Market Update – 16 Oct 2018
16 Oct 2018 15:34
More price volatility this week than what we have seen of late. The general risk-off sentiment from last week’s equity pull back saw crypto prices, especially alts, retreat. XBT was down at one point 17%, ETH down 18%, BCH down 19% and XRP down 27%. XBT recovered somewhat, with a little help from Tether to finish the week flat, again. Alts were less fortunate, ETH closing the week down 8%, BCH 11%, and XRP down 14%
- Fidelity Investments, a 72 year old Wall street giant which administers more than US$7.2 trillion in client assets, announced a new and separate company called Fidelity Digital Asset Services on Monday. It will be the first major global investment firm to seriously invest in the crypto space and is a huge step towards opening the pipeline to institutional funds. Fidelity Digital Asset Services will offer both cryptocurrency custody and trade execution services for institutional investors.
- With the Tether investigation still fresh in everyone’s mind and the more recent news of Bitfinex struggling to obtain new banking relationships since its departure from Noble bank, concerns spread yesterday afternoon that USDT may become unpegged from the USD. As USDT holders raced for the door the USDT/USD premium traded as low 0.85 on some exchanges. With many trading bots using USDT pairs as pricing inputs, we saw some very erratic price movements, with a sharp rally of anything listed against a USDT pair, followed by a subsequent sell off. To give you an idea, XBT was trading at around 8,750, which then jumped up to 9,410 before falling and stabilising at around 8,900, all within the space of an hour. It was exciting to see some price movement after the low vol environment we have been witnessing over the past few months.
- Kim Byun Gum has led a consortium of investors that will pay 400 billion won (~AUD$500M) for a 50% plus one share stake in Bithumb. Kim Byun Gum is a pretty interesting guy. A blockchain business heavyweight, with a decentralised exchange and stable coin in the mix. He is also working on a payment rail for Qoo10 Singapore’s number one eMarketplace. Apart from making truckloads of cash investing in tech and biomed startups, he is also reported to be the leading plastic surgeon in South Korea. A country with one of the highest cosmetic operations per capita in the world.
- Harvard, Stanford and MIT are the latest top tier US universities to invest in crypto related businesses and crypto funds. They join Yale who has the second largest endowment fund (US$29.4B), after Harvard, to allocate a portion of the investment portfolio in crypto assets.
Many of us have been wanting to see a stable negative correlation develop between Crypto and equities. The hope is that portfolio-level diversification benefits will increase overall demand for crypto assets.
So far there hasn’t been any evidence to suggest that XBT moves in step with traditional safe haven assets like gold or USD. In fact the opposite holds true at moments like last week when the proverbial hit the fan in financial markets. On Wednesday night US equities got hammered, particularly tech stocks, after fears of further US/China trade tariffs.
Marcus Ochmann – Head of OTC Trading