March 2018


Cryptalgo Development Status

 

Algotrading: these are exciting times at CRYPTALGO as we are getting ready to deploy our automated trading algorithms. We will monitor and record data including the number of automated trades per day, the profit on each trade, the size of each leg, etc. We are also taking a close look at the risk management logic, verifying that positions that remain open after execution (due to partial fills) are closed. We hope to be able to report statistics of our first run at the end of April.

Gateway Technology: we are refining our offer for cryptocurrencies brokerage services to institutions who want to benefit from CRYPTALGO’s real time, high speed access to cryptocurrencies price data and order books across multiple exchanges with best execution. Our API will allow institutional users to connect to CRYPTALGO’s technology, operational, security and regulatory infrastructure, offering low-latency routing to exchanges.

ALGO Token: during March we welcomed to our community the first ICO private sale participants in CYPTALGO’s ALGO token (our Utility Token). Please do not hesitate to register your interest at [email protected] for further information if you wish to particpate in our token and benefit from the private sale bonus.

Jon Matonis joined CRYPTALGO’s advisory board in March. Jon is a founding Director of the Bitcoin Foundation and his career has included senior influential posts at VISA International, VeriSign, Sumitomo Bank, and Hushmail. Jon’s deep experience and relationships in the digital currency community will be essential for CRYPTALGO’s development and future success.

Avery Michaelson joined our US team in New York on April 1st and will focus his activities on business development aspects with the initial task to work on CRYPTALGO’s token launch and the development of CRYPTALGO’s institutional activities in the Americas. Avery graduated from Wharton School, PA and held positions at Deutsche Bank, Peachtree Asset Management, Coventry Capital and Societe Generale.

Maria Cristina Perez de la Sala joined our UK team in London on April 1st and will focus her activities on business development aspects in Europe, Middle East and Asia. Maria Cristina graduated from the London School of Economics and holds an MBA from INSEAD.

 

Cryptocurrencies Market Update

 

Prices of the 10 largest cryptocurrencies fell -29% in March (against the USD). Like in February the largest losses were seen in smaller second or third generation coins (such as NEO and Cardano) while Bitcoin managed to limit the slide (it was down -12%). As a result the market share of Bitcoin continued to improve and now stands at 45% (it reached a low of 35% in January, while one year ago it was dominating the market at 85%). The price of Bitcoin itself remained range bound during March, with a high of 11,671 reached on the 6th and a low of 7,387 on the 19th. Price weakness was observed in conjunction with negative news in the tech industry in general, and a renewed sell-off in equity markets; firms like Facebook, Google, and more recently Twitter have distanced themselves from the cryptocurrency industry by banning advertisements for token sales (see the market news section below). Market capitalisation rankings remained unchanged at the top of the table (see table below). EOS, which develops blockchain based applications, moved up to 6th position (from 9th) following a good run mid-March, while Cardano and NEO dropped in the ranks.

Data source: www.coinmarketcap.com

The total market capitalisation for cryptocurrencies fell to USD 322bn from USD 424bn in February (-24%). The current level is close to where the market stood at the end of November 2017 (when total market capitalisation was USD 281bn). At the end of March Bitcoin, Ether, Ripple, Bitcoin Cash and Litecoin represented 77% of the total market, with Bitcoin taking up more than half of the share.

Data source: www.coinmarketcap.com

24-hour trading volumes were down by -17% in March, to USD 13bn. Tether still ranks second in the tables, with a daily volume close to $2bn. Tether is rare among cryptocurrencies in that it carries counterparty risk because it is backed by USD. This both supports price stability and makes Tether a preferred trading instrument in the cryptocurrency market. Tether is the only cryptocurrency with trading volume that regularly exceeds its market capitalisation. In other words, the entire Tether supply changes hands regularly, sometimes more than once a day. Aside from this, we noted that a coin called Storm, makers of a Google Play app that enables users to earn tokens, rose from nowhere to fourth place (USD 900m) in the daily volume table (see below). Noteworthy as well was the ascendance of Binance Coin in ninth position this month. Binance is the largest exchange in the world by trading volume – it supports around 300 different tokens and only trades crosses between cryptocurrencies (no fiat crosses).

Data source: www.coinmarketcap.com

The price volatility of Bitcoin sharply declined, dropping from 130% at the end of February to 70% in March. This supports the view that cryptocurrency markets are stabilising at current levels following the correction started in January this year.

Data source: Bloomberg

After final numbers came in, capital raised in ICOs in February was close to USD 1.2bn. This turned out to be higher than what we reported last month (we had observed data on 26th of February when not all numbers were recorded). It is the third month in a row that ICOs have raised more than USD 1bn. The United States continues to be the country in which ICOs raise the most capital despite the SEC’s increased attention (close to USD 800 million of ICO capital was raised in the United States this year). The month of March is looking promising with 32 completed ICOs raising a total of around USD 500m (we will wait for final numbers before we give a full report).

Data source: Token Data

Cryptocurrency Market News

 

US-based online broker-dealer TradeStation announced this month that it was teaming up with GDAX to deliver real-time price data on four cryptocurrencies (BTC, ETH, BCH, LTC) to its clients, for free. We are well aware it is a challenge for brokers and data vendors to secure reliable real-time data for cryptocurrency prices, and this type of partnership underscores the need for high-speed technology offers in this space.

Binance, the Hong Kong based exchange founded Zhao Changpeng in September 2017, hit the news a couple of times this month. First it was reported that Binance had reached 7.9 million users, a stellar achievement given it started operating only six months ago. Binance also announced that it was establishing its own blockchain to transfer and trade blockchain assets, reducing administrative overhead and speeding up settlement times. Its own token, Binance Coin, will be transferred to this new blockchain. Later, on March 23rd, Binance announced that it would start operating in Malta a “fiat-to-crypto exchange”. Zhao lauded the European island for being “very progressive when it comes to crypto and fintech”. Malta has been looking to become a hub for digital asset ventures. Joseph Muscat, Malta’s prime minister, tweeted:  “Welcome to #Malta @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies.”

Meanwhile, Yahoo Japan annouced that it was taking a 40% stake in local cryptocurrency exchange BitARG with a view to scale up operations and relaunch in 2019. Japan has emerged as an important centre for cryptocurrency trading in Asia since China forced the closure of exchanges on the mainland.

London-based Coinfloor (in which trading firm DRW is an investor) announced on March 14th that it will launch a futures exchange for digital assets that will include the first physically delivered Bitcoin futures contracts. Some traditional futures exchanges including CBOE Global Markets and CME Group already offer Bitcoin futures, but these are cash settled, meaning that the actual cryptocurrency does not change hands. Market participants have voiced concerns that this may too easily allow price manipulation as actors could attempt to move quotes in their favor when futures settle without having to deliver the underlying coins.

Finally, on March 30th, we learned from a filing with the SEC that messaging app Telegram had raised another USD 850m from 94 investors in March through its private token offering. This is in addition to the USD 850m raised in February, which brings their total ICO funds to USD 1.7bn. The market is viewing this as a success given the recent downward trend in cryptocurrency prices. During March Telegram reached 200 million monthly active users.

 

 

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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