Market Update – 10 Oct 2018

10 Oct 2018 14:41
Winston Su, Marketing Director

Welcome back to another Australian crypto market update.  There has been plenty of positive news local and abroad to make up for the lack of price movement this week.

In markets we saw more low volatility in Bitcoin, trading within a 3% range for yet another week. BCH kept most of its recent gains, dropping 1% this week. XRP fell 15% since last Monday as investors likely took profits from its meteoric rise a couple of weeks back.

This week’s headlines:

* Bakkt provided more colour on its first product which will roll out next month.   The futures contract will be completely backed with physical Bitcoin, quelling partially backed rehypothecation rumours. It will be interesting to see the impact this has on Bitcoin price movements after its launch.

* Google reinstates crypto ads. However, not in Australia, only in the US and Japan…

* The Winklevoss crypto exchange Gemini has secured an insurance policy for its storage of digital assets by an insurer syndicate led by Aon.  This follows Lloyd’s of London entering the crypto insurance space. Crypto insurance has been very sought after by high net worth and institutional clients here in Australia and offshore. It’s great to see more insurers getting familiar with the industry.

* Yahoo, at one point the number one search engine, has been busy over the years carving out a niche for itself as a one stop shop for free financial data, news and charting.  Yahoo Finance is one of the reasons Yahoo is now the 6th most visited website.  Recently, Yahoo Finance have added a cryptocurrency dashboard and now offer crypto trading on their iOS app.

* Bloomberg reported earlier this week that Puerto Rican firm Noble Bank lost its two largest clients – Tether and Bitfinex.  Puerto Rico has been somewhat of a crypto oasis for banking in the US. It was rumoured to hold up to $US 3.3 Billion of client’s funds at the end of 2017. Since losing Tether and Bitfinex the bank is reported to be no longer profitable and is looking for a buyer after a good deal on a banking license.

* Crypto research house Diar released a report showing the decline in trading volumes at some top tier exchanges.  Notable points include:

+ Q3 2018 trade volumes for Coinbase hit 1 year lows.

+ Binance finished last quarter at half of their Q1 2018 volumes for USDT, their largest trading pair.

* With trading volumes down, exchanges have been diversifying themselves.

+ Both Binance and Coinbase have committed substantial funds to invest in blockchain startups in the hopes they will foster adoption. Binance recently backed Aussie startup TravelbyBit to roll out a new Point-of-Sales payment system allowing users to pay for travel related items in crypto. The $US2.5m ($AU3.5m) funding will assist TravelByBit in rolling out their payment system throughout Brisbane airport, with global plans soon after.

+ Security tokens are another area exchanges have been targeting. Currently, exchanges in Australia and the US are only allowed to list and support utility tokens.  The race is on to create a platform that offers security tokens in a regulatory approved and compliant way.  So far there seems to be two main approaches. US exchange Circle has focused on a modified crowdsource funding method aimed at retail investors. Whereas Coinbase has targeted sophisticated investors and institutions, focusing on private placements and a secondary market for unlisted company shares. It will be interesting to see how lawmakers react to this development.

* In other local news, Aussie gold speccys are turning to crypto to raise capital.  Perth-based mining industry adviser PCF Capital plans on launching a Security Token Offering (STO) named “Futuregold”. Funds raised from the security token will be invested in a portfolio of small cap gold stocks with future revenue streams flowing back to token holders.

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Marcus Ochmann – Head of OTC Trading