June 2018

Cryptalgo Development Status


ALGOTRADER: we have increased the inventory we hold on exchanges which is lengthening our trading periods for arbitrage. When an arbitrage has been executed the rebalancing modules recycle the resulting inventory into buying and selling power on exchanges with best prices. We have been improving our rebalancing modules both for fiat and cryptocurrencies to increase frequency of trading and number of opportunities available to the system. During June we successfully went through a number of continuous trading sessions with highly encouraging results. We expect to report statistics as soon as the number of transactions is significant enough.

ASSET MANAGEMENT: We have set up Cryptalgo Capital, our UK subsidiary, on 27th of June. Cryptalgo Capital will be responsible for our asset management and cryptocurrency brokerage activities. Our asset management team is busy working on the launch of a Cayman fund that will use ALGOTRADER. The strategy is market neutral and is expected to generate excess returns that are uncorrelated to cryptocurrency markets.

BROKERAGE: We are launching an OTC desk to help clients with large cryptocurrency transactions that cannot be immediately executed on exchanges. Our trading team has a strong trading background gathered over decades in investment banking, and has deep market coverage in the cryptocurrency space. Aside from OTC transactions, our brokerage services aim to give clients access to fast execution across multiple exchanges at best prices, combined with a large array of trading orders, all through a single account with Cryptalgo.

In parallel to developing our services, we have also updated and streamlined our product offering. The diagram below is a summary of where we stand now.


Cryptocurrencies Market Update


The cryptocurrency market continued to decline in June, with prices of top ten coins finishing down -24% at month end. The selling was concentrated on smaller coins: total market capitalisation declined by -21% to USD 250 billion. Bitcoin lost -13%, Ether -22% and Ripple -24%. The bearish market sentiment was linked in part to news of stolen coins that affected South Korean exchanges Coinrail and Bithumb, although the amounts in question were relatively small; a CFTC investigation into trading at four exchanges around the CME Bitcoin futures expiration may also have contributed to the sell-off. There were no major changes in the ranks of top ten currencies, except that Tether made it into the top ten table below at tenth place, with a market capitalisation of USD 2.7 billion. Tether is a so-called stable coin, with it’s value pegged to the US Dollar. It is also the only cryptocurrency for which the daily traded volume is roughly equal to market capitalisation: the entire market float changes hands at least once a day, which shows how important the coin is to market participants.

Data source: www.coinmarketcap.com

The market dominance of Bitcoin rose to 44% in June, from 39% last month. 44% is also where Bitcoin’s market capitalisation stood on average over the past twelve months, by reference to total cryptocurrency market capitalisation. The representations of Ethereum (18%), Ripple (7%), Bitcoin Cash (5%) and EOS (3%) remained unchanged between May and June.

Data source: www.coinmarketcap.com

The big surprise in June were 24-hour trading volumes of the top 200 coins. Despite the fall in market prices the total number actually rose by +7%, to USD 13.2 billion (from USD 12.3 billion at the end of May). The rise in trading volumes was spread across the largest cryptocurrencies: Bitcoin volumes were up +6%, Tether up 37%, Bitcoin Cash up +22%, Ripple up +44%, and Litecoin up +2%. 24-hour trading volumes for Ethereum and EOS both declined, by -16% and -33% respectively. In traditional asset classes like stocks and futures, such a rise in trading volumes within a downtrend is often seen as an indicator of a market bottom.

Data source: www.coinmarketcap.com

The price volatility of Bitcoin inched higher during June, closing at 65% (compared to 58% at the end of May). The rise occurred as market prices dropped following the news that Coinrail and Bithumb (the Korean exchanges) had been hacked on June 10th and June 21st respectively. That said, the overall rise in volatility remained moderate as the cryptocurrency market continued to stabilise around current levels.

Data source: Bloomberg

ICO funds raised for token offerings completed in May totalled over USD 1 billion. While this represents a sharp drop compared to April (which saw USD 2.3 billion in raised funds), this reduction needs to be put into the context of Telegram’s private offering of USD 1.7 billion which was recorded last month, inflating the figures. Leaving Telegram’s record offering aside, the numbers for May showed a marked improvement compared to April, both in the number of ICO’s that closed (53 versus 48) as well as the average amount raised per ICO (USD 20 million versus USD 12 million).


Data source: Token Data

Cryptocurrency Market News


The Wall Street Journal reported on June 9th that the CFTC had sent letters to four cryptocurrency exchanges (Bitstamp, ItBit, Kraken and Coinbase) asking them to hand over trading data to find out whether prices had been manipulated or not. The investigation is connected to the CME’s Bitcoin futures and a request by the CME to see trading data from the exchanges around the time when the first futures settled in January.

On June 10th Coinrail, a lesser known Korean exchange, reported that around USD 40 million worth of coins had been stolen from its wallets. 70% of its assets which were in cold storage were not affected by the hack.

Mining firm Bitmain was in the news on June 11th, as it reportedly raised USD 400 million in a pre-IPO private funding round. This values the China-based firm at USD 12 billion. Bitmain designs application specific integrated circuit (ASIC) chips and manufactures cryptocurrency mining hardware.

Social trading broker firm eToro announced on June 18th that it was setting up cryptocurrency OTC trading desk in London. OTC trading is executed away from exchanges in larger sized transactions, usually between institutions and market professionals.

On the 21st of June, South Korean cryptocurrency exchange Bithumb said it was hacked and about $30 million worth of coins was stolen. The exchange said that the stolen coins would be covered from Bithumb’s own reserves. A report from Bithumb on the incident can be read here (please scroll down for the English version).

Finally, Coinbase announced on July 2nd via Twitter that Coinbase Custody, its institutional grade custody service, is now live and had accepted its first deposit. The service is aimed at institutional investors including hedge funds for a minimum deposit amount of USD 10 million. The exchange currently holds more than USD 20 billion in crypto assets, it also said.



Disclaimer: the information contained herein is being furnished for discussion purposes only and may be subject to completion or amendment through the delivery of additional documentation.  This communication does not constitute an offer to sell or the solicitation of an offer to purchase any security, future or other financial instrument or product. Information is presented as of the date and, if applicable, time indicated. CRYPTALGO does not accept any responsibility for updating any such information. Any historical or simulated results presented herein should not and cannot be viewed as an indicator of future performance. Market views and opinions are current opinions only. CRYPTALGO is not an adviser as to legal, taxation, accounting, regulatory or financial matters in any jurisdiction, does not act as fiduciary or financial, investment or commodities trading advisor for any of its counterparties, and is not providing any advice as to any such matter to the recipient.  The recipient should discuss such matters with the recipient’s advisers or counsel and make an independent evaluation and judgment with respect to them.

Past performance may not be a reliable guide to future performance.

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