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The Hard Fork – Weekly Market Commmentary

This Week’s Topics:
1) Unpacking last week’s Twitter breach
2) DeFi tokens continue their bull run
3) Grayscale sees record-breaking $1bn quarter

 

Indices Round-up

 

TradeBlock Index Asset1 Price ($) 7d∆2
XLMX Stellar Lumens 0.10 3.55%
XMRX Monero 68.98 -0.81%
XBX Bitcoin 9156.52 -1.38%
XRX XRP 0.20 -1.97%
EOSX EOS 2.57 -2.41%
ETX Ethereum 237.59 -2.47%
BCX BCH 224.26 -5.38%
ECX Ethereum Classic 6.11 -6.29%
LTX Litecoin 42.24 -6.82%
ZCX Zcash 57.61 -8.79%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 07/13/2020 06:00 ET thru 07/20/2020 06:00 ET.

 

7 day price movers
Digital currencies posted mixed results on the week. Among our indexed currencies, XLM was the only asset to trade higher, gaining 3.55%. ZCX traded down the most, losing 8.79% on the week. In traditional markets, US equities traded modestly higher on the week with the S&P index rising a little over 50 basis points. US bond yields turned lower on the week, with the 10-yr around 0.60% and the 30-yr under 1.3%. US bonds continue to be bid as concerns over rising coronavirus cases persist.
 

Unpacking last week’s Twitter breach
On Thursday this past week, multiple high profile verified (blue check mark) accounts were breached in one of the widest ranging attacks to hit Twitter. Accounts belonging to Joe Biden, Elon Musk, Barack Obama, Jeff Bezos, Bill Gates, Kim Kardashian, and the corporate account of Apple among others were hit in the attack. 130 accounts in total were targeted. All of the accounts tweeted varied but similar postings regarding a bitcoin giveaway or crypto partnership.

The tweets first appeared on corporate accounts and personalities in the digital currency space beginning around 3:30 pm ET. At 4 pm ET on Thursday, the co-founder of the Gemini exchange, Tyler Winklevoss, tweeted from his personal account that the exchange’s twitter account, among other digital currency exchange Twitter accounts, was breached.
 


 

A short time later high profile accounts outside of the digital currency space began posting tweets offering to send bitcoin to users who first deposited bitcoin into certain wallet addresses, which were included in the tweets.

During the breach, TradeBlock’s Bitcoin block explorer showed wallet addresses belonging to the attackers contained around $100,000 in bitcoin that were deposited. It is unclear whether these funds actually came from individuals who fell for the giveaway scam or if it was simply deposited by the attackers to increase attention to the attack. In either case, the attack garnered a small sum of money despite such a high profile effort. Additionally, the initial wallet addresses are now nearly empty with the attackers transferring the funds. However it does not appear that the attackers have used mixing services to make their transactions harder to trace yet.

Despite the attention that bitcoin received immediately following the attack, the price of bitcoin proved surprisingly stable during this time. Additionally, bitcoin trading volume on the day of the attack (July 15) was inline with volume during the rest of the days that week.
 

Figure 1: Daily bitcoin trading volume during the week of the Twitter attack


 

DeFi tokens continue their bull run
Decentralized finance currencies extended their bull run this past week. Aave (LEND) was the biggest DeFi token gainer this work with the token’s market cap rising from ~$295 million to ~$480 million over the past seven days. The rest of the DeFi universe saw strong gains as the sector continued its bull run. The run-up in prices comes as large cap digital currencies such as bitcoin and ether remain very stable in comparison.

In the figure below we diagram the total market capitalization over time across the largest digital currencies within the DeFi sector. In a previous report, we highlighted the initial rise of these tokens with a particular focus on Compound (COMP), including our approximate valuation model.
 

Figure 2: DeFi token market cap over time


 

Grayscale sees record-breaking $1bn quarter
This past week Grayscale released its Q2 202 investment highlights. The asset manager hauled in a record $905.8 million in new investments to its suite of digital currency products. The haul was nearly double its previous record which occurred in the preceding quarter and brought in $503.7 million.

Institutional investors continue to dominate Grayscale inflows, with the majority coming from the likes of hedge funds and asset managers. Bitcoin has seen an uptick in institutional interest of late with various funds entering the space, including Paul Tudor Jones’ fund which was announced earlier this year.

Grayscale ranks as the largest asset manager in the digital currency space with more than $4 billion in AUM. Grayscale uses TradeBlock’s suite of digital currency indices for NAV calculations across its various investment trusts.
 

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