Crypto spring? Trade volumes heat up whilst JP Morgan backs Blockchain

22 Feb 2019 07:00
Marcus Ochmann – Head of OTC Trading

Market Update 12th - 19th February 2019

Welcome back to another Australian crypto market update.

Volumes are back! This week we saw more volume on IR exchange and the OTC desk since the post BCH hardfork volatility last November. It wasn't only IR seeing the flow. Bitmex churned through $US3billion (AUD$4.2 billion) in volume over the past 24 hrs. Triple what was trading this time last week. BitMex suggested in a recent blog post that their annual trading volume was close to US$1trillion.

Whilst there has been some positive news flow this week, nothing stands out as a clear driver for the recent rally. However, we did notice one thing leading up to last night's rally. Someone has been buying a TON of Bitmex BTC/USD perpetual swaps in sizable US$10million dollar chunks. The rally seems to have stirred up some FOMO flow, and we have seen plenty of additional buying interest through our OTC trading desk.


In Markets

Sea of green this week. Out of the tokens we list, ETH was the strongest performer, up 20.6%, BCH up 18%. LTC continues to rally, up 11.3% this week. LTC has rallied 221% since the 1st of Jan this year. Bitcoin was up a modest 7.5% for the week.


In Headlines

JPM launches internal blockchain: JPM Coin

This was big mainstream media news this week. JP Morgan will launch an internal blockchain solution to speed up internal USD transfers between its clients. I have a couple of things to point out that many of the main news articles missed. This is not the first US bank to offer this. Signature Bank NY and Silvergate, both have had this product for quite some time. Secondly, it's just the US banks catching up to functionality most global banks already offer, without the need of a blockchain. Even Australian banks offer real time 24-7 internal transfers and have done so for over a decade.

The one difference is that JPM is one of the largest banks in the world. Most, if not all of the top Fortune 500 companies have an account of some sort with them. This should greatly increase the speed with which international subsidiaries move funds around the globe, especially for many corporates that use JPM's treasury services.


Lightning network pizza

Fold, a US based crypto payment app is now accepting Bitcoin lightning network payments for Domino's Pizza, delivered to your door. Not only that, they are promising: "Every order is 5% off, <$0.01 transaction fees, instant settlements and ~30min delivery time". Put that in ya pipe and smoke it! Actually, I wouldn't recommend smoking anything before ordering pizza in this way, the lightning network is not (yet) known for its ease of use.


CSW vs Wikileaks

In a recent Medium post Dr. Craig Steven Wright re-announced he "was" Satoshi and the emotional piece throws spears at Julian Assange, Wikileaks and Ross Ulbricht for bringing a bad use case and name to Bitcoin. According to Dr. Satoshi, no one understands bitcoin and it's taken him 10 years to come out and tell us all how displeased he is with the world. Wikileaks was quick to fire back and there has been a bit of a twitter war since. As always with CSW there is more to this story but I won't get into it here.


ETH Constantinople hardfork scheduled for next week

Ethereum constantinople hard fork is back. It had a false start last month when its 16th of Jan scheduling was delayed due to the discovery of a security flaw in the existing blockchain code. Now, everything is good to go and it is rescheduled for the 27th Feb. The protocol upgrade includes a number of changes including a reduction in the block reward from 3ETH to 2ETH (the Thirdening) and building blocks for an off-chain scaling solution, similar to bitcoins lightning network. The upgrade is seen as a transition phase from PoW to PoS for the Ethereum network.


Greyscale Fund Report

The biggest crypto fund manager in the world released its quarterly report this week. The key findings were: they took on US$359.5million of new investment funds in 2018. In Q4 2018, 88% of new funds went into their bitcoin only fund, their most popular fund and the largest of its kind in the world. Also, 66% of new investment funds came from institutional investors. The Grayscale Bitcoin Investment Trust (GBTC) alone holds over AU$1billion of assets under management.


Happy trading!

Subscribe to our weekly market updates

Marcus Ochmann – Head of OTC Trading