Research

H1 2018 Crypto Report Highlights

Another half year past, another bear market endured — and hopefully survived — another wild ride on the crypto-rollercoaster! I’ve personally come to somewhat enjoy these periods, being strapped to the nosecone of a rocket ship can be exhausting and sometimes it’s nice with some “downtime” to get building and prepare for the next stage of the ride.

By   Christopher Bendiksen 9th August 2018

At CoinShares we’ve been busy doing just that and should the market decide to do its thing again, we’ll be ready. While we wait we’ve prepared another half year report for you with a comprehensive market overview of four established crypto assets, a little news recap, some commentary and lots of further reading.

For those pressed for time, here are our 5 Essential Takeaways:

  • The $400m liquidation of bitcoin held by Mt Gox trustee contributed to the market downturn with notable large sale of 18,000 btc coinciding with Q1 lows. They still have reserves of 166,344 BTC so we could conceivably see more of these sales on strong rebounds or fresh market highs. We suggest keeping an eye on the dealings of Mr. Kobayashi.
  • Some long-awaited regulatory clarity — The SEC has stated that decentralisation is a criterion of security status along with protocol functionality at the time of sale and a collection of other metrics. Notably the SEC does not see Ethereum and Bitcoin as securities, partly because they are already established decentralised networks.
  • We’re seeing beginning trends of changes in ICO and funding landscape with increasingly more private sales — i.e. Telegram. The SEC’s hawkish statements on ICOs being securities may have contributed to a beginning trend of private sales. We suspect many projects are preferring private over public sales as a means to reduce KYC risks due to the lower number of participants private sales require in order to secure sufficient funding.
  • Scalability has taken top priority in protocol improvement. The successful launch of Lightning on top of Bitcoin and Litecoin base layers has demonstrated the potential for powerful off-chain scaling solutions. Similarly, the focus on sharding and layer 2 scaling solutions rather than PoS implementation in Ethereum shows increased attention given to scaling by developers as its base layer struggles to accommodate increased on-chain demand.
  • As assets mature they are showing beginning trends of improving Sharpe ratios. While 2017 was more volatile than preceding years for many cryptoassets, the long term trend seems to point downwards while high returns in many cases remain. This combination strengthens Sharpe ratios over time as holders of cryptoassets are better compensated with returns relative to risks. As always though, and as our chairman just pointed out in long-form; past performance is not indicative of future performance.

For a more comprehensive overview including commentary, snacky charts and links to further reading, please check out the full report:


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