Monex Crypto Market Weekly: May 17

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This post is a translation of the weekly cryptocurrency analysis by Crypto Lab, a wholly owned subsidiary of Monex Group (Tokyo, Japan). Monex is the parent of TradeStation Group.

Summary

  • Bitcoin (BTC) continued its upward trend, nearing $8,400 on Wednesday evening. Money also streamed into altcoins.
  • Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH) and Nem (XEM) rallied on excitement over the Catapult upgrade.

Market Trends This Week

BTC kept rallying this week, at one point climbing more than 30 percent to $8,388. Altcoins like ETH and BCH also came to life.

Equities fell again this week as trade frictions between Beijing and Washington continued. This contrasts with the gains in virtual currencies, reflecting how investors have gained interest in the crypto space.

Capital flow into the market grew rapidly, which is evident from BitMEX’s daily volume and the record activity in CME’s futures contracts. BTC volume according to CoinMarketCap spiked as well. The buying came amid the Consensus 2019 conference and other Blockchain Week events in New York.

We also saw money shifting from BTC to altcoins. ETH and BCH led the gains, rallying more than 25 percent each. XEM in particular benefited, ripping more than 50 percent after the distributed ledger published details of its version 2.0 upgrade, also known as Catapult.

Bitcoin (BTCUSD) chart, with hourly candles.
Bitcoin (BTCUSD) chart, with hourly candles.

Topics of the Week

  • Ethereum Developer conference Devcon announced for Osaka in October. (5/10)
  • NEM Foundation partnered with a wallet company for Catapult implementation. (5/10)
  • Binance Labs supports wallet development of virtual currency Grin. (5/12)
  • The daily turnover of BitMEX sets a record, according to CEO. (5/12)
  • Globis Graduate School of Management in Tokyo starts issuing digital-completion certificates using blockchain technology. (5/13)
  • CTO announces that Bitfinex raised $1 billion in private sale of its own cryptocurrency LEO. (5/13)
  • Bakkt announces that it will test BTC futures in July. (5/13)
  • CoinDesk’s Consensus 2019 conference is held in New York. (5/13- 5/15)
  • The number of BTC futures contracts on CME reaches a record high. (5/13)
  • Microsoft (MSFT) previews a Bitcoin-based distributed ID network. (5/13)
  • XRP rallies after Coinbase allows trading for New York state residents. (5/13)
  • Ground X, under the umbrella of Kakao, announced that it will launch its own blockchain Klaytn in June. (5/13)
  • Stuttgart stock exchange lists an exchange-traded note (ETN) linked to XRP and LTC. (5/13)
  • The U.S. Securities and Exchange Commission again postpones the examination deadline for BitWise’s virtual-currency ETF. (5/14)
  • BitGo launches off-chain clearing and settlement services. (5/14)
  • Coinbase expands service target countries to 103 countries, and widens trading of stablecoin USDC to 85 countries. (5/14)
  • Brazilian lender Banco Bradesco (BBD) joins Corda-based trade network Marco Polo. (5/14)
  • Liquid establishes a joint venture Liquid Financial USA Inc. and announces entry into the U.S. market. (5/15)
  • Updates of “namespace” and “mosaic function” in NEM Catapult are announced. (5/15)
  • The New Zealand-based virtual currency exchange Cryptopia starts
    bankruptcy proceedings after suffering a hacking incident. (5/15)
  • BCH suffered a chain split after the developer group Bitcoin ABC introduced a bug into the network. (5/15)
  • Binance finishes maintenance after being hacked. Deposits and withdrawals resume. (5/15)
  • Total assets held by Coinbase Custody exceeds $1 billion, according to its CEO. (5/15)
  • Huobi launches OTC trading service for institutional investors. (5/15)
  • ConsenSys collaborates with LVMH and MSFT on the AURA platform, which will verify the authenticity of luxury goods. (5/16)
  • New York Supreme Court grants Bitfinex’s motion to modify an injunction from the State Attorney General. (5/16)

Market Forecast For Next Week

Will BTC continue its uptrend as longer-term buyers vie with short-term profit takers?

There has been talk that less money will flowing into crypto markets now that the S&P 500 has stabilized. However Coinbase executives at the Consensus conference said they expect more institutional investors to keep putting money to work. The question is whether those longer-term buyers will offset short-term profit takers following the past month’s rally. This could result in more volatility. We could also see activity shift from BTC to altcoins.

Next Week’s Topics

  • 5/20: Nine currencies including Dent (DENT), Holo (HOT) and Status (SNT) are listed on the Korean Exchange ProBit.
  • 5/21: Other tokens including Enjin Coin (ENJ) will be listed on Korea’s ProBit.
  • 5/23: Holo (HOT) to perform AMA on YouTube.
  • 5/23-24: AI & Blockchain Summit 2019 to be held in Malta.
  • 5/25: Verge (XVG) to hold a meetup in Rotterdam.

Industry Related Trends

Regulatory Trend: Coinbase Launches XRP Trading in New York State

On May 14, the U.S. virtual-currency exchange Coinbase announced availability of XRP pairs for New York residents. The company had begun accepting new XRP transactions in February, but restricted residents of New York and the U.K. because of their tighter regulatory standards.

New York is considered the most regulated state for virtual currency in the U.S. Albany’s Department of Financial Services (DFS) requires so-called “bit licenses” for companies transacting virtual currencies in the state. Firms obtaining a license also need to undergo regular inspections.

That, combined with the ongoing XRP litigation, has made exchanges nervous about handling the token. The fact Coinbase is proceeding despite those headwinds could shift sentiment in favor of XRP. After all, New York is at the center of the global economy and financial markets.

Technology Trend: NEM Foundation Moves to Wallet Development for Catapult Implementation

On May 10, the NEM Foundation announced plans to work with Hatio Innovations Private Ltd. as the first partner of the NEM SP (Service Provider) Program. The project name is Catapult Mobile Wallet and the owner is NEM Foundation. It aims to develop an easy-to-use, feature-rich wallet that is essential for implementing the improvements of NEM resulting from the Catapult upgrade.

Hatio is owned by BillDesk, a leading payment aggregator in India. Business contents include solution proposal for blockchain technology, trading of digital assets, B2B wallet and customer service. In this project, it was chosen from 12 candidates.

NEM’s catapult was originally scheduled to launch last year. But that’s been delayed because of unclear development progress. NEM reorganized this year and issued a road map for Catapult, including a development system for upgrade implementation. Under such circumstances, in addition to this announcement, updates of “namespace” and “mosaic function” in catapult are announced on May 15. Let’s keep an eye on how development progresses into the third quarter of this year.

Individual Company Trend: New Zealand Exchange Cryptopia Files for Bankruptcy

Christchurch, New Zealand-based virtual-currency exchange Cryptopia announced on May 15 a halt to trading and the start of bankruptcy proceedings. In Cryptopia, trading was no longer possible several hours before it announced the start of the bankruptcy proceedings.

“Despite the efforts of management to reduce cost and return the business to profitability, it was decided the appointment of liquidators was in the best interests of customers, staff and other stakeholders,” the firm said in a statement. The investigation of stolen assets is expected to take several months, and user anxiety is likely to continue for a while.

Cryptopia stopped trading in mid-January after a $16 million hack. There were some concerns about the situation after a large amount of money was repatriated to an unknown wallet. Was it a so-called exit scam?

Such exchange troubles are frequent, including famous examples like Mt.Gox and Coincheck. At that time, an overheated market cooled down following the incident. This year is different, with BTC continuing to rise amid the Cryptotopia and Binance hacks. One reason is that only a small amount of damage was done. But credit should also be given to improved measures implemented against hacking.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.