China Lands First Blow in Global Blockchain Wars

As lawmakers jockey to chastise technology leaders like Facebook’s Mark Zuckerberg (for the dastardly future crime of earning potential profits by providing a payment service to millions of people), America’s greatest economic foe, China, has quietly built a substantial lead in the race for leadership in technology’s newest battleground: Blockchain Technology.

This was an exciting week for cryptocurrency holders. Bitcoin prices surged as much as 40% Friday after China’s Xi Jinping urged his fellow citizens to “seize the opportunity” afforded by blockchain technology. The Chinese leader’s statements on blockchain are believed to be his first in-depth remarks on the technology. His comments stressed the importance of stepping-up research on the standardization of blockchain to increase China’s influence and rule-making power in the global arena.

2019 has been a busy year for China. While the United States bemused itself with bipartisan bickering, China quietly pursued global leadership in blockchain technology. During the year, China successfully moved nearly their entire population off of paper money and onto digital currency solutions. This change affected Chinese citizens of all economic levels. Even panhandlers on the streets of Beijing no longer solicit coins and bills, they instead display their QR code for donations to their digital bank accounts.

China’s central bank also announced a verification system this week called the Certification of FinTech Products that will certify 11 types of financial technology hardware and software widely used for digital payments and blockchain services. This initiative follows a year-long public education campaign where China’s central bank published and disseminated pamphlets and other educational materials heralding the benefits of digital currencies and explaining the capabilities of blockchain technology to streamline commerce and fight corruption.

China’s intention of dominating this new technology has been made clear – first with covert foundational initiatives and now overtly with President Xi’s announcements and the sponsoring of these programs. This is all advantageous for a command economy like China, which can now recapture lost innovation through streamlined implementation, a phenomenon now materializing. Washington’s struggles with endless equivocation and ineffectiveness reflects the Western world’s general indecisiveness, allowing China to establish itself as the global blockchain technology and cryptocurrency leader.

Blockchain technology stands poised to rebuild the way that data, digital assets and currencies move around the globe. The global financial landscape will be restructured to reflect the immutability and instant transferability of blockchain-based assets and currencies. Gone are the days of waiting for third-party transaction validations. Goldman Sachs, Fidelity, IBM, The Bank of England, The Bank of Japan, the ECB, the Federal Reserve and the IMF have all commented on the inevitability of this changing paradigm, but no operator has gone as far as the Bank of China to position itself as a leader for this coming reality.

The Chinese government has moved forward with formal policy to ready itself and its population for a digital economy, passing a new law (effective January 1st) aimed at “facilitating the development of the cryptography business and ensuring the security of cyberspace and information”. Among other things, this law also makes it illegal to falsely claim that blockchain technology is fraudulent. The new legislation, and indeed President Xi’s comments, were anticipated by many as China readies the country for the launch of its state-backed cryptocurrency – which is expected as soon as December.

When we finally see the inner workings of China’s national cryptocurrency, we can be certain that its blockchain architecture will likely be a long way from the decentralized, trust-less principles upon which Bitcoin, Ethereum and other public blockchains are based.

China’s interest in the space appears to have had a positive impact on already established cryptocurrencies like Bitcoin, by adding global legitimacy to the cryptocurrency industry overall. Only time will tell the true cost of America’s war on its innovators. China has taken the first steps toward dominating the future of the internet and of finance. The first shots in the “Blockchain Wars” have been fired and America barely noticed.

John Sarson

Managing Partner & CIO

Institutional Cryptocurrency Adoption Grows as CME Bitcoin Futures See Record Growth.

CME Group Inc, the world’s largest futures exchange, continues to see record growth in Bitcoin Futures.

According to the recently released CME Report, greater Bitcoin market adoption led to robust volume of 5,534 contracts traded per day in Q3, +10% vs. Q3 2018 and higher than all previous quarters except Q2 2019.

Importantly, the report noted, institutional flow remained strong with 454 new accounts added, compared with 231 added in Q3 2018 (+97% growth).

CME noted that this means Bitcoin futures can provide right-sized liquidity when your need it, allowing market participants globally to efficiently hedge bitcoin risk on a trusted platform.

These were some of the notable highlights from CME’s report:

  • Average daily volume (ADV) was 27,670 equivalent bitcoin or ~$289M notional value
  • Record OI of 6,128 contracts (30,640 equivalent bitcoin) achieved on July 1
  • Record number of LOIH, or entities that hold 25+ BTC, hit a record high of 56 on July 9.
  • ~50% of BTC volume was traded outside the U.S., with ~26% coming from APAC and ~21% from EMEA.
  • 3,400+ unique, active accounts have traded since launch

*CME Reports that’s data is accurate as of 09/30/2019.

These New IRS Tax Guidelines Are a Must-Read for Cryptocurrency Investors

The Internal Revenue Service continued its discovery and adoption of cryptocurrencies and digital assets into the United States financial system by issuing long awaited updates on the treatment of “hard forks” and “air drops.”

With the release of IRS Ruling 2019-4, the agency provides guidance on how cryptocurrency holders can account for their digital asset holdings.

Read the full IRS Guidance (Rul. 2019-4) here.

TREND SPOTTING: Tokenized Investment Funds

Evil Ratings CBS
Cointelegraph recently reported the proposed launch of a $25 Million ‘tokenized’ movie venture fund led by iconic American actor Wesley Snipes. This is the first blockchain project launched by Snipes, who is best known for his roles in Demolition Man, The Blade Trilogy, Passenger 57 and other lauded high-budget action films. The development fund focuses on projects produced directly by Snipes and his production studio, Maandi House, so we classify this as a rare yet appropriate use of celebrity endorsement.

This is not the first venture fund to be tokenized. Boston-based CosimoX holds the bragging rights for the first tokenized venture fund.

Tokenization reduces the administrative costs associated with on-boarding many small individual investors. It also streamlines the distribution of fund proceeds. Tokenized funds can appeal to large groups of people that share a specific common trait (in this example fans of Mr. Snipes), but may not be sufficiently affluent to stroke the six-figure checks traditionally associated with movie venture funds.

Once tokenized on a blockchain, unlimited number of investors can participate in the funding of the world’s next great action movie….

Wait there is more: Tokenized funds, depending on the regulations of the country in which they are domiciled, can offer investors immediately open secondary markets – creating a nice liquidity feature for investors where one previously did not exist.

At Sarson Funds, we predict that tokenization of investment funds will continue to grow in popularity, because of the cost-savings and investor base expanding benefits offered to fund sponsors.

Sadly, US-based operators (and investors) stand poised to lose out on the growth of the Tokenization industry as funds like Mr. Snipes’ select countries like Liechtenstein for their progressive blockchain regulations.

Holochain gets HOT: Blockchain Momentum Update

What Worked

  • Doge (DOGE) has continued it’s run from last week reaching a height of 170% gain over 8 days before a pullback.

  • Holochain (HOT) is up 56% this week as one of the cheapest coins relative to Bitcoin on Binance.

Upcoming Catalysts

  • LTC- Global Litecoin Summit will be taking place in San Francisco on September 14th. Charlie Lee will be in attendance and speaking at the event.

  • ZCL- Anonymous Bitcoin will be forked from Zclassic on September 10th. Holders of Zclassic at the time of the fork will receive a 2:1 ratio of Anonymous Bitcoin.

  • WAVES- Waves decentralized exchange will be the next project to enable smart contracts on their platform September 10th.

  • Goldman Sachs Trading Desk- Goldman Sachs noted that the development of a Cryptocurrency Trading Desk was based on fake news. However, they are focusing on custody solutions for cryptocurrencies.

  • Mt Gox Bitcoin Whale- There has been a Bitcoin wallet with $844 Million in USD moving funds to exchanges. $100 Million worth of Bitcoin was moved to Binance and Bitfinex over a 10-day period before this week’s selloff occurred.

  • Volkswagen Using Iota DAG Technology- Volkswagen will be releasing a digital carpass in Q1 of 2019 to track data for evaluating car performance using Iota’s Tangle technology.

BTC Market Activity

We saw 4 rejections in Bitcoin from the $7400 price level before massive selling pressure on September 5th caused a 15% decline in price. This rapid selling occurred over a 24-hour period with Bitcoin finding support at $6300. The drop came after Bitcoin had been grinding higher over a 2-week period establishing that sellers are still in control almost 9 months into this bear market. Shorts on Bitfinex are back up near all-time highs after an initial jump of 50% last Saturday. The movement of over $100 Million in Bitcoin to exchanges from a Mt Gox wallet holding $844 Million caused concern days before the sell-off occurred. Focus is shifting back to the $5700-$6000 support zone with concerns Bitcoin could move into that range for a 7th retest in the last 8 months.

Technical Indicators

  • DOGE– Doge had a major breakout this week from a long-term down-sloping trendline. This 170% run-up occurred after it was listed on yahoo finance. It is worth noting that Doge has remained strong during the bitcoin sell-off this week.

  • XRP- Ripple has broken down from a symmetrical triangle that was forming on the 4-hr timeframe. Long-term support was tested for a 2nd time and held at 25 cents. 33 cents is the next level of resistance we are watching.

  • ADA- Cardano was rejected from the 10.8 cent price level 4 times before testing support at 8.5 cents for a 3rd time. It is living below this support now and if it fails to break back above this level, we are looking at the final line of support at 7.8 cents. There is the possibility that a double bottom is forming on the 4-hr time frame. A break above 9 cents would confirm this.

    #career #consulting

XET and Electroneum in Focus: Blockchain Momentum Latest.

What Worked

Etranl Token (XET) ran up 941% this week. The coin is looking to be the lowest cost solution in overseas remittance.

Electroneum (ETN) powered upward 170% this week after a successful rollout of its mobile payment app with supposedly 1.1 million registered users.

Upcoming Catalysts

  • ADA– Kraken will be listing Cardano today (along with QTUM)
  • BTC – Today Bitcoin futures contracts on the CME expire
  • DOGE– Dogecoin will have a fork named Dogethereum (DOGX) on September 30th.
  • XMR – Monero may be releasing their bullet-proof protocol September 30th to replace their Range of Proof. The protocol is implementing zero-knowledge proof (ZK Snarks)
  • Ethereum Gov’t Bonds – BTCManager.com reports that the Austrian government is auctioning €1.15 Billion worth of bonds on the Ethereum blockchain.
  • Ethereum Derivatives – LedgerX is looking to provide derivatives for Ethereum. They currently provide Bitcoin derivatives and may have the Ether derivatives as soon as October 2018

BTC Market Activity

Bitcoin has been stable this week between $6,400 and $6,800. The $6,800 resistance is one that we’ve monitored in the past. Overcoming this resistance may open up a rally per Bitcoin’s volume profile. This was what happened earlier in the month as Bitcoin rallied up to $7,400. Typically, we’ve seen higher price action as Bitcoin CME Futures expire so this weekend may have a spike in volatility.

#ETN #Kraken #XET #Electroneum

ZRX Coinbase Debut: Blockchain Momentum Latest.

What Worked

  • Havven (HAV)- This stable coin is up 59% this week as rumors about tether spread.

  • 0x (ZRX)- 0x has been added to Coinbase and is up over 20% in the last 24 hours.

Upcoming Catalysts

  • ETH- Ethereum’s Constantinople hard-fork will be conducted on October 14th. This will make the network more efficient and reduce the mining reward from 3 ETH per block to 1.

  • ZRX- Coinbase Pro has listed 0x, however, only deposits are available for now. Trading will start sometime in the next 2 days.

  • CBOE Futures Expiration- October 17th is the expiration date of CBOE futures contracts. Typically, Bitcoin see’s volatility on or around their expiration dates.

  • Bitfinex and Tether problems- Bitfinex has suspended all fiat deposits for one week. There have been rumors about banking issues with speculation that they may be insolvent.

  • Coinbase’s Index Fund – Coinbase has announced that the index fund they launched earlier this year will be shutting down. They have instead decided to focus on retail investors through a new product they are offering called Coinbase Bundle.

BTC Market Activity

We saw a crypto market sell-off this week as Bitcoin’s price broke down after forming an equilibrium pattern over the last month. Fortunately, long-term support has held at $6000 for now. Complications with Bitfinex have likely left investors shaken as rumors of banking problems and insolvency spread. The $5800-$6100 range has been tested many times this year as the bear market persists. Each time this support zone is tested it becomes weaker until price eventually breaks below it. While this has yet to happen for Bitcoin, it is still certainly possible if there is significant follow through from bears. Until Bitcoin breaks below this level, we are staying engaged and waiting for the market to tell us to exit.

We are staying optimistic with positive news coming up in November from The Intercontinental Exchange’s Bakkt project. This will further spread cryptocurrency adoption as Starbucks, Boston Consulting Group and Microsoft jump onboard.

Bitcoin’s fundamentals are stronger than they have ever been with adoption and institutional pipelines continuing to develop. Regardless of Bitcoin’s price action this year, we are confident the future is bright for cryptocurrencies overall.

Technical Indicators

The crypto market has had an interesting week as many altcoins saw gains dry up when Bitcoin made its move lower. Overall, many alts still have good set-ups with support holding for many projects. If Bitcoin makes another move lower, we could see a market wide sell off pushing altcoins below support levels and back into a free fall.

DCR- Decred moved this week from $37 to $46 but retraced the entire move after Bitcoin sold off. However, it continues to make higher lows keeping its trend intact. This is the same situation as ICX and AION mentioned last week. These set-ups remain valid until support fails which would likely be caused by a move to the down side in Bitcoin.

SUB – Substratum is one of many lower cap altcoins that have fully retraced their moves in 2017 relative to both BTC and USD prices. This retrace means that accumulation can begin again with the start of a new market cycle after Bitcoins lowest point has been confirmed.

#zrx #coinbase #HAV #altcoins

Decred (DCR) Sparks Interest: Blockchain Momentum Latest

What Worked

  • Odyssey r(OCN) an up 37.92% this week as the market heated up.

  • Decred (DCR) spiked a little over 6% in intraday trading as it got listed on KuCoin.

Upcoming Catalysts

  • WGR – Wagerr just started “direct-chain” betting. The mainnet fork allows users to place bets against the chain, with the chain burning and minting coins as require

  • BTG – Bitcoin Gold will be delisted from Bittrex today after details of an $18 million hack from May emerged this week.

  • BTC – Morgan Stanley is looking into jumping into the Bitcoin derivatives market.

  • Goldman Sachs Trading Desk- Goldman Sachs noted that the development of a Cryptocurrency Trading Desk was based on fake news. However, they are focusing on custody solutions for cryptocurrencies. UPDATE: The CFO of Goldman Sachs clarified that there is still ongoing development of a cryptocurrency trading desk.

  • OKEx Founder – The founder of the number #2 cryptocurrency exchange by adjusted volume was questioned by the Shanghai authorities about potential fraud in the

BTC Market Activity

Bitcoin reaching the bottom of a triangle formation that started at the peak of bitcoin in December 2017. The end of this pattern may see a surge in the coin’s volatility. Bitcoin’s fundamentals suggest that with bitcoin still seeing unusually high, normalized, NVT, the coin is likely to depreciate through $6,200 before holding steady in the $4,000 range. However, our analysis of trading activity has found that there is a “buy wall” of orders at the $6,000 level determined to keep Bitcoin’s price above this resistance line. This buy wall on bitcoin’s order books may signify a buying pressure that could spark a bitcoin rally as selling pressure wanes.

Technical Indicators

  • ADA, ADX, BTC, DCR, and XRP – On Wednesday, prior to the small rally in the cryptocurrency markets, we found that Cardano (ADA), AdEx (ADX), bitcoin (BTC), Decred (DCR) and Ripple (XRP) were all developing accumulation patterns. These trades were timed welled as the alt-coins markets soon rallied with bitcoin and Ethereum.

    #decred #odyssey #bitcoin #cryptocurrency

Boston area Digital Asset Discovery: 12.13.18 4pm-6pm

BOSTON AREA FINANCIAL ADVISORS AND INVESTMENT PROFESSIONALS, JOIN US FOR AN INTERACTIVE DISCUSSION ON CRYPTOCURRENCIES AND DIGITAL ASSETS.

When: Thursday December 13th, 2018 | 4pm-6pm

Where: SarsonFunds’ Office | 132 Chief Justice Cushing Hwy, Cohasset, MA 02025

RSVP Here

Gain insights on navigating client questions and developing adoption strategies for this growing asset class into client portfolios.

This discussion aims to clarify the opportunities in the digital asset market for investment advisors and their clients. Topics will include:

  • Digital asset security

  • Cryptocurrency markets

  • Future of cryptocurrencies

Wall Street is rapidly adopting digital assets into their universe. Goldman Sachs, Morgan Stanley, and the NASDAQ have dedicated resources into building a robust Wall Street-grade infrastructure for the mass adoption of digital asset investing. Don’t delay in planning on how to effectively incorporate cryptocurrencies into your strategy.