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Satoshi&Co Daily Crypto Newsletter

January 7 · Issue #257 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website www.satoshiand.co

Crypto markets have been robust through the latest macro induced uncertainty. Gold has responded positively as a safe haven/hedge as usual and BTC has held up post the Iranian headlines. After reversing a move down to $6800, BTC has been in an uptrend for the past week and is currently at $7550.
Source: willywoo
Source: willywoo
Network value is headed up while transactions have dropped slightly. Hash rate on the other hand has hit new highs and is now past 115 hexahashes and not showing any signs of exhaustion. Difficulty has tracked this and has also been secularly increasing. 
Source: bitinfo.charts
Source: bitinfo.charts
Source: bitinfo.charts
Source: bitinfo.charts
There has been an insane amount of chatter about halvening priced in via EMH(Emerging Market Hypothesis) style philosophy with others saying there is no evidence of this. Markets we know discount information almost all the time. The question is, what information is truly out there vs the unknown. Capital flows which are necessarily a large part of BTC price movement are not known. Any large institution interest could easily drive the price up 10-20% in very short order. A look at combined bid/ask order book liquidity shows the relatively small amount of capital needed to move BTC by even 1%.
Source: data.bitcoinity.org
Source: data.bitcoinity.org
In the derivatives space, moving 10M USD can be anywhere from 25bps to 5% so even with an assumption of a $100-250M inflow via institutions could move markets 2.5%- 20% at a minimum on the ranges.
The halvening effect on supply is obvious, it’s in the name. Perhaps the second order effects are showing up in hashrate and difficulty rather than price for now. At the current rate of increase, mining profitability is falling and clearly can still test lower boundaries but the evidence points towards greater activity in mining rather than lesser. This could be an indication that the miners themselves are more optimistic than current prices show. Current prices will reflect this when the opinion becomes more widespread, but it certainly looks like the second order effects are telling the true story: Keep mining, this is a valuable commodity. Hence, we are definitely holding bullish positions and expressing some protection via cheap puts. 
The options market has been pricing no real jump over the expected halvening dates in the at-the-money part of the market, however March upside options are priced high. This is the options market estimate that risk lies to the upside by end of march which is two months ahead of the halvening date. Previous halvenings have typically seen strong momentum to the upside 60 days prior, so this could be a function of that artifact pricing.
Source: Skew
Source: Skew
Source: Skew
Source: Skew
Bitcoin is also realizing a volatility of 52% annualized over the last month. This is quite low and there have been very few periods of lower volatility than this. We feel exposure to owning options selectively on the 1 month time frame is a prudent way of expressing interest, be it as calls or puts. Appreciation or hedging, options are cheap.
Meanwhile in Crypto Wonderland...
“Coinfloor To Delist Ethereum”
Coinfloor, the U.K.’s longest-running cryptocurrency exchange, plans to delist ethereum next month, citing an unclear future of hard forks and the need for onerous technical support for the second-biggest coin by market capitalization. The company will also delist bitcoin cash, the splinter currency founded two years ago in the aftermath of bitcoin’s heated scaling debate. Starting Jan. 3, Coinfloor will support only bitcoin, whose eleventh anniversary happens to fall on that day. The plan comes ahead of the launch of ethereum 2.0, tentatively planned for early 2020, which will begin the process of shifting the network away from the energy-consuming proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS).
“State Street To Collaborate With Gemini”
State Street Corporation has announced a new joint project in collaboration with cryptocurrency exchange and custodian Gemini Trust Company that aims to combine digital asset holdings with State Street’s back-office reporting. Per the press release, this pilot performs reporting scenarios on a user’s holdings within Gemini Custody. Initially, the project will support two cryptocurrencies “chosen for liquidity reasons,” and will consolidate the reporting of digital assets in Gemini’s custody with their traditional counterparts serviced by State Street.
“Fidelity To Expand Its Crypto Business Into Europe”
One of the world’s largest fund managers has formed a new UK entity to sell cryptocurrency services to European clients. Fidelity Digital Assets, the cryptocurrency arm of Fidelity Investments, has offered custody and trading tools to financial institutions in the US since 2018. State regulators in New York gave it a green light on November 20 this year, paving the way for sales to Wall Street investors. Fidelity’s UK entity, incorporated on December 16, will give the fund manager a platform from which to sell digital asset services to European businesses, including hedge funds and family offices. It does not currently hold any regulatory permissions.
“R3 Closes The Largest Open-account Trade Finance Trial On Corda”
R3 has closed what it’s calling the largest open-account trade finance trial ever conducted on its Corda platform. This trial included more than 70 organizations from more than 25 countries. Upwards of 340 participants from those organizations were involved and came out from sectors like financial services, information technology, telecommunications, logistics, the maritime industry, real estate, hospitality and the automotive industry. The trial tested working capital applications developed by TradeIX and focused on the receivables finance product on Marco Polo’s platform, TradeIX announced Thursday. Accounts receivables financing, also called factoring, is where a business sells account receivables to a third party at a discount in return for immediate cash payment.
Crypto Twitter Pick
Ethereum Name Service | ens.eth
The ENS ecosystem is exploding! 🚀

Just added 11 new logos to our site (https://t.co/b9CAMNPm75), bringing the total to *81 wallets & dapps*. 💪

ENS is the leading blockchain name service, w/ multi-coin support, decentralized websites, & much more: https://t.co/MjmVn9SjLs
#ENS https://t.co/XY30lOJRzM
7:51 PM - 6 Jan 2020
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
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