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The Hard Fork – Weekly Market Commentary

This Week’s Topics:
1) Fidelity launches bitcoin fund
2) DEX trading volumes reach all-time high
3) FTX acquires Blockfolio for $150 million

 

Indices Round-up

 

TradeBlock Index Asset1 Price ($) 7d∆2
ETX Ethereum 426.89 5.25%
XMRX Monero 94.32 1.30%
LTX Litecoin 61.97 -0.62%
XBX Bitcoin 11615.13 -1.43%
ECX Ethereum Classic 6.75 -2.00%
ZCX Zcash 79.10 -3.00%
XRX XRP 0.28 -3.48%
EOSX EOS 3.23 -4.89%
BCX Bitcoin Cash 274.87 -5.74%
XLMX Stellar Lumens 0.10 -8.49%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 08/24/2020 06:00 ET thru 08/31/2020 06:00 ET.

 

7 day price movers
Large cap digital currencies posted mixed results on the week while select tokens within the burgeoning DeFi sector saw gains of more than 100%–YFI and UMA both saw gains of nearly 150% over the past 7 days. Among our indexed currencies, ethereum traded up the most, gaining 5.25%. Conversely, stellar lumens traded down the most, losing 8.49%.Volatility in the space has stayed relatively muted on a historical basis despite a recent uptick on the recent price rise.
 

Figure 1: Bitcoin price volatility remains relatively muted


 

In traditional markets, US equities pushed to new all-time highs completely erasing market losses suffered in the COVID-19 correction in March of this year. In bond markets, the U.S. treasury curve steepened late in the week as investors digested comments from Fed Chair Jerome Powell at the annual Jackson Hole symposium. Following Powell’s comments, the 10-year trsy yield was up five basis points to 0.74%, its highest level since June.
 

1) Fidelity launches bitcoin fund
It was revealed this past week that the financial management juggernaut, Fidelity, is launching its first Bitcoin fund. The bitcoin investment fund will be called the Wise Origin Bitcoin Index Fund I, according to SEC filings. The fund will operate under Fidelity’s new business unit, Fidelity Digital Funds. The fund will have a minimum investment of $100,000, which is fairly standard for investment funds.

Fidelity has long been a proponent of the digital currency markets and in particular of bitcoin. As far back as September of 2017, the firm’s CEO revealed that the money manager was mining bitcoin. Since this time, Fidelity has continued its expansion within the space, including launching a separate business unit, Fidelity Digital Assets, back in 2018 replete with research, custodial services, and investments for digital assets.
 

2) DEX trading volumes reach all-time high
Yield farming and the clamor for DeFi tokens has pushed notional trading volumes on decentralized exchanges (DEXs) to new all-time highs. The highest volume DEX currently, Uniswap, had its best week yet and notional trading volume across its platform now rivals that of the largest US centralized exchange, Coinbase.

Uniswap saw more than $6 billion in transactional volume across its platform for the month of August. In the figure below, we diagram notional trading volume across the leading DEXs over time.
 

Figure 2: DEX notional trading volume over time


 

Further, there now exist a multitude of tokens launched by the teams behind these DEXs. Holders of these DEX tokens have governance rights to decide on future course of action of the DEX project and additionally receive trading fees generated from the platform. Given the staggering trading volume now going through DEXs, DEX tokens are paying out attractive yields to token holders. In our in-depth report last week, we analyzed the Kyber Network platform and its KNC token.

3) FTX acquires Blockfolio for $150 million
The digital currency exchange, FTX, acquired Blockfolio this past week in a $150 million deal. FTX is one of the largest derivative trading exchanges in the space and has become known for its unique product listings and quick turnaround on new initiatives. In addition to offering more vanilla derivatives contracts on bitcoin, ethereum, indexes, and other assets, FTX also offers betting in the US presidential market.

The deal is said to include a new retail trading synergy between Blockfolio and FTX. Blockfolio could be uniquely positioned to deliver new trading clients to the exchange given its more than 6 million users. Blockfolio currently ranks as one of the largest digital currency portfolio tracking applications.


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