Zcash 51.06 -0.81%
ECX Ethereum Classic 4.16 -2.47%
XRX XRP 0.31 -2.60%
Ethereum Ethereum 113.53 -3.11%
XLMX Stellar Lumens 0.09 -7.25%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 01/20/2019 17:00 UTC thru 01/27/2019 17:00 UTC.

7 day price movers

Digital currencies largely traded down this past week. The current bear market has now passed the 400 day mark. This is nearing the all time bear market record, which spanned from Nov. 2013 to Jan. 2015, when bitcoin asset prices were in a correction for 410 days.

Bitcoin prices were nearly unchanged on the week despite the Cboe choosing to withdraw the SolidX/Van Eck ETF proposal (for more information, see topic 2 below). A bitcoin ETF has long been seen as a positive catalyst for the space, yet this reality has been elusive over the years as the SEC has disapproved various bitcoin ETF offerings in the past.

Among our indexed assets, Litecoin traded up the most on the week gaining 5.5%. Stellar Lumens, conversely, traded down the most shedding 7.3% on the week.

 

On-chain stablecoin volume is more than half the payment volume at Venmo

Stablecoins have received significant attention in the digital currency space – and even outside of it – heralded as possible disruptors to traditional payment servicing companies such as Venmo/PayPal. In Q3 2018, several new stablecoins were launched to much fanfare.

To compare a traditional payment processing platform vs new stablecoin offerings, we analyzed the daily average on-chain transaction volume that was transferred across four of the largest new stablecoins vs the daily average total payment volume that was transferred across the Venmo platform. Venmo’s total payment volume figures are published in PayPal’s annual and quarterly reports (Venmo is a subsidiary of PayPal).

The daily average on-chain transactional volume summed across USD Coin (USDC), TrueUSD (TUSD), Paxos Standard Token (PAX), and Gemini Dollar (GUSD) was more than $116 million. In comparison, the daily average total payment volume across the Venmo platform for 2018 came to nearly $158 million. While these offerings recently launched, our findings indicate they are already achieving nearly 75% of the transactional volume that Venmo captures.

 

Cboe withdraws VanEck/ SolidX Bitcoin ETF proposal

This past week, the Cboe chose to withdraw the highly anticipated SolidX/Van Eck Bitcoin ETF from approval consideration by the US SEC. In an announcement posted on Wednesday, January 23rd, the SEC confirmed that the proposal had been withdrawn. In a CNBC interview, Van Eck CEO, Jan Van Eck, said the decision was driven by the recent US government shutdown, which has left many SEC employees furloughed. It is expected that the bitcoin ETF proposal will be re-submitted at a later date.

The digital currency market appears to have become accustomed to delays in a bitcoin ETF product as bitcoin prices remained nearly unchanged after the announcement. The SolidX/Van Eck ETF was originally submitted in June of 2018 and has faced multiple delays in regards to a final decision from the US SEC. In September 2018, the SEC notably disapproved nine proposed bitcoin ETFs submitted by different firms.

 

ICOs see weakest fundraising environment since early 2017

Initial coin offering (ICO) raises are starting 2019 off at the lowest level since April 2017. The number of projects choosing to raise capital via an ICO has declined considerably as regulatory agencies clamp down on many such offerings. Despite the concerns, some projects are choosing to continue capital raises through token offerings, albeit via more regulatory compliant means. This past week, it was announced that Gavin Wood’s new project, Polkadot, was seeking to raise an additional $60 million via an ICO.

In the chart below, we track the number of ICOs and the monthly capital raised over the past few years.

Figure 1: Monthly ICO Figures

Initial Coin Offering Capital Raised - 2017 to date

Data for chart sourced from Coin Schedule

While ICO fundraising has weakened in 2019, in years past ICOs had raised a significant amount of capital. Since January 2016, it is estimated that more than $28 billion has been raised in ICOs across nearly 1,600 projects.

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