CRYPTO GOLD WEEKLY UPDATE
Week of Monday February 19, 2018

Markets Performance:

• Last week, cryptoassets were the best performing asset class with the cryptocurrency flagbearer, Bitcoin (USD) snapping a 5-week losing streak, finishing the week at $10,178.71, up +17.1% from the previous Friday’s close of $8,689.84.
• Ethereum’s Ether (USD) rose +10.4% during the week period, moving up nearly ~$100 from $852.38 to $941.08, while the broader CAMCrypto30 index (top 30-cryptocurrencies by market capitalization), outperformed with an +18.4% gain.
• Fading regulatory fears out of South Korea, which accounts for a large bulk of cryptocurrency trading, helped further calm the recently distressed cryptoasset market, which saw Bitcoin’s (USD) price plummet -70% from an all-time high of nearly ~$20,000 (12/17/17) back down to ~$6,000 (2/6/18).
• Following the worst two weeks for the S&P 500 since August 2011, legacy markets also found footing during last week’s trading session, with both the S&P 500 and tech-heavy Nasdaq up +4.3% and 5.3%, respectively.
• Inflation is beginning to come into focus for legacy markets with increased deficit concerns continuing to send both the dollar and treasuries lower, with inflation-hedged assets like gold and other commodities seeing further capital inflows.

Recent Trading History / Current Trading Range:

• As a cryptoasset benchmark, the price of Bitcoin (USD) is off -49% from its December 17th high of $19,783.21, but still posts a staggering +1,125% gain over the last twelve months (LTM) versus only +16% from the S&P 500.
• After hitting a 4-month low of $5,922 on 2/6/18 (off -70% from its all-time highs), Bitcoin (USD) has recovered roughly +70%.
• On the technical front, however, Bitcoin (USD) is currently facing an 9-week bear cyclical trend, stuck within a downward trading channel (blue-dotted lines).
• The $12,000 price level will be a key technical threshold to watch with Bitcoin (USD) looking to recover further, as both a long-term resistance level and downward trading channel band are challenged.

Crypto Market Drivers:
(*Level of Importance in Descending Order / Bold & Hyperlinks – Major Weekly News)

SHORT-TERM (ST) DRIVERS:

• Speculation and Investment
  • Mysterious investor purchased roughly $400 million of Bitcoin between Feb. 9 and Feb. 12.
• Regulatory (i.e. China, South Korea, United States, etc.)
  • Swiss Financial Market Supervisory Authority (FINMA) published a set of guidelines for applying existing financial market legislation to the regulation of ICOs.
  • The head of the Commodity Futures Trading Commission suggested that any federal-level approach to cryptocurrency regulation should be “carefully tailored” to the risks involved.
  • European Union regulators warned cryptocurrencies were unsuitable investments and should be viewed as “highly risky” assets.
• Security Concerns (i.e. criminal activity, fraud, manipulation, etc.)
  • BitConnect, a Bitcoin investment platform, continues to face additional legal action on ponzi scheme allegations.
• Financialization (i.e. futures, ETFs, etc.)
• Decentralized Governance (i.e. technology upgrades, forking, incentivization structure, etc.)
  • An unexpected and controversial Litecoin fork arose, with Litecoin creator Charlie Lee labelling it a scam.
• Banking / Traditional Finance Response
  • Berkshire Hathaway Vice Chairman Charlie Munger said it’s “disgusting” people buy Bitcoin, and described the cryptocurrency as “totally asinine”.
  • The Governor of the central Bank of Thailand asked that all banks in Thailand stay away from cryptocurrency.
• Tax Implications
  • Few Americans have reported cryptocurrency gains on 2017 federal tax returns thus far.
• Exchanges (i.e. counterparty risk, restrictions, and limits)
• Blockchain Technology Advances and Vulnerabilities (i.e. scaling, security, etc.)
• Initial Coin Offerings (ICOs)

LONG-TERM (LT) DRIVERS:

• Decentralization / Disintermediation Trend
• Technology Adoption (i.e. permissioned / non-permissioned networks, individuals, industries, government, etc.).
• Speculation and Investment
• Financialization (i.e. futures, ETFs, etc.)
• Volatility in Legacy Financial Markets (or lack thereof)
• Blockchain Technology Advances and Vulnerabilities (i.e. scaling, security, etc.)
• Non-Blockchain Technology Advances and Vulnerabilities (i.e. DAGs, non-Proof of Work consensus algorithms)
• Regulatory (i.e. China, South Korea, United States, etc.)
• Tax Implications
• Decentralized Governance (i.e. technology upgrades, forking, incentivization structure, etc.)
• Geopolitics / Macroeconomic Forces (i.e. risk-on / risk-off)

Major Events This Week:

• Major cryptocurrency and blockchain events out of France, Switzerland, India, Germany, Italy, U.K., and the U.S. are set to dominate cryptocurrency headlines once again in the coming trading week.

Wild Crypto Story of the Week:

• Polish Central Bank Paid Youtuber to Attack Cryptocurrencies

Glossary:

• DAG – “Directed Acyclic Graph” is non-blockchain form of distributed ledger technology (DLT) using a consensus algorithm without the use of mining (Proof-of-Work). DAG-based DLTs look to improve upon blockchain limitations, particularly with respect to scaling and speed. IoT Chain (ITC), IOTA, Byteball, and Hashgraph are DAG-based projects currently leading the non-blockchain market.