Your weekly dose of insightful market analysis and trending stories.

The Highlight of the Week

Ethereum fundamentals get better

A crucial part of any public blockchain is to ensure support from miners. Miners earn revenue through two sources: block rewards and transaction fees. All the major public blockchains such as Bitcoin and Ethereum have decreasing rewards baked into the protocol. The reason is that either they have a fixed supply or the annual inflation reduces with time. Currently, the fees have a lesser share in miners’ revenue. However, with reducing rewards, fees need to increase to compensate for the reduction in block-rewards. Therefore, fees need to find an equilibrium between miners being paid and not making the usage prohibitive for the users.

The most bullish incident for Ethereum this week is the growth in daily fees to catch up with that of Bitcoin.


Source: https://coinmetrics.io/charts/#assets=btc,eth_left=FeeTotUSD_zoom=1523388446231.1558,1569110400000

Apart from the fees increment, the other bullish indicators for Etehreum are gas usage reaching its all-time high, and network hash rate climbing to 10 months high. These indicators bode well for the blockchain because they indicate underlying usage and miners’ interest, respectively.

Despite bullish developments, we will closely monitor these developments to gauge whether the change is long term or just another impulse.

Top News From Last Week

CME Group announced it will launch options on its Bitcoin futures contracts in Q1 2020.

Price discovery is critical for any financial market. The options market serves as a crucial component in enabling the price discovery mechanism. Secondly, information asymmetry is a perennial challenge in the financial markets. The options market helps the propagation of information. It paints likely scenarios for the spot traders. Options allow traders to hedge their positions. Volatility has been a significant deterrent for institutions to be on the sidelines of crypto action. Options will enable institutions to can effectively hedge their bitcoin positions and may be critical in getting more institutions into crypto assets.

OKEx's Korea unit is delisting all five privacy coins – Monero (XMR), Dash (DASH), Zcash (ZEC), Horizen (ZEN) and Super Bitcoin (SBTC).

A few weeks ago, Coinbase UK delisted Zcash, and now OKEx Korea is delisting all the privacy coins. Is this the new normal? Is the government going to force centralized exchanged to ban all privacy coins? What is the most private mode of payment? It’s cash. If governments want to ban privacy coins just because they are private, one could ask the same questions about physical money. Though Coinbase UK delisted Zcash, it continues to trade on the exchange’s US arm. If the US, probably the toughest regulator, is not banning all the privacy coins, there is hope. Countries like Switzerland, Malta also do not seem to be in favor of prohibiting privacy coins. Therefore, it would be unwise to jump to the conclusion that the entire world will ban privacy coins.

Bakkt sees a slow and steady start

Bakkt is a bitcoin futures exchange platform by Intercontinental Exchange, the parent company of the New York Stock Exchange. Bakkt launched on Sunday evening and seen a slow start in terms of volume. However, as America is still waking up, the trading activity has seen an uptick. As of now, the volume is 53 BTC. A few hours ago, it was 17. We have seen negative commentary on Twitter and other social media about the slow start. We think this criticism is unwarranted. We believe one needs to monitor the situation for at least a few weeks if not months before branding Bakkt as a failure. Institutions may very well want to wait and confirm the smooth functioning before jumping on to the platform.

Top Performing Tokens

Top performing tokens from SEPT/14/2019 to SEPT/20/2019 were:

Worst Performing Tokens

Worst performing tokens from SEPT/14/2019 to SEPT/20/2019 were:

ROI of Recent IEOs

ROI of recent IEOs until SEPT/19/2019:

Tokens with Most Volume

Tokens with the most volume from SEPT/13/2019 to SEPT/19/2019 were:

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Token Metrics Media LLC does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Token Metrics Media LLC registered as an investment adviser or broker-dealer in any jurisdiction.

Information contained herein is not an offer or solicitation to buy, hold or sell any security. The Token Metrics team have advised and invested in many blockchain companies. A complete list of their advisory roles and current holdings can be viewed here: https://blog.tokenmetrics.com/disclosures/