January began with BTC at $3,745 and closed at $3,435. ETH Constantinople fork (upgrade) revealed a flaw just before launch and was delayed. The upgrade is scheduled for the end of next month and has now become a risk factor to consider. Anything short of a perfect release will most likely negatively affect the whole industry.
As for positive achievements the DX.Exchange, which has offices in Estonia and Israel, will offer digital tokens based on shares of 10 Nasdaq-listed companies with plans to expand to the New York Stock Exchange as well as in Tokyo and Hong Kong. Each digital security is backed by one regular share and holders will be entitled to the same cash dividends, even though the companies themselves aren’t involved. This will be done through the Ethereum network. Facebook rolled out their own stablecoin that is pegged to the dollar and will first surface in India through WhatsApp.
Continuing dialog from past letters about Institutions, Circle revealed some numbers that we interpret as institutions who want to get in have already done so. What we mean is that there are ways to get in and trade from an institutional standpoint and it’s already happening. That a sudden wave of institutional flow that will push prices up is not going to happen anytime soon and likely not at all. Here are the numbers from Circles OTC Desk, traded $24 billion notional in 2018 with 600 different institutions across 36 different crypto assets. 600 is a lot of different institutions and 36 is a wide range of crypto assets.
As crypto lost growth interest in 2018 we see blockchain losing growth interest in 2019. We see the next season of interest built in the use, application, and utility of networks. Japan may beat the US in creating the first Bitcoin ETF however than may not be tradeable until 2020 or beyond. The speculation that Russia will move some of its reserves into Bitcoin as a way to avoid new U.S. sanctions we consider false news.
Bitcoin reachable nodes crossed over 10k mid-January from a slump of 9k, the peak was 12.5k in Dec'17. This is a sign of growth and we will continue to monitor this. There is a theory that Bitcoin is more inversely correlated to the dollar and should this be so watch for it to be a leading indicator.
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Digital Asset Investment Management is a licensed Registered Investment Adviser specializing in Bitcoin for 401k's, IRA's and Traditional Brokerage accounts. Learn more at www.daim.io