WEEKLY SECONDARY MARKET ANALYSIS (10 SEPTEMBER – 17 SEPTEMBER)

Disclaimer: The views and claims expressed here are not meant as an alternative form of investment advice. Every investment move involves risk, and you should consult professional financial advisors for guidance or conduct your own research before making a decision.

This Week’s Hot Topics

China

1. The Huashan Hospital, a teaching hospital affiliated to Shanghai Fudan University, and the Ant Financial Service Agreement have jointly created the first blockchain electronic prescription service in China. This e-prescription can not only solve the problem of inaccurate and unpredictable prescriptions in the hospital, but also reduce the risk of prescribing drugs.

2. Shenzhen Cultural Property Exchange and National Information Center have jointly set up a digital creative innovation center to better solve the problems of cultural art copyright, source backgrounds, authenticity, confirmation, and circulation.

3. Peng Feng, the head of the Planning Department of the Digital Money Institute of the People’s Bank of China, said that traditional databases form the foundation of the previous generation of Internet, blockchain forms the foundation of the next generation Internet, which will develop a new Internet with value.

4. Thunder and the New World announced the realization of strategic cooperation, and released the chain to enjoy the cloud, aiming to implement the blockchain technology into the construction of citizens’ digital identities.

5. Recently, Bank of China successfully completed the US dollar international remittance between customers in Hebei Xiong’an, China and Seoul, South Korea through the blockchain cross-border payment system. This is the first international commercial bank to apply the independent R&D blockchain payment system onto international remittance business.

 

Southeast Asia

1. Chan Chang’s CEO Zhao Changpeng announced on September 15 that the Singaporean French currency trading platform will open a three-day private test on September 18, marking it their official entry into the legal currency trading field.

2. The Cambodian central bank is working with the Japanese company Soramitsu to establish a blockchain-based payment system. The success of these projects will further strengthen the position of blockchain in the Southeast Asian technical framework.

3. Malaysia is currently exploring the use of blockchain technology to increase the transparency and sustainability of its three industries. The Malaysian government believes that blockchain technology will not only help promote the domestic economy, but will also help streamline the Islamic financial sector.

4. Recently, Philippine Digital Asset Exchange PDAX obtained the permission of the Central Bank of the Philippines (BSP) to trade digital currency with Philippine peso (peso)

5. Japan’s telecom giant Softbank has completed a blockchain proof of concept (PoC) to allow P2P mobile payments between different operators. Softbank said the technology was developed in collaborative effort with blockchain startup TBCASoft and NASDAQ-listed Synchronoss.

 

South Korea, Japan

1. South Korean Customs plans to use Samsung’s blockchain technology as a technical support in the decentralized customs clearance system.

2. According to Money Today, Korean telecommunications company KT applied to Gimpo City to launch a local currency blockchain platform worth 10 billion won in the first half of next year.

3. South Korea’s digital currency exchange Cashierest announced its CAP repurchase and lock-in policy to promote CAP price stability and smooth trading.

4. According to the Yonhap News Agency, the vice president of the Korea Financial Research Institute (KIF) said that the issuance of central bank digital currency (CBDC) can directly affect private economic entities, which will have a positive impact on the implementation of monetary policy. Hence, it is necessary for the state to comprehensively review and prepare for the corresponding measures.

 

Europe, America

1. Blockchain technology services company BitGo has obtained approval from the Bank of South Dakota, USA, to launch digital asset custody services, marking it as the first government-approved digital money custodian company.

2. The recent announcement of the newly-approved release of stable currencies Gemini Dollar and Paxos has incited heated discussions. These two stable coins that are now endorsed by the New York Financial Bureau and Ethereum smart contracts can reduce the risk pressure, increase the entry of funds, and play an active role in the market.

3. Canada’s sole regulated crypto investment firm, First Block Capital, has been approved by BCSC and OSC to launch a mutual trust fund, which effectively promotes the development of the secondary market in Canada.

 

Market Review

The Total Market Value of Global Cryptocurrency Assets

Source: coincheckup.com

As of 15:00 on 17 September, the global market value of the encryption market is 203.9 billion US dollars, which is a rise in 4.2% from 19.58 billion in the same period last week. The transaction volume decreased by 11.9% compared to the same period last week. This week, the global market capitalization of digital currencies is relatively stable, but the volume may shrink, and the market trading willingness may fall overall.

 

24-hour Top 5 Digital Currency Exchanges (By Volume)

Source: Coinmarketcap.com

As of 15:00 on September 17, 2018, the market’s top 5 exchanges totaled $18.1 billion in a week, a decrease of $3.7 billion, or 23.75%, compared to $23.4 billion in the same period last week. The overall transaction volume of the exchange platforms this week has continued to decline with the rebound of the market during mid-week, indicating that the overall strength of the exchange is still weak with an inverted U-shaped trend.

 

Top 5 Digital Currency Market Value Changes

Source: coincheckup.com

As of 15:00 on September 17, this week’s top 5 cryptocurrencies are BTC, ETH, XRP, BCH and EOS, of which:

BTC rose 2.82% this week, and the market value rose from 56.16% last week to 55.24%.

ETH rose 11.43% this week, and the market value fell from 10.37% last week to 11.11%.

XRP rose 0.66% this week, and the market value fell from 5.73% last week to 5.50%.

BCH fell 5.84% this week, and the market value fell from 4.30% last week to 3.88%.

EOS rose 7.59% this week, and the market value fell from 2.45 percent last week to 2.42%.

 

Top 5 Digital Currency Turnover Rate

Source: feixiaohao.com

Compared to the same period of last week, excluding BCH’s small cash turnover rate that rose by 0.43%, the other four currencies all showed different degrees of decline. This indicates that the trading enthusiasm in the market is declining. In addition, EOS still has the highest turnover rate in the Top 5, and there is significant market confidence in the coin’s future business developments.

 

Change in USDT Balance in the Top 5 Exchanges

As of 15:00 on September 17, judging from the change in the USDT balance of the Top 3 exchanges, the USDT balance of Bitfinex increased by 20 million as the USDT issuer compared to last week. The flow of funds from the other two exchanges remains essentially the same in magnitude. In the current market, capital flow is in a dynamic balance.

 

Premium Rate of USDT in Exchange

Source: chaintrack.cn

This week, the USDT premium rate showed a decline. The highest premium rate this week was 1.31%, down 2.30% from 3.61% in the same period last week. The lowest point of this week’s premium rate was 0.00%, which was 0.2% higher than the lowest point of -0.2% in the same period last week. The outflow of funds this week was slightly better than last week, but the market is still pessimistic.

 

Market Fear Index

Source: alternative.me

As of September 17, the “Fear and Greed” index for digital currencies was 25, a 40% increase from the same period last week (index 15), and the level of panic eased. Although there is still an extreme level of fear at this stage, it is evident that the short-term market is moving in a positive direction according to this week’s upward trend.

 

Topic of the Week

BitGo’s digital currency hosting service has been approved by relevant US regulatory authorities

Following the approval by the US Regulatory Authority of the stablecoins Gemini Dollar and Paxos Standard, the blockchain technology service company BitGo has recently been approved of its digital asset custody service, which is aimed at institutional investors. As the first digital asset custodian in the United States to receive a national regulatory compliance license, Bitgo will work with Kingdom Trust to provide a multi-tiered digital asset secure storage package. The Kingdom Trust is a digital asset custodian regulated by the Bank of South Dakota with a storage asset value of approximately $12 billion. They specialize in providing unique and innovative hosting solutions for individual investors, family offices, consulting firms, broker-dealers and a variety of other investment platforms.

According to the US Securities and Exchange Commission, institutional investors whose client assets exceed $150,000 must deposit their assets in a “qualified custodian”. These qualified custodians include banks, savings institutions, registered broker dealers, futures commission merchants and foreign financial institutions. This ensures the security of the assets themselves. Traditional assets such as gold and bills can be physically deposited. Providing asset preservation services is an important feature of the custodian.

Different from physical assets, digital assets are a kind of virtual assets, and their private key is their unique certificate. The traditional dynamic wallet is connected to the Internet to realize the transfer business, but the dynamic wallet runs the risk of being hacked, and the static wallet cannot be realized. Chief Compliance Officer and Legal Officer Shahla Ali spoke of the real-time money transfer business, “At present, we provide hot wallet services, where anyone can download our software and store encrypted assets. We also provide a hot and cold wallet that is combined with hosting solutions. While it is safe, it is not the same as the BitGo Trust.” She continued, “The BitGo Trust will enable us to provide regulated hosting services that meet the requirements of AML and KYC (know your customers). Our current hosting service already has anti-money laundering and KYC requirements, but the BitGo Trust is created for institutional clients, especially those registered consultants and broker dealers.”

In the context of the current challenges of the traditional asset management industry facing new reshuffles and huge regulatory pressures, institutional investors have been actively seeking new ways of investing. In recent years, with the rapid expansion of blockchain assets, in order to not miss the historical opportunity of the future blockchain development and increased investment diversification, the willingness of all major institutions to allocate digital assets is very strong. However, due to the risk of digital currency itself and the difficulty of finding a compliant custodian, these large sums of money have been delayed in the digital currency market.

Recently, the United States successively approved the digital currency investment business, such as the custody business and stablecoins, showing the change of attitudes of the US decision-making layer of the digital money market. By allowing the institutional investors to enter the channel, it can inject funds into the digital currency. This can be regarded as USA’s first step into the compliance of the digital currency market.

Looking back at the surge in Bitcoin in 2017, the root cause of this predicament is that South Korea’s compliance custodians provided institutional investors with access to channels and Japan’s Financial Office “strategic reserve” program, which made Bitcoin almost a true digital gold. Unfortunately, the successor of the Financial Services Agency of Japan rejected this plan, causing Bitcoin to lose support at a high level and decline. As can be seen from the above two points, the fundamental basis for the rise of digital currency boils down to two points: The injection of a large amount of funds, and the recognition of its status.

These upcoming US institutional investors will inject a sum of money, which is undoubtedly a shot-in for the current digital currency market. Coupled with the influence of the US in the financial world, this will lead to a global analogy. Judging from the recent policy of the US Regulatory Authority, the official seems to be actively looking for a specific definition of digital currency, and it is believed that there will be results very soon. Throughout 2018, this seems to be one of the most important events of the year.

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