Crypto’s Summer Time Sadness, Paul Johnson, Guest MINDSETTER™

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Saturday, October 20, 2018

Paul Johnson, Guest MINDSETTER™

It was not a hot summer for crypto asset pricing this year, although that may have been lost on venture capitalists. VC activity in blockchain-related companies has increased 280% so far this year when compared to 2017. Many of these deals took place in Q3 2018.

There are now only 15 coins/tokens with market caps greater than $1 billion, down from the 31 on December 31, 2017, 19 coins/tokens at the end of March 2018, and 18 coins/tokens at the end of June 2018. A market-weighted average of the 15 billion-dollar coins/tokens increased 2.7% in the quarter, although, interestingly, the average decline was -14.5%. *

Bitcoin (BTC) still dominates the crypto asset market and now represents 58% of the total crypto market capitalization, up from 41% on December 31, 2017, 51% on March 31, 2018, and 40% on June 30, 2018. BTC increased 11.5% in Q3 2018.

Stellar was one of the three-billion-dollar coins/tokens to rise in value during the quarter, increasing 46.9%, ending the quarter at $0.26 per coin. It is also interesting to note that XRP (Ripple) enjoyed a 30.4% gain during the quarter.

The worst performing coin/token in the billion-dollar club was TRON, down 38.3% during the quarter. TRON generated a substantial amount of hype in 2017 and, despite the recent significant decline, still maintains a market cap of $1.5 billion. The second worse performing coin/token in the billion-dollar club was IOTA, down 38.2% in the quarter.

Billion-dollar coins outperformed billion-dollar tokens, with coins increasing 5.4% in the quarter, while tokens declined approximately 2.7%, both on a market-weighted basis.

A few additional statistics to note. The total market cap for the 15 billion-dollar coins/tokens was $203.3 billion at the end of the second quarter, but only 190.3 billion at the end of the third quarter, representing a loss of $13 billion during the three months ending in September.

The top three coins/tokens -- BTC, ETH (Ethereum) and XRP -- accounted for 80.2% of the crypto market value at the end of September 2018. This figure is up from the 76% at the end of June 2018, 76% at the end of March 2018, and 72% at the end of December 2017. Bitcoin continues to dominate the overall market and now represents approximately 58% of the overall crypto market. Ethereum’s share of the market value fell 8.5 percentage points to 10.5%, while Ripple gained more than 2 percentage points in its share of the market’s aggregate capitalization. The top 10 coins/tokens accounted for almost 94% of the market value at the end of September 2018, slightly higher the 91% they held at the end of June 2018. The crypto market continues to be highly concentrated (and got more so in the third quarter).

On a market-weighted basis the top 25 ERC20 tokens decreased 36.2% in the quarter, while the average return was -41%.

The total market value of the top 25 ERC20 tokens was $8.5 billion at the end of September, compared with $17.6 billion at the end of December, $14.0 billion at the end of March, and $7.7 billion at the end of June. The average market cap of the top 25 ERC20 tokens at the end of September was $340.1 million with a median value of $248.4 million, compared to an average market cap of $703.0 million and a median value of $308 million at the end of December, an average value of $560 million with a median value of $286.4 million at the end of March, and an average market cap of $297.5 million with a median value of $165.9 million at the end of June.

It is also interested to note that several stablecoins began trading in the quarter, including the Winklevoss brother’s Gemini Dollar (GUSD), Paxos Standard (PAX), and Goldman-backed Circle USD Coin (USDC).

Perhaps the autumn and winter months of the year will be kinder to the crypto market, although it feels like the leading coins/tokens will continue moving sideways until there is more clarity on the future of the emerging asset class.

Thanks to Cole Kennelly for his assistance in collecting and analyzing the data referenced above.

 

{image_2}Paul Johnson is Senior Advisor at Harbor Peak LLC.

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