November 2018


 

Cryptalgo Development Status

 

INSTITUTIONAL CRYPTO AND SECURITY TOKENS SECONDARY TRADING AND LIQUIDITY PLATFORM

We are working on releasing a pre-alpha version of our OEMS by the end of the year, for prospective clients to give initial feedback. OEMS is the user interface that sits on top of Galaxy. The system brings a unique, state-of-the-art, trading and operational interface, including useful features such as: 

  • dynamic order book views, allowing users to switch between the whole market, prices for user-connected exchanges only, and executable prices based on inventory
  • full depth order book
  • smart routing to exchanges with best prices and best liquidity
  • trade execution algorithms such as VWAP, TWAP, and basket trades
  • customizable desktop views using widgets
  • trade from charts
  • comprehensive reports including trade reports and transaction history, open orders with order status, system logs, profit & loss, deposits, withdrawals and transfers

Here are some preliminary screenshots:

As stated in previous newsletters, our goal is to become a global trading and liquidity platform for financial institutions by aggregating liquidity from Cryptocurrency and Security Token exchanges. Our services will be similar to those of institutional trading venues on traditional equity and futures markets, providing a reliable, highly secure and regulated environment. These will include (1) institutional-quality order execution, (2) aggregated liquidity across multiple exchanges, (3) algorithmic trading, (4) an institutional-designed trading client (front end) and (5) internal matching engine.

 

 

 

Cryptocurrencies Market Update

 

The Cryptocurrency market took a beating in November as BTC dropped -42%, and the overall market capitalisation fell to USD 119 billion (from USD 204 billion at the end of October). The price of Bitcoin broke a key support of USD 6,000 on November 14th, then quickly tumbled through USD 5,000 and 4,000, closing at USD 3,800 on November 25th. Ethereum’s price closed at USD 108 on that day. The fall may have been triggered by Bitcoin Cash’s contentious hard fork which passed on November 15th, resulting in two distinct chains with two distinct cryptocurrencies (Bitcoin ABC and Bitcoin SV), and much uncertainty about the future. Questions include how much mining support will be devoted to each coin, which coin will exchanges decide to list, and will Bitcoin SV miners attempt to take down Bitcoin ABC because they view it as illegitimate.

Looking at currencies in the top ten table, we note that Ripple has now made it to number two, surpassing Ethereum’s market capitalisation by a good margin (around USD 3 billion, or close to 30%). The worst price drop among currencies in the table was Bitcoin Cash (-61%), a result of the hard fork and related uncertainties mentioned above.

Data source: www.coinmarketcap.com

The price declines in November were accompanied by rising trading volumes on cryptocurrency exchanges, as well as a rise in volatility. 24-hour exchange traded volumes for the top 200 coins stood at USD 14.7 billion, a +66% increase from last month. Meanwhile, the 20-day realised price volatility of BTC/USD, after hitting a low of 13% on November 12th, surged to 72% (a five-fold increase) as of November 25th.

 

Data source: Bloomberg, www.coinmarketcap.com

The rise in trading volumes was also observed on the Bitcoin Blockchain (a measure that filters out transactions within exchanges). Daily volumes have risen from recent lows of USD 200 million a day (on October 30th) to USD 750 million a day (on November 26th), a +275% increase.

 

Data source: www.blockchain.com

Finally, at the time of publication, Tokendata had not reported any completed ICO for October. The website was monitoring seven ICO projects listed as active. This represents another decline compared to September, during which thirteen successful ICOs were recorded. We will hopefully have a better picture next month of whether ICO funding has dried up.

 

 

Other Cryptocurrency Market News

 

The major news this month was Bitcoin Cash’s hard fork which went through on November 15th. The fork resulted in two distinct cryptocurrencies, Bitcoin ABC and SV. The ABC and SV proposals came from two different groups of developers who disagree on the best ways to improve Bitcoin Cash. For those interested in digging further, Circle’s blog produced a good write up on what happened, including some technical aspects.

The fall in cryptocurrency prices, notably the decline in BTC/USD, had a knock-on effect on miners which according a recent Bloomberg article are finding it increasingly difficult to cover electricity and infrastructure costs at current prices. The article cites the break-even cost of mining a single Bitcoin was recently estimated at USD 7,000.

Underscoring the issue was the news on 21 November that GigaWatt, a US based Bitcoin miner located in the state of Washington, filed for bankruptcy protection after sustaining heavy losses in 2018.

Miners also came under pressure in Norway where the government announced on November 22nd that it would suspend subsidies on power granted to Bitcoin miners. The government said that cryptocurrency miners in the country will have to pay normal electricity tax from the new year.

The fallout on miners had an effect on US technology stock prices. For example, NVIDIA corporation saw its share price nearly halve since the end of September. The company announced on November 15th its provision for inventories expanded more than five-fold in the fiscal third quarter to $70 million, and that the same provision had more than tripled for the first nine months of its fiscal year to $124 million. NVIDIA produces graphic cards that are traditionally used in video games, but also for cryptocurrency mining equipment.

 

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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