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Global markets are taking a tumble right now in light of the recent coronavirus outbreak in mainland China. Given China’s weight in global consumption, the fall in consumption during the Chinese new year period could have serious consequences for many global companies. In light of this backdrop, haven-like assets such as gold have seen local highs with BTC too recording $9k for the first time in 2020. The slide in stocks from mid-January seems to coincide with increased awareness of this potential new pandemic. But gold and bitcoin are marching ever onward as investors run for cover. Institutional investors, please take note, we suggested an increased crypto allocation in your portfolio in our most recent edition last Friday.
BTC had been unchanged for a week but has moved from 7300 to 9000 in the past 30 days, keeping in track with what we mentioned in the beginning of the month. Short term volatility spikes every week for a bit and vanishes, suggesting a greater and greater comfort with higher prices. Consistent with our thought on hash rate and how we felt it was broadly signalling strength, the market so far has signalled it is accord with higher prices, either through this thesis or another.
Up move volume has significantly tracked better than down move, usually bullish as well;
Premiums in the futures space are from 10-12% annualized for Mar and Jun indicating a further favoring of leveraged upside. The only fly in the ointment has been declining volumes secularly which can point to greater possibilities of running stops. This is highly exchange dependent but if Open Interest drops then there is a greater incentive on lower volumes to move price tactically. Despite Chinese New Year being a cause for lower participation, it points to less strong hands holding positions in either direction. We had mentioned the price of short dated options being low and they continue to be low despite BTC moving as priced on a daily basis. Our analysis at a higher level therefore points to greater short term volatility and a more tactical approach to fading dips and spikes which is a naturally long gamma strategy. Algos built around widening ranges with contingencies to buy at stop loss lows and sell at stop loss highs can be highly profitable in such times. At the very least, they will not be very active but taking advantage of synthetic volatility in such a format is a very useful strategy based on the numbers.
Meanwhile in Crypto Wonderland...
“Nervos Network Sets Up A $30 Million Grant Fund”
Nervos Network has set up a $30 million public grant fund to sponsor external developers building on its blockchain infrastructure. Announced Thursday, the fund will pay developers in the combination of cash and CKByte tokens, and all submitted projects will be made public to source feedback from the broader community, Nervos co-founder Kevin Wang told CoinDesk. Individuals, teams and companies can begin submitting applications for improving the firm’s layer one blockchain Common Knowledge Base (CKB).
“Bill Seeking Exemption of Personal Crypto Transactions In Congress”
A bill seeking to exempt personal cryptocurrency transactions from taxation for capital gains has been reintroduced in the Congress of the United States. Called “The Virtual Currency Tax Fairness Act of 2020,” the bill would establish an exemption for virtual currency expenditures that qualify as personal transactions. Users would then not have to report instances when they spent crypto whose valued had changed relative to the U.S. dollar on day-to-day expenses. Existing tax law struggles to cope with cryptocurrencies, as they sometimes behave as investments, sometimes commodities, and sometimes just like other currencies. It is to this last type of transaction that the bill looks to simplify for crypto traders and users.
“Bux Acquires Blockport”
Bux, the Amsterdam-based fintech that wants to make investing more accessible, has acquired the European “social” cryptocurrency investment platform Blockport. Terms of the deal remain undisclosed, although Bux says the move paves the way for the company to launch its own branded cryptocurrency investment app. Dubbed “BUX Crypto,” it will be available in the nine countries in which Bux operates, and is planned to go live in Q1 this year. In addition, we are told the founders and core team members of Blockport will join Bux and “take ownership” of the Bux cryptocurrency offering.
“NBA Team Launches Blockchain-based App”
Many people think that cryptocurrencies only serve as an alternative payment option. While there are coins that fit this bill, there are other cryptocurrencies that can perform a host of other functions. The NBA can be considered an early adopter of crypto. In 2014, the Sacramento Kings became the first NBA franchise to accept bitcoin as payment for store products and season tickets. Four years later, the same team began mining Ethereum. Recently, Nets guard Spencer Dinwiddie tokenized his contract to get a lump sum payment and reward token holders. Now, the Kings are once again ahead of the curve in combating fake NBA merchandise.
Crypto Twitter Pick
An underrated benefit is this makes someones reputation as a consultant perfectly transparent - your ego can now be backed by a public market price
It's an elegant way to incentivize people to ensure their clients are completely satisfied
2:24 PM - 28 Jan 2020
What We Are Reading / Listening To
The Dream of the 90’s is Alive in Cryptocurrencies by Kate Sills
How Blockchain is Transforming Cross-Border Payments with Michael Dunworth
Overnight Performance of Top 10 Currencies
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