2019 January 21 - Volume.3 Issue.2

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2019 January 21 - Volume.3 Issue.2

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Cryptocurrency Markets Bolstered by Billions in New Supply

Global cryptocurrency markets have have found an uplift of over 12% from newly minted coins, as well as new tokens that have come into play at the start of this year. In new tokens issued in 2018 alone, a whopping $5Bn has been added in value. And while total capitalization of cryptocurrencies is a lofty measure for health outlook, markets still stand nearly ten times the value they did at the start of 2017.


2019 kicked off with the equivalent of $15Bn in additional value from cryptocurrency inflation and new tokens versus the start of 2018.

The lions share coming from Bitcoin, Ethereum and the recently forked Bitcoin SV that added over $5Bn for the trio on cryptocurrency markets (Diar, 19 November 2018).

New stablecoins released in 2018 and increases in supply of dollar pegged cryptocurrencies during the year accounted for an additional $1.2Bn at the start of 2019.

And supply increases for cryptocurrencies that existed amounted to nearly $4.2Bn at current prices.

|| BEAR SHMEAR, LETS TOKENIZE AIR

It was however coins created during the year that added the most to the top dollar figure of market capitalization. Last year saw over 700 cryptocurrencies added to market - more than existed at the start of 2017 - a 50% increase at the start of 2019 vs 2018.

And overall, markets saw an average 35% inflation rate for the year in coin supply increases.

What does stand out even more as a sore thumb in the midst of a bubble burst was the $5Bn in value that cryptocurrency traders have appreciated in new tokens that did not exist at the start of the bear market - coins that, for all intents and purposes, remain to be no more than additional noise in an overcrowded decentralized promise-land.

|| PICK A SUPPLY, AND PRESS ENTER...

When all is said and done, new supply that came onto the blockchains during 2018 accounted for almost the whole market valuation that stood at the start of 2017 with no standout application success story as of yet apart from cryptocurrencies whose sole purpose is to transfer value.

Even that isn't without its scaling issues under development that remain to harness a cumbersome user experience.

wdt_ID Inflation of USD Value
1 2018 Token Additions 4,960,221,381
2 2018 Token Inflation 4,172,000,000
3 Bitcoin 2,626,282,875
4 Ethereum 1,553,222,667
5 Stablecoins 1,264,000,000
6 Bitcoin SV 1,036,753,369
7 Burned Coins (195,000,000)
8 Total 15,417,480,292


Start of Year Cryptocurrency Market Capitalization/# of Coins


Bitcoin: US Dollar Inflation Value at Time of Issuance


Sources: CoinMarketCap, CoinMetrics. Prices in table reflect 2019/01/01.


Ether On-Chain Transaction Value Hits All-Time-High

A security vulnerability found just before a major Ethereum upgrade was to take place last week has delayed plans that would bring down gas costs. And while developers are motoring on the fix, on-chain transaction count has found a stable footing from its user-base. In fact, on-chain transactions of Ether hit its highest peak last month if one is to exclude the activity following the DAO hack.


Total US Dollar value on-chain last year stood at $815Mn, down from $1.1Bn in 2017. A 97% drop in on chain transaction value from peak in January versus December 2018 was by and large the cause of an 80% drop in Ethereum's price.

|| BUCKING THE TREND?

Transaction count on the Ethereum network dropped 50% at the end of the year versus peak at the start of 2018.

In terms of transaction count on-chain the "super computer" has found stability since October bobbing between 16-17Mn monthly transactions (see chart). Diar estimates puts this figure closer to 15Mn transactions for January 2019.

ETH value transacted on-chain however tells a different story. Last month saw volume to the tune of over 115Mn ETH, the highest since the networks genesis if one is to exclude the flurry of activity following the hard fork caused by the Decentralized Autonomous Organization (DAO) hack in 2016.

Fees are unlikely to be the hinderance of growth for Ethereum already having some of the lowest fees for transacting on-chain.

But developer are looking long-term and the Constantinople upgrade, now pushed back, will bring down fees a great deal further for certain types of transactions that would allow for better storage use.

On-Chain Transaction Volume All-Time-High December 2018 (ETH)...


...While USD Value On-Chain Falls to 22-Month Low (USD)


Source: CoinMetrics, EtherScan

2018 Ethereum & Bitcoin Transaction Count

Unique Ethereum Addresses Back on Rise


Grayscale's Stellar Appearance

0.02% of circulating Stellar Lumens have ended up in a trust launched by institutional-geared cryptocurrency firm Grayscale. This marks the 10th product Grayscale has launched accounting also for the Digital Large Cap Fund (Diar, 12 February 2018).

It remains questionable if large investors will dig their teeth into the large cryptocurrency space however. The company's portfolio remains top heavy with Bitcoin accounting for 94% of total Assets under Management (AuM). But Grayscale has taken on larger bets with a larger push into privacy coin Horizen and the now Internet-of-Things (IoT) geared Ethereum Classic (see table).


wdt_ID Cryptocurrency % of Circulating Supply Held
1 Horizen 5.85%
2 Ethereum Classic 4.48%
3 Zcash 2.37%
4 Bitcoin 1.17%
5 Bitcoin Cash 0.09%
6 Ethereum 0.05%
7 XRP 0.03%
8 Stellar 0.02%
9 Litecoin 0.01%


Source: Grayscale. Notes: Shares Outstanding as of 2018/12/31.

Miners Flock to ZCash

Cryptocurrency miners have found refuge in solving for ZCash with the block reward still two halving periods behind Bitcoin (ZCash follows the same controlled supply model with differing block times).

With 7200 ZECs up for grabs daily the networks mining hash rate has been able to sustain a 650% growth as other cryptocurrencies lose equipment in the face of the ongoing bear market and stiff competition (Diar, 14 January).


ZCash Hash Rate Growth Holding Up


Source: BitInfoCharts

tZero Set to Launch
After almost four years under development Overstock.com's Patrick Byrne's tZero security tokens platform is set to go live later on this week. Speaking to Coindesk the company stated that they are in talks with 60 companies for potential listings on their trading platform. tZero now follows in the steps of multiple other companies that have gone live with securitized tokens but remain closed off to accredited investors.
Yen-Pegged Crypto
The Cabinet of Japan has authorised under a regulatory sandbox the proof-of-concept for a Yen-pegged cryptocurrency that is being launched by Crypto Garage. The stablecoin working atop of Blockstream's Liquid Network will give participating institutions the ability to execute atomic swaps against Liquid-BTC. This also marks the very first stablecoin that is pegged in a currency other than USD and Euro.
ICOs Raise $12.3Bn in 2018
Data provided by TokenData closes off December 2018 ICO raises at $75Mn - a 15% increase from the previous month. In total, ICOs raised an insane $12.336Bn in 2018, shattering 2017 by nearly $8Bn in a bear market. But while 2018 did see a 91% increase in capital raised vs 2017, last month's still places it as one of the worst since 2017. The return of the raising method is unlikely given amped up scrutiny by regulators.
Thai Stock Exchange Enters
The flurry of institutional bourses interested in launching cryptocurrency and digital asset operations see's no end with the latest announcement coming out of the Stock Exchange of Thailand (SET). Many large exchanges have taken a side-approach with investments and acquisitions into the blockchain arena, and the SET will be no different setting up a seperate Digital Asset upon regulator approval.

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