Blockchain Bites: JPM Coin Goes Live, Bitcoin Rallies, Stocks Falter

JPM Coin will see its first commercial use, banking executives said. Southeast Asia’s largest bank by assets, DBS, is eyeing a digital assets exchange. And bitcoin’s recent rise shows a decoupling from traditional markets, like the S&P 500.

JPM Coin
JPM Coin, the enterprise-minded digital asset stewarded by the titular global bank, will see its first transaction this week, a JPMorgan executive said. Designed for wholesale payments and faster transactions, the system is predicted to save the banking industry hundreds of millions of dollars a year. First revealed in February 2019, JPM Coin will run on Quorum, a private version of Ethereum developed by the bank but acquired by development firm ConsenSys in August. Further, the executive told CNBC the bank has created a business unit with around 100 employees called Onyx to house related projects. “We believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business,” the executive said. 

Bank’s exchange
Southeast Asia’s largest bank by assets, DBS, is apparently in the works to build a digital assets trading platform. The Singapore-based bank and financial services corporation posted – and quickly removed – a webpage detailing the DBS Digital Exchange that will offer access to “an integrated ecosystem of solutions to tap the vast potential of private markets and digital currencies.” In addition to bitcoin, bitcoin cash, ether and XRP trading services, the exchange will also offer tokenization services, offering business the opportunity to raise funds by issuing digital forms of securities and assets, per the page. The exchange will be regulated by the Monetary Authority of Singapore, the city-state’s de facto central bank.

BTC funds bail
A growing number of donors are giving crypto to bail funds, CoinDesk’s Ben Powers reports. Bail fund projects have taken in thousands of dollars in crypto donations – including major assets like BTC and ETH, as well as smaller market cap coins like BAT – since the summer, according to The Giving Block. Potential benefits include helping bail funds diversify payments streams, attract younger tech-savvy and international donors as well as tax benefits. “We expect that more people will embrace crypto as their preferred method of making donations – especially as people understand the tax benefits of giving via crypto, which are similar to those of donating conventional securities,” The Bail Project’s Chief Financial Officer Zach Herz-Roiphe said.

Volume surge
Automated market makers Curve and Uniswap traded combined volumes above $4 billion on Monday, perhaps in reaction to a recent exploit of popular DeFi protocol Harvest Finance. Daily trading volume on Uniswap leapt 1,200% to a record $2.04 billion, surpassing the previous record high notched shy of $1 billion, while decentralized exchange Curve Finance saw volumes above $2 billion. This weekend, an attacker used a flash loan – a technique that allows a trader to take on massive leverage without any downside – draining some $24 million from Harvest and triggering a bank run. “Volume on Uniswap surged, as the Harvest Finance exploiter likely ran money through the automated market maker,” Denis Vinokourov, head of the research at the London-based prime brokerage Bequant, told CoinDesk in a Telegram chat.

Powell pontificates 
Jesse Powell, crypto OG and Kraken CEO, has criticized the decentralized finance (DeFi) space, in light of several recent multimillion-dollar exploits, not the least of which affected Harvest Finance yesterday. In a tweet on Tuesday, Powell said he would “not accept” DeFi projects’ attempts at “externalizing the cost” of “hasty reckless” rollouts. In an expletive-laden tweet he admonished these breakneck coders for rushing out unaudited and uninsured projects. Despite this, CoinDesk’s Sebastian Sinclair notes, the DeFi sector is continuing to grow, having surpassed $12.45 billion in total value locked up in smart contracts on Oct. 25. (That figure dropped by about $1.15 billion after Monday’s exploit of Harvest, and now stands at $11.3 billion, according to DeFi Pulse.)

The indicators
Bitcoin is rallying, and on-chain and off-chain indicators point to a continuing trend. CoinDesk markets reporter Omkar Godbole placed bitcoin’s new yearly watermark in the context of declining daily deposits to cryptocurrency exchanges as well as a movement of coins off exchanges. 

According to Glassnode, the number of daily deposits to exchanges fell to a nine-month low of 26,889 on Monday as the total number of bitcoins held on exchanges slipped to a two-year low of 2,478,799 BTC.

These statistics, while imperfect, have traditionally pointed to a market sentiment where traders and investors are prepared to “hodl” into a rally, Godbole noted. 

A similar sentiment can be gauged by looking at futures markets, where contracts give the option for buyers to strike a buy at a predetermined price by a predetermined date. According to Godbole’s analysis, one-, three- and six-month put-call skews, which measure the cost of bearing to bullish bets are hovering near zero, an indication that some traders expect for bitcoin’s price to continue rising. 

Last week, Bloomberg analysts put out a quarterly report on predictive crypto performance, targeting a $100,000 BTC price level for 2025 and a high of $14,000 as early as this year. 

“Still in hangover mode from the 2017 rally, we don’t know what specific catalyst might launch Bitcoin to new highs, but demand vs. supply metrics remain price-positive,” the analysts write in “Bitcoin Trend, Adding Zeros.”

Among the macro factors they point to is bitcoin’s decreasing volatility compared to the Nasdaq composite, a growing correlation with gold and a likely growing market cap, in part spurred by corporate investment (like MicroStrategy and Square’s) in the cryptocurrency.

“In an unparalleled macroeconomic backdrop of rapidly increasing fiscal and monetary stimulus, limited supply stores of value such as gold and Bitcoin stand to prevail, in our view. This should be true when traditional asset classes – stocks and bonds – are overextended,” the report reads. 

A separate report by CoinDesk’s sister company Grayscale has found that more than half (55%) of U.S. investors who responded are interested in buying bitcoin in 2020. That’s up from 19% from survey responses last year.

For the short term? “The next resistance to take out is $13,800 (June 2019 high),” Patrick Heusser, a senior cryptocurrency trader at Zurich-based Crypto Broker AG told Godbole. 

Decoupling?
Bitcoin is riding at 16-month highs,  trading around $13,420 at press time. The cryptocurrency is now up 25% for the month and 87% on a year-to-date basis, CoinDesk’s Omkar Godbole reports. This comes as coronavirus scares and intermittent U.S. stimulus talks have spooked traditional markets, seen by the S&P 500’s 2% drop yesterday. “In effect, we appear to be seeing a weakening of the positive correlation between bitcoin and the S&P 500 seen since the March crash,” Godbole said. Matthew Dibb, COO of Stack Funds, agreed: “The decline in transfers to exchanges despite risk-off in equity markets is a bullish sign.”