The Hard Fork – Weekly Market Commentary

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1) Abra launches synthetic investment vehicles for US stocks using bitcoin
2) Tokens sold in BitTorrent ICO rise nearly 7-fold over two weeks
3) Number of incident reports at US digital currency exchanges declines

 

Indices Round-Up

TradeBlock Index Currency1 Price ($) 7d∆2
LTX Litecoin 46.52 39.43%
EOSX EOS 2.73 15.65%
ETX Ethereum 117.44 10.19%
XMRX Monero 46.91 10.10%
XBX Bitcoin 3,612.27 5.45%
BCX Bitcoin Cash 122.65 4.53%
ECX Ethereum Classic 4.02 3.77%
ZCX Zcash 49.01 2.23%
XRX Ripple 0.30 0.34%
XLMX Stellar Lumens 0.08 -3.92%
1. Underlying currency sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 02/03/2019 17:00 UTC thru 02/10/2019 17:00 UTC.

7 day price movers

Digital currencies broadly traded higher this past week after several positive catalysts. Among our indexed assets, Litecoin traded up the most, gaining 39.43% on the week. The rally pushed Litecoin prices to a seven month high–possibly spurred by an announcement that Beam would be partnering with the Litecoin foundation to add privacy features to the currency. Conversely, among our indexed assets Stellar Lumens was the only currency that traded down, shedding 3.92% on the week.

Bitcoin prices rose a modest 5.45% despite a flurry of positive tweets from Twitter CEO Jack Dorsey, who claimed he owns bitcoin and will not be owning any other digital currency. Dorsey described bitcoin as “a great brand, (has) strong principles, resilience, and the ability to stay cohesive with the ideals of the Internet.”

 

Abra launches synthetic investment vehicles for US stocks using bitcoin

This past week, digital currency firm Abra announced that users in 155 countries will be able to gain exposure to price movements in US stocks on its platform. Abra is using bitcoin and smart contracts to create a series of digital currency collateralized investment contracts which will offer investors across the globe exposure to US blue chip stocks, such as Facebook and Amazon. Additionally, investors will be able to own the equivalent of fractional shares rather than being required to own full shares.

When traders on the platform buy or sell exposure in one of Abra’s listed equities, contracts are created which track price movements of the stock and add/subtract bitcoin in the traders’ accounts as the stock price fluctuates. Interestingly, contracts are not created between parties seeking exposure in opposite directions, but rather Abra initially assumes directional risk in each contract with a counterparty. Abra then completely hedges this risk in the open market. The firm’s CEO has stated that a key priority of the company is to democratize capital markets, allowing everyday citizens in various countries access to US equity markets.

 

Tokens sold in BitTorrent ICO rise nearly 7-fold over two weeks

BitTorrent, the popular peer-to-peer file sharing protocol, conducted an Initial Coin Offering in late January that raised $7.2 million–selling out in 15 minutes. Since the ICO, BitTorrent tokens (BTT) have seen prices rise nearly 7x. BTT is listed on the popular digital currency exchange Binance, as well as US based exchange Bittrex, among other smaller venues.

While large price gains following the initial offering had become quite common during the digital currency bull market in late 2017, recently, projects have shunned capital raises via ICOs as regulatory agencies have cracked down on token sales.

The large price gains in BitTorrent tokens lie in contrast to the broader digital currency markets, which have faced sustained selling pressure in what has become the longest bear market in bitcoin history.

 

Number of incident reports at US digital currency exchanges declines

We tracked the number of incident reports at popular US based digital currency exchanges over the past several years. Our findings show that the number of incidents reported has declined to a two year low. While digital currency exchanges frequently saw downtime in 2016 and during the peak of market prices in late 2017, as trading volumes soared, recently, exchanges have reported the fewest number of incident reports since January 2017.

In the chart below, we diagram the number of non-scheduled incident reports at US based exchanges since 2016. The decline in incidents occurring at exchanges suggests that digital currency exchange infrastructure has improved over time. It is important to note, however, exchanges are also likely reporting fewer incidents because platforms have seen reduced traffic in recent months, as trading volumes have fallen to nearly two year lows.

Figure 1: Number of non-scheduled Incident Reports at US based Exchanges

Non-scheduled Inicident Reports at US based Exchanges

Data for chart sourced from corresponding exchange (*Poloniex and Bittrex no longer list incident report history.)

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