September 2018


 

Cryptalgo Development Status

 

SECURITY TOKENS: We are expanding our Trading and Liquidity Platform by adding security tokens to instruments available for trading. Security tokens represent a massive opportunity in the market, as they are tokenized versions of existing real world assets such as equity, debt or real estate. They are subject to regulations under security laws, which – unlike cryptocurrencies – make them widely attractive both as investments and as instruments for trading. By adding security tokens, Cryptalgo’s Trading and Liquidity Platform will allow users to trade both cryptocurrencies and tokenized traditional assets across multiple exchanges, all through a single account, via an institutional grade system, user interface, security and compliance framework.

ALGOTRADER: Despite low trading volumes, our ALGOTRADER is identifying many trading opportunities and is demonstrating very promising results as we enter the final stages of our development and testing.

NEW PARTNERSHIP: Cryptalgo has entered into a strategic partnership with HedgeGuard, a European firm specialising in portfolio management and middle office services to asset managers. Cryptalgo and HedgeGuard will collaborate to help asset managers with trade execution and risk management of cryptocurrency and security tokens portfolios. To that end, Crytalgo’s OEMS trade execution system will be integrated with HedgeGuard’s portfolio management platform to provide a unique, state of the art, turnkey solution to asset managers looking to gain exposure to cryptocurrencies and security tokens.

TRADING AND LIQUIDITY PLATFORM: We have demonstrated the integration of our OEMS with Elysium’s post-trade-processing solution, called Mission Control, with great success at Chicago’s P&L conference, the largest FX show in North America. We see considerable demand as market offerings currently do not provide adequate solutions for institutional trading of cryptocurrencies and security tokens. The OEMS is the first step in delivering a full Trading and Liquidity Platform for cryptocurrencies and security tokens.

APPOINTMENT OF NEW ADVISOR: Tal Elyashiv has joined our advisory board as we add more focus on tokenized assets and security tokens trading. Tal is Founder of Securitize, the leading issuance and lifetime management company for security tokens. and the Founder and Managing Partner of SPiCE VC, the first tokenized VC fund.

 

 

Cryptocurrencies Market Update

 

September was marked by moderate gains across global cryptocurrencies. While Bitcoin declined -1.4% against the USD (from August 26th to September 30th, using prices published by coinmarketcap.com), the average gain across the top 10 coins was +12.4%, driven by a substantial rally in Ripple (+80.0%). Ripple’s remarkable surge (its price nearly doubled within four days, from September 17th to 21st) came after the company hinted that it would be launching a new commercial application of its product, xRapid, within months. The xRapid product uses XRP as a bridge for settlement between currencies, allowing payment providers and banks to process faster cross-border transactions. The company has struck deals with various high-profile financial institutions, including Santander and American Express. After having surpassed Etheruem’s market capitalisation for the first time since it began trading, Ripple’s market capitalisation finished the month at USD 23.2 billion, only marginally lower than Ethereum’s (23.8 billion). 

Meanwhile, the market capitalisation of the 200 largest cryptocurrencies rose to USD 218 billion during September, from USD 210 billion last month. The list of the ten largest cryptocurrencies by market capitalisation was unchanged, and Bitcoin’s market dominance finished slightly lower, at 52% (down from 55%).

Data source: www.coinmarketcap.com

Ripple’s price has surged against the USD

Data source: Bloomberg

While Ripple broke an important resistance level on the upside, Bitcoin remained within its USD 6,000 to USD 7,300 range during September and its volatility declined from 72% to 51%. The currency was affected earlier in the month (on September 10th) when U.S regulators suspended trading in two securities linked to digital assets (see the news section below), while Ethereum co-founder Vitalik Buterin told Bloomberg that the days of explosive growth in the blockchain industry have likely come and gone.

Bitcoin’s price (versus USD) has remained range bound and its volatility has dropped below 50% during September 

Data source: Bloomberg

 

Cryptocurrency trading volumes rose substantially in September, benefiting from the rise of Ripple and the surge in trading activity related to the company’s announcements. 24 hours volumes for the top 200 coins stood at USD 13.9 billion at the end of the month, compared to USD 9 billion at the end of August (+54%). The largest increase in trading volumes (+590%) was seen in Ripple.

Data source: www.coinmarketcap.com

Finally on the ICO front, the total amount raised in August was up +20% from July, at USD 502 million.The total number of successful ICOs fell from 38 to only 17. The largest project was tZero, a capital markets specialist firm which provides a trade execution and risk management platform for security tokens. tZero raised USD 134 million. The second largest ICO in August was Hedera Hashgraph, collecting USD 100 million.

Data source: Token Data

Cryptocurrency Market News

 

Citigroup announced on 11 September that it was planning to offer crypto custody solutions to institutional investors. The investment bank has also announced that it developed a new digital receipt-based system for investing in cryptocurrencies based on Digital Asset Receipts or DARs. The DAR trading option by Citigroup was pitched (by one of the sources) as the most direct way for an investor to trade cryptocurrency without having to actually own cryptocurrency.

According to a Bloomberg article published on September 13th, Morgan Stanley is planning to offer trading in derivatives linked to the largest cryptocurrencies. A person familiar with the matter reported that the U.S. bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin. Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction.

On September 10th, the New York Department of Financial Services (NYDFS) approved two stablecoins pegged to the USD. According to an article by Coindesk, crypto exchange Gemini is launching a dollar-backed stablecoin built on Ethereum, designed to provide liquidity for users hoping to send or receive U.S. dollars through the Ethereum network. On the same day, blockchain startup Paxos announced that it has launched a stablecoin with regulatory backing from the state of New York. The new token called Paxos Standard has been approved and will be regulated by the NYDFS; it is fully backed by the U.S. dollar. Notably, Paxos is already a qualified custodian, meaning it is legally regulated and approved by the SEC to hold client funds.

Coindesk reported on September 9th that the SEC had issued an order seeking to suspend the trading of the Bitcoin Tracker One and Ether Tracker One exchange-traded notes, issued by XBT Provider AB, a Swedish-based subsidiary of the U.K. firm CoinShares Holdings. According to the SEC, the ETN documents were confusing market participants as to the nature of these financial instruments. Some sources characterised them as ETFs while others described them as ETNs, according to the regulator.

The day before, Business Insider reported that Goldman Sachs had dropped plans to launch a cryptocurrency trading desk, which immediately resulted in the total market capitalisation of cryptocurrencies dropping by $12 billion in an hour. However the day after, Martin Chavez, CFO of Goldman Sachs, denied the recent news saying, “I never thought I would hear myself use this term but I really have to describe that as a fake news”.

According to another Business Insider report dated September 6th, Coinbase is looking to create a cryptocurrency-based exchange-traded fund (ETF) with the help of BlackRock. The proposed crypto ETF reportedly discussed is aimed to allow retail investors to gain access to volatile cryptocurrency markets.

 

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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