Market Update 8th – 14th July 2020
Another week of steady as she goes for neo-stablecoin Bitcoin, with the price trading in a narrow range and no major moves. BTC ends the week 0.7% down and is currently trading around $13,350. Research firm Skew says the correlation between Bitcoin and the S&P 500 reached a new all-time high this week. Ethereum and Litecoin also finished flat. XRP was up 6%, Stellar increased 27%, while Bitcoin Cash lost 3.1%, EOS lost 1.2% and BSV was down 3.8%. All eyes this week were on IR’s newest listing Chainlink (LINK) which surged from under $8 to around $11.50. It’s currently $10.40 and to finish the week up 34%.
The missing LINK
Chainlink (LINK) trading has gone live on Independent Reserve today, with an introductory brokerage fee 0.2% for the first two weeks. LINK aims to solve the ‘oracle problem’. Oracles are data feeds that smart contract platforms rely on – for example, an oracle feeds the price of the Korean Won into Synthetix to allow traders to bet on the price. But in July last year, that oracle got the price wrong, which allowed a bot to make off with more than a billion dollars. While those trades were cancelled, that won’t be an option in future for fully decentralised platforms and they could be wiped out. LINK offers decentralised oracles with verified and accurate data which is why so many big DeFi projects are integrating it. Some call LINK “a bet on the whole DeFi space”. The LINK token is used to pay node operators and data providers in the network.
More Bitcoin, more Ether
Grayscale’s Digital Large Cap Fund has increased its weighting of Bitcoin by 0.5% to 81.5% and upped ETH’s share from 9.6% to 11.7%. The fund reduced its weightings for XRP (5% to 3.6%), Bitcoin Cash (2.8% to 2%) and Litecoin (1.6% to 1.2%). Grayscale currently has $5.9 billion assets under management, an increase of 250% so far this year.
The students become the master
The combined market cap of ERC 20 tokens has topped $47.3 billion, surpassing that of Ethereum itself at $38.7 billion. It’s a bittersweet moment for ETH, as the network is powering the DeFi boom, but the native token is yet to reap the rewards. CryptoBriefing suggests the reason is because many projects use their own tokens for staking, and accept other assets for collateral, so they don’t need ETH for anything except gas fees. But CryptoBriefing believes the ETH price could get a boost from the adoption of EIP-1559 which would make fees cheaper and reduce ETH supply through burning, and the introduction of ETH 2.0, which will introduce staking rewards for ETH holders. Former Goldman Sachs hedge fund manager Raoul Pal believes Ether may lead the next rally. “I don’t yet own ETH but feeling the need to think about adding some. My primary vehicle remains Bitcoin,” he tweeted.
About that ETH 2.0 launch date
The much-delayed Ethereum 2.0 (which was due to launch around now) may not launch until January 2021 according to Ethereum Foundation researcher Justin Drake. He says the public testnet and a bug bounty program will take months. But co-Founder Vitalik Buterin disagrees and says he’s in favour of launching “significantly before that date regardless of level of readiness.” He pointed out Phase 0 will not have any critical applications running on it “so the practical risks of breakage are lower.”
13,000 BTC millionaires
According to Glassnode the number of Bitcoin addresses holding US $1 million in Bitcoin has risen past 13,000. The number hit 26,000 in early 2018 and dipped below 6,000 in early 2019. Meanwhile, Messari data shows the number of unique Ethereum wallet addresses are growing around twice as fast as Bitcoin’s since the beginning of the year. ETH addresses are up 118% this year, while Bitcoin addresses increased 49%.
Bull run round up
Crypto investment firm executive Charles Edwards tweeted that the Hash Ribbon buy signal went off on July 13. The indicator factors in the hash rate and mining difficulty and goes off about once a year. “The post-Halving signal is particularly special,” he said. “It will probably be a very long time until the next occurs. …and so the great bull run begins.” Former UBS and Deutsche Bank equities sales trader Marcel Pechman this week compared Bitcoin to Apple stock in 2008, a year after the iPhone launched, due to similar 11% market penetration. “A similar growth outcome for Bitcoin would drive its price to $59,900 ($84.5K), amounting to a $1.1 trillion ($1.6T) market capitalization in 2023,” he wrote.
Until next week, happy trading!
Independent Reserve Trading Desk