October 22 – 28, 2019 | Bitcoin Surges Over 40%, Stanford Professor Warns Banks, and More
3iQ Research Group consolidates the top five cryptoasset stories of interest to investment advisors and our investors.
Bitcoin Surges Nearly 40% as China’s Xi Jinping Embraces Blockchain
October 25 – Bitcoin surged over 40% in three trading days after the Chinese President Xi Jinping announced that his country should “seize the opportunity” that comes with blockchain technology. Sentiment quickly changed in the crypto market following the announcement, as most major cryptocurrencies rallied alongside bitcoin off of 5-month lows. The announcement was largely seen a surprise, given China’s historically tough stance on cryptocurrencies. Xi Jinping’s statements on blockchain are believed to be the first detailed remarks he has ever made regarding the technology. Chinese officials are also reportedly developing a digital version of their own national currency. “It’s bullish for the entire crypto industry, in general, when you have the leader of one of the world’s largest economies coming to embrace blockchain technology like this,” said Matti Greenspan, a senior market analyst at eToro. “Bitcoin, as we know, is a central player in the blockchain industry.”
Professor: Crypto Could Disrupt Low-Interest Deposits and Bank Profits
October 24 – A professor at Stanford Graduate School of Business notes that cryptocurrencies could soon put an end to banks that profit from low-interest deposits. In a recent interview, the Dean Witter Distinguished Professor of Finance, Darrell Duffie, said that cryptocurrencies are likely to disrupt the business models of banks within the next decade. Professor Duffie thinks that the public should not be misled by the currently low levels of adoption of decentralized cryptocurrencies like Bitcoin, nor should the public take the pushback against Facebook’s Libra from regulators as a sign of uncertainty. “At some point, new payment methods will trigger greater competition for deposits,” said Duffie. “If consumers have faster ways of paying their bills, and merchants can get faster access to their sales revenue without needing a bank, they won’t want to keep as much money in accounts that pay extremely low interest.”
Read the full article from the Stanford Graduate School of Business here.
Digital Asset Research: “Clean Prices” are Needed for Crypto to Mature
October 25 – Digital Asset Research (DAR), a leading crypto markets analysis firm, has conducted a comprehensive study of the spot markets in which cryptocurrencies trade. The report, called “Clean Prices: A Required Step for Crypto to Mature” noted that the predominance of “bad foundational data” has hindered institutional participation and made regulators skeptical, thus stunting sector growth. The report provides a detailed guide on how DAR identified and quantified market manipulation, and expands on findings made by Bitwise Asset Management in submissions they made to the US Securities and Exchange Commission (SEC) earlier this year. In addition to qualitative assessments on cryptoasset trading platforms, DAR provided an in-depth look at buy/sell permutations, frequency and type of orders, correlation testing, and trade lot sizes on cryptoasset trading platforms. “We believe there are measures that can be taken today that can substantially increase the quality of primary data, and fulfill institutional requirements as this market matures,” said the report.
Read the full report from Digital Asset Research here.
Ethereum Developers Target December 4 for Istanbul Mainnet Activation
October 25 – The next system-wide upgrade for the Ethereum network, Instanbul, is expected to go live on its mainnet on the week of December 4. The decision was made during the most recent Ethereum Core developer call which occurred on October 25. Developers on the call also agreed that any unexpected issues during the software upgrade between now and December 4 would push the mainnet activation back to January 8, 2020. If there are no issues between now and the expected release date, the network upgrade will introduce six backwards-incompatible code changes to the Ethereum network, which is currently the second largest blockchain network in the world. Ethereum developers also approved an additional code change, called the Ethereum Improvement Proposal (EIP) 2124, which will prevent confusion on which Ethereum Software miners are currently running by including a new fork identifier mechanism. “Generally, clients have a hard time following a non-majority chain so usually you have to tweak the clients [manually] … to make sure they’re on the right chain,” said Péter Szilágyi, an Ethereum Core developer.
The Number of Physical Merchants Accepting Cryptocurrencies is Growing
October 27 – The number of physical merchants who accept crypto payments are continuing to grow, according to Coinmap.org. As of October 2019, 15,558 business around the world are accepting bitcoin as a means of payment, which is up 18% from the same time last year. Europe continues to be the hottest continent for in-person bitcoin payments. In particular, Slovenia and Croatia had seen some of the biggest increases, from 240 locations in January 2019, to 530 today. Interestingly, Vancouver, British Columbia was also reported to have a proportionately high number of bitcoin-accepting businesses per 1,000 residents at 0.127. However, using cryptocurrencies as a means of payment may not be for everyone, considering price volatilities and taxable events that may occur in jurisdictions such as the United States. “One significant impediment is price volatility. That’s likely behind the rise in popularity of stablecoins, and trust in stablecoins could lead the way to increased commercial use… We think a lot of the benefits of using cryptocurrencies versus traditional payment methods are still to come because cryptocurrencies are more programmable,” said a spokesperson from Chainalysis.
Read the full article from the CoinTelegraph here.
3iQ Bitcoin Trust (Class A) : NAV as at October 28, 2019
3iQ Corp. (“3iQ”) is the first Canadian investment fund manager to agree to terms and conditions with the Canadian securities regulatory authorities which permit 3iQ to manage a multi-cryptoasset investment fund available to Canadian accredited investors. 3iQ provides accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.
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