The Hard Fork – Weekly Market Commentary


This Week’s Topics:
1) Bakkt sees modest volumes in its opening
2) Binance launches staking services
3) Price volatility soars back


Indices Round-Up

TradeBlock Index Asset1 Price ($) 7d∆2
XRX XRP 0.25 -7.54%
XLMX Stellar Lumens 0.06 -11.33%
ZCX Zcash 38.04 -16.56%
ETX Ethereum 173.00 -17.71%
XBX Bitcoin 8,008.33 -19.49%
XMRX Monero 55.36 -22.48%
ECX Ethereum Classic 4.58 -23.57%
EOSX EOS 2.92 -23.60%
LTX Litecoin 55.25 -24.65%
BCX Bitcoin Cash 224.59 -26.70%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 09/23/2019 06:00 ET thru 09/30/2019 06:00 ET.

7 day price movers

Digital currencies broadly traded down this past week in one of the worst weekly price declines for the space since 2018. The majority of losses came on one trading day, with bitcoin declining more than 10% on Tuesday while large cap alts saw even greater losses. The declines corresponded with a crash in US equities on Tuesday as the S&P 500 index closed down roughly 1.5% on the day–one of its worst recent daily declines. US markets faced considerable turbulence on the week amidst political instability as Democrats in the US House of Representatives began exploring the process to impeach President Trump.

Figure 1: Bitcoin price crash

Image sourced from TradeBlock; view more here


Bakkt launch sees modest volumes

Bakkt’s first week of trading saw modest volumes as considerable demand for a bitcoin physically settled futures product failed to materialize. On its first day, there were just over 70 bitcoin futures contracts traded, representing a notional volume of ~$700,000. In comparison, during its first full month post launch, the CME saw nearly $2 billion notional traded, ~$120 million per day on average. However, CME contracts were launched during the height of transactional activity in the space as bitcoin hovered near an all time high in late 2017.

Bakkt’s futures platform had been one of the most anticipated products to launch in 2019. While Bakkt’s futures debut saw only modest volumes, trading volumes likely would increase over time. CME futures, which had experienced declining volumes in late 2018 and early 2019, have seen a recent resurgence in transactional activity. As we highlighted in one of our past weekly reports, CME bitcoin futures trading volume reached an all-time high in May and June.


Binance launches staking services

On September 26th, Binance announced the launch of a dedicated staking platform for international customers. Users can now access their Binance exchange accounts to stake up to 8 different digital assets which allow participants to earn network rewards. The assets that Binance will support are delineated below:

Staking is a process by which holders of digital tokens can perform various functions to ensure blockchain network integrity–for their efforts, stakers receive digital tokens in return, often through inflation of the network’s native token. The amount of capital that is being staked has risen over time as the number of proof-of-stake network launches has grown, and as investors look to gain an additional fixed yield in the process.

Exchanges have looked to diversify their revenue streams away from trading activity to include a host of other services. Similar to Binance, Poloniex has automatically begun staking certain assets for international customers who maintain a balance on the exchange. Additionally, exchanges have recently launched various custody services as well. In recent months both Coinbase and Gemini have launched custody platforms.


Price volatility bounces back

After touching a recent low, price volatility in the space bounced back as digital currencies experienced a sudden crash this past week. Volatility had been decreasing week over week as bitcoin consistently traded around $10,000 per coin over the past several weeks. This calmness was short lived, however, as bitcoin experienced a sudden crash on Tuesday and then continued to bleed lower over the next few days before staging a modest recovery.

In the figure below we diagram 60 day price volatility for bitcoin. As shown, bitcoin volatility had been trending lower before the recent surge in activity.

Figure 2: Bitcoin price volatility over time

Data for chart sourced from the TradeBlock Professional Platform

Subscribe to the TradeBlock blog for the latest analysis and updates.


For the latest analysis and updates