In this week’s edition, we talk about the reasons for the markets dip earlier in the week, followed by its rise only hours ago, talk about some of the factors that have helped bitcoin reach a level of maturity now that it is finally reaching its 10th birthday, review some recently published articles on our site that you should give a look over if you haven’t already, and identify for you two coins which managed to do pretty darn well in what was otherwise another gloomy week in the world of crypto.

Crypto Markets Slide After Stocks

Last week almost marked yet another period of gloom for cryptocurrency as a few hundred dollars were shaved off the price of bitcoin and $6.7 billion disappeared from the total coin market cap. This time to blame was a steadily-falling stock market, which has dropped considerably since the start of October. Most top-tier stocks have now suffered losses considered to be in the “correction”-level range, of 10% or more. Unlike the stock market, which sees more gradual rises and declines in price movement, gains and drops in BTC tend to be sudden and significant, as can be visualized in the chart below, which compares the value of the S&P500 to the price of BTC.

sp500 vs btc yahoo finance

S&P500 vs BTC for the last 5 days. Source: Yahoo! Finance

 

Despite cryptocurrency’s poor performance in 2018, almost 20% of all hedge fund startups currently coming into existence are focusing on blockchain-based or crypto-related investments, perhaps hoping to time their launch with a low point in prices.

Tether on the Brink of Collapse?

In somewhat of a tale of good news, BTC swung back upwards some 9% early Monday morning, erasing all of its recent losses and gaining to levels not seen since early September. Bitcoin prices of Bitfinex briefly surged above $7,750 before settling back down to around $6,900, though failed to breach the $6,800 level on most other exchanges. The news is not being altogether considered “good” as the price movement upward was corresponding exactly with what seems to be an unraveling of stablecoin Tether (USDT). Tether, which is supposedly backed by the US dollar at a one-to-one ratio, had been in a definitive downtrend since early October, and apparently started to come off its hinges within the last 24 hours, sinking to an all-time low of $0.925.

USDT 10 15

USDT dropped precipitously early Monday, losing its dollar pegging. Source: coinmarketcap.com

 

As discussed in last week’s Roundup, Tether’s main exchange for USD, Bitfinex, had recently been undergoing some problems of its own, facing a litany of customer complaints by those unable to process fiat withdrawals and temporarily suspending deposits for some categories of users. USDT had already been on the decline for the last 4 days, unable to surpass the $1 mark since October 11th. As of the writing of this article, USDT was trading at an average of $0.964, climbing back up to $1.00 on Bitfinex, but falling as low at $0.91 on Bittrex. Meanwhile, up-and-coming rival stablecoin TrueUSD (TUSD) was trading at a seven percent premium, at $1.07, marking an apparent influx of new customers looking to escape what could be Tether’s collapse. Most major altcoins saw substantial gains along with BTC, as money moved out of USDT in search of what were ironically to be more stable investments.

Bitcoin Earns “Mature” Label on Eve of 10th Birthday

Despite its ups and down, bitcoin is becoming relatively more stable than in previous years, thanks to not only some time under its belt necessary for maturation but also institutional involvement and the introduction of financial products, like bitcoin futures markets. In an interview with Fox Business, U.S. Commodity Futures Trading Commission chairman J. Christopher Giancarlo heaped praise upon bitcoin futures contracts for helping to stabilize the extraordinarily volatile nature of bitcoin, saying:

“According to the San Francisco Fed, it was the bitcoin futures emergence that actually sapped the bitcoin bubble that emerged at the end of 2017, and we have seen bitcoin, perhaps in some people’s view, achieve a more sustainable level than it was during the bubble period last year… Like all things, it takes time to mature, and with the movement of more institutional investors into that space, I think we’ll see that maturization.”

Lending evidence to the idea of bitcoin’s newfound stability was the fact that it saw its tightest trading range in September since July 2017. As bitcoin becomes traded on more and more markets by an increasing amount of traders, arbitrage opportunities begin to lessen, and price levels become more smoothed out, meaning the price of BTC becomes harder and harder to manipulate in one direction or the other.

Also lending evidence to a matured bitcoin is a recently published scientific study that measured volatility in bitcoin markets since 2012, likening its transformation to Eastern European markets that emerged out of the collapse of the Soviet Union in the 1990s. The study analyzed a number of variables which help calculate the likelihood that price was about to shift in direction from one way to another and found that such shifts decreased as bitcoin aged, suggesting that it was well on its way to becoming relatively stable, just like any other highly traded market. Its authors ultimately concluded that, “since high-frequency price data are available since the beginning of trading, the Bitcoin offers a unique window into the statistical characteristics of a market maturation trajectory.”

In Case You Missed It

Over the past few weeks we published a series of articles explaining the most popular consensus algorithms used by cryptocurrencies, which are basically the mathematical engines that secure any coin network and provide a means for coin generation. Although there are a couple we have yet to cover, this list covers the consensus algorithms for 95% of all cryptocurrencies currently in existence, and they are a good reference point should you ever desire to know exactly what “Proof of” something means in the future:

  1. Proof of Work (PoW): BTC, ETH, BCH, LTC, etc.
  2. Proof of Stake (PoS): NEO, DASH, PIVX, NXT, etc.
  3. Delegated Proof of Stake (DPoS): BTS, LISK, ADA
  4. Proof of Burn (PoB): XCP
  5. Proof of Importance (PoI): NEM

Also, in case you missed it, our resident technical analyst Jonathan Morgan has been reviewing 5 coins that are being added one by one for trading to Coinbase, one of the biggest and most widely used crypto exchanges around the world. In a series of articles on “The Coinbase 5,” Jonathan explains what you need to know about these coins – what makes them special – and why they present interesting trading opportunities before being added to the exchange:

  1. Why you should pick up the Coinbase 5 (ADA, XLM, BAT, ZRX, ZEC)
  2. The Coinbase 5 (ADA, BAT, XLM, ZEC, ZRX) – the message is clear – get them quick!
  3. ZRX (0x) added to Coinbase: Which of the Coinbase 5 cryptos is next?

Coins Bucking the Trend

Despite early Monday’s lift (possibly thanks to the Tether situation), markets still remain down over the last 7 days, that is except for a few coins, which managed to do spectacularly well. So what are they and why are they defying the gravity of the trend? We applied our patented Goodness Index (GI) formula to the top 100 coins by market cap (not including stablecoins) to identify which coins were up the most against bitcoin and on relatively heavy volume and came up with 2 bonafide movers and shakers. For your reference, the average GI score for the top 100 non-stablecoins for last week was -5.21, meaning most coins were somewhat down compared to bitcoin (as to be expected when BTC is falling in price).

quarkchain 1QuarkChain (QKC) (GI = 47.7)

Less than 5 months old, QuarkChain is a coin that has been consistently defying market trends, introduced with the goal of providing speedy, on-chain transactions with a capacity of up to 1,000,000 transactions per second. In addition to creating a highly-scalable blockchain it hopes to solve inherent problems of centralization introduced by mining pools by encouraging solo mining and making it easier for all network participants to run their own nodes.

So why was QuarkChain up over 21% on tremendous volume last week? The project has some solid fundamentals: a very smart and well-educated development team, a fast-growing, dedicated community, and some terrific marketing. It was mentioned in a highly-read Yahoo! News article a couple days ago and some of its core developers have been making a splash at blockchain development summits. QuarkChain’s Twitter page boasts over 27,500 followers, meaning it is hugely popular among those in the know. On October 5th, a thorough review of QuarkChain’s source code was published on the web, which happened to be highly favorable, suggesting a bright future for the coin.

digitex 1Digitex Futures (DGTX) (GI = 29.5)

The Digitex Futures Exchange platform is a novel way of offering futures markets for Bitcoin, Ethereum and Litecoin, against the US dollar. By recording all order information on the blockchain and maintaining balances via smart contracts, traders can speculate on prices without having to pay commission or transaction fees. This allows traders to make speedy, real-time trades, offering trading options which are currently not possible with traditional-type exchanges, all through the use of their platform-native token, DGTX.

So what helped DGTX rocket upward some 75% in price over the last week, increasing in price over 5-fold since the beginning of October? The project, though still young, has been swirling in excitement since it was first announced, raising almost $5 million in a period of 20 minutes during its ICO. On October 4th, CEO Adam Todd announced that the Digitex Futures platform would be launching before the year’s end, helping to bring the advantages of futures trading to a user base that prefers to operate in terms of cryptocurrency. It seems like the positive traction created by Todd’s announcement is snowballing, with more news sources publishing favorable articles about DGTX, helping to cement its place in the top 100 coins by market cap, which in turn inspires a new audience and attention from the media. Digitex Futures’ zero fees prospect is also a highly inviting changed compared to most futures markets, and the project’s Twitter page is tremendously popular, with over 53,000 subscribers.

Also in the News

  • In what could turn out to be one of the more interesting debates of 2018, Vitalik Buterin and Nouriel “Dr. Doom” Roubini are planning on duking it out over the pros and cons of cryptocurrency, so long as they can find an impartial moderator. Roubini, a long time critic of bitcoin and all things crypto, was recently made light of by blockchain wonder boy Buterin, provoking a brief Twitter feud between the two.
  • One of the geographically smallest “countries” in the world, Transnistria, is creating its own cryptocurrency to spur economic development, though critics believe the move could simply be a front for arms deals to take place between the republic, which broke away from Moldova in 1992.
  • Add Manny Pacquiao to the list of celebrities getting their own cryptocurrency, thanks to Singapore-based exchange GCOX.
  • The famous “SIM swapper” who tricked a cell phone company into providing him with the SIM information that held the keys to a bitcoin address worth $14 million has been arrested, with police vowing to hunt down every last participant in the latest type of high tech cyber crime.
  • Someone placed a giant inflatable rat on Wall Street next to the Federal Reserve building that happened to have the bitcoin logo placed upon one of its eyes. Though the move was thought to be in protest to the practices of federal banking, it was mostly just confusing, or otherwise ignored by busy Manhattanites, used to seeing such objects used by unions during labor strikes.