Over the past week, the U.S. SEC delayed Bitcoin ETF proposal it had on the table, Binance CEO CZ labelled reports that the exchange had suffered a hack involving user KYC data as “FUD”, commission-free trading app Robinhood got a thumbs up from UK regulators and Coinbase quietly delisted privacy coin Zcash from its UK platform.
CZ Plays Down KYC Data Hacking Rumours
Security has been a touchy subject for popular crypto exchange Binance, following a hack in May that resulted in a loss of 7,000 BTC from the company’s hot wallet. There are now reports, emanating from an anonymous Telegram user, that the company has lost user data – including KYC documents such as passport information – in a fresh hack. Various Binance representatives, including CZ, have been quick to distinguish the rumours, labelling the white hat hacker’s claims as ‘inconsistent’ and ‘FUD’ claiming leaked images don’t match their records.
Charlie Lee Rejects Litecoin Abandonment Claims
Following on from this week’s much anticipated ‘halving event’, Litecoin founder Charlie Lee has taken to Twitter to address rumours around the coin’s lack of developer activity. In his tweets Lee provided justification for the low number of Github commits, including the use of personal branches for core development rather than the master branch, and assured his followers that development work is ongoing. Litecoin is currently at $87 following a high of $145 set in June.
Dharma Pauses New Deposits as Funds Slip out of DeFi Ecosystems
Ethereum’s decentralised finance (DeFi) ecosystem, which has helped drive public enthusiasm while the network undergoes its transition to Ethereum 2.0, appears to be experiencing some challenges. Firstly, San Francisco-based lending platform Dharma has suspended new deposits and loans following a period of sustained outflows.
No new loans have originated from the protocol since late July. Further, the amount of ETH locked in MakerDAO has hit its lowest levels since November. Maker users recently approved increasing the stability fee to 19.5% following issues with maintaining its stablecoin DAI’s $1 peg.
Can Alts Fight Back Against BTC Dominance?
This week, Bitcoin dominance over altcoins hit more than 71% - a level unprecedented since December 2017, following which alts began a famous, though ultimately unsustainable, rally. Endless rivers of red on Binance, countless negative news headlines, despondent crypto traders on twitter…it appears there’s little cause for optimism when it comes to altcoin investing. Yet, despite the bearish overtones one may be surprised to learn that the combined market cap of altcoins has actually increased since the December cycle low - and quite significantly.
On 15 December, as Bitcoin crashed to its low of $3200, altcoins came tumbling with it, hitting a combined low of $38 billion. Since that point, Bitcoin has gone from strength to strength, reaching a high of $13,900 and currently in consolidation at around $11,500. The year hasn’t been quite so kind on altcoins, with no less than 15 days where the combined market cap has fallen 5% or more from the previous day’s close. Yet, as it stands the total alts market commands a valuation of $87.8 billion – more than double December’s low.
Amid bearish sentiment and apparent selling pressure on altcoins, where has this growth come from? The answer is quite simple. The alts market is continually widening, with new projects being listed for public trading each month.
These projects have attracted new money into the space, while existing money interchanges between the days’ winners and losers across various exchanges. The total market funds therefore are distributed over a greater number of projects, giving the appearance that the combined market is bleeding to new lows.
So as the money seeps ever more thinly across the alts space, which projects have been the biggest beneficiaries, and which have lost out?
The bulk of ‘fresh money’ has come from new projects, including:
- Algorand (ALGO) - $2.2bn (according to Binance)
- LEO (LEO) - $1.29bn
- Cosmos (ATOM) - $650m
- BitTorrent (BTT) - $60m
- Matic (MATIC) - $56m
- Grin (GRIN) - $50m
Among existing listed projects, several have had stellar returns against a difficult market backdrop. The biggest winners have included:
- Chainlink (LINK) – up 740% YTD
- Binance (BNB) – up 405% YTD
- Ren (REN) – up 460% YTD
Despite many projects suffering a torrid 2018, many projects have suffered further losses in 2019. The biggest losers have included:
- Polymath (POLY) – down 68% YTD
- Stratis (STRAT) – down 59% YTD
- Zilliqa (ZIL) – down 53% YTD
What does all this mean? In the simplest terms, it shows that Bitcoin dominance has increased despite several high-profile projects entering the market and a handful of outliers achieving the sort of gains normally reserved for bull markets.
The casualties in this scenario are the scores of once-popular projects that have seen their market caps bleed away amid negative alt sentiment. If alts are to reclaim market share against Bitcoin, a new flow of retail money will likely be necessary to breathe life into the market.
As things stand, don’t hold your breath for a repeat of December 2017.
Tweets of the Week
The Block’s Larry Cermak offers a cynical recollection of the 2017 ICO boom:
1/ It’s now obvious that ICOs were a massive bubble that's unlikely to ever see a recovery. The median ICO return in terms of USD is -87% and constantly dropping. Let's look at some data! pic.twitter.com/zmCXVPjup6— Larry Cermak (@lawmaster) August 7, 2019
Crypto Cronkite sums up the frustrations involved in trading cryptocurrencies:
the no. 1 advice I have for young crypto traders is that it's natural and normal to cry as a man— CRONK (@CryptoCronkite) August 9, 2019
Naval offers some cogent startup advice. Does this same principle apply to crypto projects?
The Lindy Effect for startups:— Naval (@naval) August 7, 2019
The longer you go without shipping product, the more likely you will never ship product.
Recommendation 1 – Ethereum only wins if ETH is money
Ethereum bull Ryan Sean Adams discusses the imperative for ETH to capture the three properties of money – a medium of exchange, a unit of account and a store of value.
Recommendation 2 – Becoming decentralized enough: The case for DAOs
Token Economy’s Mohammed Fouda predicts the DeFi space to separate into two branches: centralised companies and truly decentralised companies governed by a Decentralised Autonomous Organisations (DAOs).
Recommendation 3 – Bitcoin is not too volatile
Parker Lewis continues his excellent ‘Gradually, then suddenly’ series with discussion on why Bitcoin’s volatility is a positive attribute.