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The Hard Fork – Weekly Market Commentary

This Week’s Topics:
1) Bitcoin dominance hits high
2) Blockstack receives SEC approval for $28m token sale
3) US bill draft reportedly looks to ban Libra


Indices Round-up

TradeBlock Index Asset1 Price ($) 7d∆2
XBX Bitcoin 10,342.31 -12.68%
XLMX Stellar Lumens 0.09 -19.16%
XRX XRP 0.31 -21.43%
XMRX Monero 81.21 -22.33%
LTX Litecoin 88.94 -26.29%
ZCX Zcash 78.04 -26.42%
ETX Ethereum 227.06 -26.87%
EOSX EOS 4.29 -28.10%
BCX Bitcoin Cash 293.59 -29.18%
ECX Ethereum Classic 5.49 -31.19%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 07/08/2019 06:00 ET thru 07/15/2019 06:00 ET.

7-day price movers

Digital currencies saw one of their sharpest pull-backs in weeks, as the asset class broadly traded down amidst various comments from politicians and central bankers. On Thursday, US president Donald Trump tweeted criticism of digital currencies, naming both bitcoin and Facebook’s planned Libra token, and re-affirmed his support for continued US dollar dominance. His tweets follow comments from Fed Chairman Jerome Powell, whom stated earlier that bitcoin does not compete with the US dollar, as its more used as a store of value like gold, than as a means of payment.

Among our indexed currencies, ECX traded down the most, declining 31.19% on the week. Conversely, XBX traded down the least, falling a more measured 12.68%.


Bitcoin dominance hits high

Bitcoin dominance is back near all-time highs, as the largest digital currency by market cap continues to gain more market share compared to alt-coins. While bitcoin has posted strong weekly gains, over the last few months, alternative digital currencies have struggled to gain the same price momentum. The space continues to see consolidation, as smaller market cap digital currencies receive weakened demand, and reduced markets as various exchanges delist and geo-block customers from transacting in smaller alt-coin pairs.

In the figure below we diagram bitcoin dominance, as a percentage of market share amongst the top-five largest digital currencies over time. As shown, bitcoin dominance is back near all-time highs, reaching 80% market share amongst the top-five largest digital currencies.

Figure 1: Bitcoin Dominance Nears High

Data for chart sourced from TradeBlock and Coinmarketcap


Blockstack receives approval to launch reg A+ token sale

This past week, the US SEC approved a $28 million token sale for Blockstack to sell its digital currency, the first of its kind. Blockstack is permitted to offer its tokens to the public via Regulation A+ exemption, which was formally adopted in 2015 to allow start-ups access to public financing markets without burdensome requirements that accompany public equity offerings.

Under a Regulation A+ filing, US and Canadian domiciled companies are afforded the opportunity to raise up to $50 million over a one year period using “public solicitation” with the offering being exempt from SEC and state securities registrations. Regulation A+ offerings effectively allow crowd-funding as such capital raises can have an unlimited number of non-accredited investors although are subject to some reporting requirements. The token sale has broader implications for the digital currency funding market as a whole, as it potentially allows for a more clear path to conduct token sales.


US bill draft reportedly looks to ban Libra

Over the weekend, it was reported that a draft bill originating from the House Committee on Financial Services would look to ban large tech companies from launching digital currencies. The draft bill delineates large tech companies as those generating more than $25 billion in annual revenue. If the bill is sponsored and passed, it would ban Facebook from launching its Libra stablecoin. Facebook generated more than $55 billion in revenue over 2018, subjecting the firm to the bill’s ban.

The bill comes amid Congressional hearings that are scheduled this week around Facebook’s Libra Project. A Senate Banking Committee hearing on Facebook’s stablecoin is scheduled for July 16th, and a hearing with the House Committee on Financial Services is scheduled for July 17th.

The potential bill highlights a possible increase in governmental scrutiny around digital currencies and, in particular, stablecoins which behave similarly to the US dollar. In our report published this week, we have found that stablecoins have seen a significant increase in on-chain transactions in 2019, and the top five largest Ethereum based stablecoins saw more transfer volume than Venmo for the most recent quarter.

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