The Hard Fork – Weekly Market Commentary

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This Week’s Topics:
1) Harvard endowment invests in token sale
2) Initial exchange offerings rise
3) Bitcoin trading volume hits recent high

 

Indices Round-Up

TradeBlock Index Asset1 Price ($) 7d∆2
EOSX EOS 5.32 -0.63%
XBX Bitcoin 5,080.00 -0.80%
ETX Ethereum 163.94 -1.76%
XMRX Monero 65.43.36 -4.58%
ZCX Zcash 68.97 -4.63%
XRX XRP 0.32 -9.07%
XLMX Stellar Lumens 0.12 -9.47%
BCX Bitcoin Cash 279.31 -11.45%
ECX Ethereum Classic 6.26 -13.05%
LTX Litecoin 78.43 -13.72%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 03/31/2019 17:00 UTC thru 04/07/2019 17:00 UTC.

7 day price movers

Digital currencies traded flat to down on the week. After posting a strong rally last week, digital currencies saw limited price action this week. Among our indexed assets, EOSX declined the least, paring 0.63%. Conversely, LTX traded down the most, losing 13.72% over the week. Despite the recent positive price action, there remains a limited number of near term catalysts that could be responsible for pushing prices higher.

 

Harvard endowment invests in token sale

This past week, it was reported that the endowment fund for Harvard University has invested in a token sale for the decentralized computing network platform, Blockstack Token LLC. Harvard management, along with two other investment groups, purchased 95.8 million tokens valued at nearly $12 million.

Blockstack is seeking $50 million under a regulation A+ token sale, according to SEC filings. Blockstack’s core technology is developed as open-source software, and the company claims to have more than 7,000 enthusiasts and developers participating in the network. The company disclosed a total revenue of nearly $35 million, and assets of more than $32 million, including $21 million in cash and cash equivalents according to latest SEC documents dated April 11, 2019.

While this is not the first time an endowment fund has invested in the digital currency space, this is the first reported instance of an endowment investing directly in an initial token offering. Endowment funds have been increasing allocation towards digital currency investments recently, as a new survey found that more than 90% of endowment funds have allocated capital to digital currency investment opportunities, often in the form of fund of funds or venture capital funds.

 

Initial exchange offerings rise

A new token sale structure is on the rise; over the past several months, the number of initial exchange offerings (IEOs) and the capital raised in such sales have risen to a new high. Initial exchange offerings are token sales, which are conducted through existing exchanges, in which contributors purchase future tokens directly from an exchange.

While an IEO functions similarly to an initial coin offering (ICO), ICOs differ in that contributors purchase future tokens directly from the token issuer, usually a company or entity offering some token utility today or at a future time. One of the most successful IEOs to date was the BitTorrent token sale which was conducted on Binance, one of the most popular digital currency exchanges. The BitTorrent token sale sold out within minutes and raised $7.2 million. Since the token sale in January 2019, BitTorrent Tokens have traded up ~6.5x at time of publication.

In the chart below, we diagram the number of initial exchange offerings and the amount of capital raised each month since January 2019.

Figure 1: Initial Exchange Offerings Over Time

Initial Exchange Offerings Over Time

Data for chart sourced from Coincodex

 

Bitcoin trading volume hits recent high

Bitcoin trading activity has reached the highest level in six months recently, after reaching a multi-year low in March. Trading volume had steadily declined since prices reached an all-time high in December 2017, until November 2018 when a sudden crash in bitcoin prices spurred increased activity. Since November, volumes continued their downward trend, reaching a two year low in March 2019.

This trend reversed during the first two weeks of April, however, as trading volume increased to the highest level since November 2018. Prices across the space have risen alongside it, as bitcoin has traded to its highest level in months, maintaining price levels above $5,000 per coin. In the figure below, we diagram bitcoin trading volume at the largest US accessible exchanges overlaid with TradeBlock’s bitcoin index prices.

Figure 2: Bitcoin Trading Volume Over Time

Bitcoin Trading Volume Over Time

Data for chart sourced from the TradeBlock Professional Platform

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