Weekly Insights #29

Written by on May 6, 2019

May 3: Bitcoin is seemingly waking up from its long winter sleep, but the reasons for its recent spike don’t have much to do with the oldest cryptocurrency’s fundamental developments. The overall crypto market capitalization increased by 6.24% this week, quickly turning the crypto community’s sentiment more positive. While India is looking into banning all public cryptocurrencies, rumors about Facebook’s coin are slowly gaining some solid ground. The current USDT situation is something the crypto market doesn’t seem to mind much, but it could end badly if the Bitfinex/Tether drama doesn’t get resolved in the public’s eye sometime soon, causing a market-wide selloff due to panic.

 


NOTEWORTHY NEWS

Indian Government Again Discussing Ban on Cryptocurrencies —Apr 26, Coindesk

The government of India is said to be renewing its efforts to completely outlaw public cryptocurrencies. A recent report citing anonymous “government officials aware of details” said that a number of government departments in India have backed the idea of a complete ban on the issuance and trading of cryptocurrencies. Banks in India were barred by the Reserve Bank of India (RBI) last year from serving cryptocurrency firms and exchanges. Since then, a number of exchanges have filed legal petitions to overturn the RBI ban. The next Indian supreme court hearing regarding the subject is scheduled to take place in July.

High-Speed Traders Don’t See an Alternative to Tether—May 2, The Block

The ongoing Tether-NYAG dispute surprisingly did not reflect significantly on the price of tether over the past week. There are not many opportunities to short tether at the moment, because a lot of institutional investors are unwilling to lend the stablecoin out due to increased risk. Given the popularity of USDT, no other stablecoins in the market can substitute for it in the near future.

 

Facebook Seeks $1B for FB Coin Amid Talks With Visa, MasterCard—May 3, Cointelegraph

Citing people familiar with the plans, it was revealed that Facebook is talking to major payment networks—namely Visa and MasterCard—about potential support, along with payment processor First Data Corp. Facebook’s cryptocurrency project, dubbed “FB Coin,” has been fuelling rumors for about a year. According to the rumors, Facebook wants to provide in-house payments to users. As more information reaches the outside, it appears various payment options are under consideration by executives, including payments via users’ Facebook profiles.

OUR OPINION: Facebook is clearly looking to extend its reach into our lives by creating something in the form of a mobile wallet focusing on banking-like services for its users. Banks’ revenue per customer is said to be $800 per year, while Facebook’s average revenue per user is $7 per year. Putting these numbers together, Facebook adding payment services represents an opportunity for 100x growth. With its existing enormous ecosystem, Facebook could quickly grow—or even enforce—the adoption of their own cryptocurrency, even if in a more centralized way. An interesting thought here is that Facebook will not necessarily compete directly with other public blockchains such as Bitcoin or Ethereum, but rather with services like Google Pay and Apple Pay.

 


THE WEEK AHEAD

BTC/USD Trading at a $400 Premium on Bitfinex

The Bitfinex BTC/USD price difference on Bitfinex compared to the BTC/USD pair on BitMex has crossed $400 today, which is the highest it’s been since November when BTC broke $6k and fell by nearly 50%. 

One trader says, “This price difference is a measure of the market’s lack of confidence in Bitfinex’s solvency. The simplest interpretation is that insiders who were confident in solvency are losing confidence and getting out and this will not end well.”. 

The situation with Bitfinex’s premium, while at the time of this writing bitcoin is trading at north of $6k, means that people are willing to pay a premium for bitcoin in order to get out of USDT, which is only 74% backed by USD or equivalent assets, so many consider it a very risky position to hold. Meanwhile, the USDT price on Bitfinex remains steadily above its $1 peg, trading at $1.05, while most other exchanges where USDT trading pairs are available have it trading below $0.99. This percentage difference is then reflected in the $400 premium evident on Bitfinex.

 

 


 MARKET OVERVIEW & METRICS

Weekly Market Overview, 26 Apr to 3 May 2019. Source: Coin360

Weekly Crypto Stats

  • Global network value reached $180.4B, with 6.24% weekly delta.
  • Global crypto market turnover was $47.94B, 33.4% from ATH.
  • Real 10 market turnover was $1.2B, -46% weekly delta.
  • Bitcoin dominance is 54.9%, with 0.18% weekly delta, and beta of 0.83.
  • Ethereum dominance is 9.68% with -1.93% weekly delta, and beta of 1.30.
  • Bitcoin hashrate is 54B TH/s, with 4.91% weekly delta.
  • Ethereum hashrate is 153.39K GH/s, with 4.63% weekly delta.

 


CHART OF THE WEEK

Despite the bear market, the percentage of people who indicated that they are “very” or “somewhat” likely to buy bitcoin in the next five years rose by nearly half , from 19% in October 2017 to 27% in April 2019.


This content has been put together by Marko Štemberger and Tilen Držan. Feel free to contact us for any feedback or if you have questions.

Information provided above is not to be considered as an investment advice.

ANNOUNCEMENT

Block Analitica, the company behind Squared Capital, has just launched its digital asset metrics dashboard to the public. Though still in beta, if you are interested in a more in-depth analysis of blockchain fundamentals — everything that’s happening with stablecoins, development activity, exchange balances, and much more — we invite you to register for a free account.


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