The Hard Fork – Weekly Market Commentary

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This Week’s Topics:
1) JP Morgan launches its own stablecoin
2) Online traffic declines at digital currency websites
3) Grayscale sees a company record $360 million inflows in 2018

 

Indices Round-Up

TradeBlock Index Asset1 Price ($) 7d∆2
ETX Ethereum 125.23 6.63%
EOSX EOS 2.78 1.74%
ZCX Zcash 49.87 1.74%
ECX Ethereum Classic 4.03 0.28%
XLMX Stellar Lumens 0.07 -0.29%
XBX Bitcoin 3572.20 -1.11%
XMRX Monero 46.16 -1.59%
XRX XRP 0.29 -1.67%
BCX Bitcoin Cash 119.95 -2.21%
LTX Litecoin 42.66 -8.30%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 02/10/2019 17:00 UTC thru 02/17/2019 17:00 UTC.

7 day price movers

Digital currencies posted mixed price changes this past week, as news emerged that JP Morgan, the nation’s largest bank, would be expanding involvement in the space by launching its own digital currency that could potentially rival Ripple’s XRP token (see topic 1 below for more information).

Among our indexed assets, ether traded up the most gaining 6.63% on the week. Conversely, litecoin traded down the most, losing 8.30%. Bitcoin prices were nearly unchanged.

 

JP Morgan launches its own stablecoin

This past week, JP Morgan significantly increased its involvement in digital currencies by launching its own stablecoin. JP Morgan’s new currency, aptly named JPM Coin, will be pegged 1:1 with the US dollar. Unlike existing stablecoins which are built on permissionless blockchains, JPM Coin is built on the firm’s private, permissioned blockchain, Quorum. As such, the coin is considerably more centralized than current leading stablecoins such as USD Coin (USDC) and Gemini Dollar (GUSD), which are built on Ethereum.

At this time, JPM Coin is intended for use between institutional accounts at JP Morgan which will allow for the instantaneous transfer of payment value. This poses a challenge to the already existing digital currency company Ripple, which uses its native token, XRP, to lower costs for payment transfers primarily between institutional accounts in cross border transactions.

Stablecoins not only can lower costs and create efficiencies in institutional transactions, but also are primed for person-to-person payment interactions as well. JP Morgan is a partial owner in Zelle, which is a popular P2P payment platform.

 

Online traffic declines at digital currency websites

We tracked estimated online traffic over the past six months at leading digital currency websites across three primary categories: market and data sites, exchanges, and media sites. Our results indicate that among the most popular websites, online traffic has declined 32% at market/data sites, 28% at exchanges, and 19% at media/news sites since August 2018.

Among digital currency market/data sites, Coinmarketcap saw the most visits with nearly 70 million for the month of January 2019. Since August, the top five most visited websites, including Coinmarketcap, saw a decline in number of visits.

Figure 1: Web Traffic at Digital Currency Data Sites Over Time

Web Traffic at Digital Currency Data Sites Over Time

Data for chart sourced from Similarweb

Binance and Coinbase rank as the most visited exchanges. Across the five most visited exchanges, each saw their traffic numbers decline since August.

Figure 2: Web Traffic at Digital Currency Exchanges Over Time

Web Traffic at Digital Currency Exchanges Over Time

Data for chart sourced from Similarweb

Among the three categories we analyzed, digital currency media/news sites saw the smallest decline in visits (-19%) since August 2018. Unlike in the other categories, one media site actually saw an increase in visits. CCN saw a 25% rise in estimated visits since August and BTC News remained nearly flat, while all other sites in the top five saw a decline.

Figure 3: Web Traffic at Digital Currency Media and News Sites Over Time

Web Traffic at Digital Currency Media and News Sites Over Times

Data for chart sourced from Similarweb

 

Grayscale sees a company record $360 million inflows in 2018

Grayscale saw a record yearly inflow into its digital currency investment products in 2018. In a report released this past week, Grayscale recorded nearly $360 million of new inflows for the year–3x its 2017 haul, and more than 2x the inflows from the previous four years combined. Interestingly, of the $360 million of inflows in 2018, 66% was contributed by institutional investors indicating that institutional involvement in the space remains healthy.

Among Grayscale’s various digital currency investment products, bitcoin recorded the largest inflows, at $242 million during the 2018 calendar year. In the fourth quarter, 88% of new investments were in Grayscale’s Bitcoin Trust while 12% flowed into all other digital asset products combined. Grayscale ranks as one of the largest investors in the digital currency space with approximately $825 million in assets under management.

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