The Hard Fork – Weekly Market Commentary


This Week’s Topics:
1) CME bitcoin futures saw record summer
2) Paxos creates gold backed digital currency
3) Binance US to launch in coming weeks


Indices Round-Up

TradeBlock Index Asset1 Price ($) 7d∆2
EOSX EOS 3.91 20.10%
XMRX Monero 76.36 9.10%
LTX Litecoin 69.99 6.84%
BCX Bitcoin Cash 305.41 6.40%
ETX Ethereum 180.53 5.35%
XBX Bitcoin 10,250.68 4.71%
ECX Ethereum Classic 6.57 4.44%
ZCX Zcash 46.72 4.00%
XRX XRP 0.26 2.84%
XLMX Stellar Lumens 0.06 -0.94%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 09/02/2019 06:00 ET thru 09/09/2019 06:00 ET.

7 day price movers

Digital currencies recovered some losses suffered last week, as the asset class saw mixed results on the week. Bitcoin changed hands as high as 10,800 per coin on Friday before declining nearly 5% over the course of minutes in an intra-day sell off. The decline came after comments from Fed Chairmen Jerome Powell, who stated that there is limited interest from consumers in a Fed issued digital currency. Among our indexed currencies, Stellar Lumens traded down the most, falling 0.94%. Conversely, EOS saw the largest price rise, trading 20.10% higher on the week.


CME bitcoin futures saw record summer

The CME saw elevated trading volumes for its bitcoin futures product over the summer before declining modestly in August. For the months of May, June, and July, more than $8 billion notional volume was traded each month–by far the largest volumes since the CME launched bitcoin futures contracts in December 2017.

In the figure below we diagram notional bitcoin trading volume over time. While the CME saw sustained trading volume early in the summer, volumes have tapered some in August declining to numbers just under those seen in April.

Figure 1: CME bitcoin futures notional trading volume over time

Data for chart sourced from CME Group

The number of institutional platforms looking to offer digital currency futures contracts has increased recently, as the highly anticipated Bakkt platform is set to launch physically settled bitcoin contracts in the next few weeks. A physically settled bitcoin futures product would be the first of its kind, and could usher in further institutional adoption.


Paxos creates digital currency backed by gold

This past week, the digital currency exchange, Paxos, launched a digital currency backed by physical gold. According to a spokesperson for Paxos, the digital tokens will represent physical gold bars custodied in vaults in London. The token itself will follow the ERC-20 standard, a technical standard that follows a rule set defined in the Ethereum ecosystem.

Paxos’ gold backed digital currency would allow investors the opportunity for liquid ownership in gold, without self custody. There do exist, however, gold derivatives which offer synthetic exposure to gold and are highly liquid products with considerable trading volumes.

Paxos gold product comes as more traditional assets and currencies are becoming tokenized on the Ethereum blockchain. In our stablecoin report we published earlier this year, we found that ERC-20 standard USD pegged stablecoins have seen a significant increase in transactional volume over the year.


Binance US to launch in the next few weeks

Beginning this week on September 12, Binance will no longer allow US customers to trade digital currencies. US customers can still withdraw assets held on Binance after this date, but all orders will be canceled after this date. While the international platform will geo-block US customers, Binance has announced that its new exchange Binance US platform should launch in the next few weeks.

Binance US is expected to have stricter regulations than its international platform, including KYC documentation that requires social security numbers and photographs of government issued identification cards. Additionally, Binance US will likely offer considerably fewer assets than Binance international, which had become known for offering a plethora of different digital currencies. While the number of assets offered would be fewer than on the international platform, there could still be a large number of assets offered. In August, Binance US announced that the exchange would look to offer up to 30 assets with potentially more to come.

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