Bitcoin finally fell below the $8,000 level but, interestingly, the immediate follow through was somewhat limited to the low $7,900 level. Given that pressure to drop below 8k has been building for some time, one would have expected the selling pressure to drive prices even lower. Next week's CME futures expiration has also resulted in a narrowing of the contango delta but the options skew points to a significant pick up in sentiment post December strikes and, in particular, March 2020 levels. This, together with the recent flattening of the hashrate indicates that market participants are positioning for a higher squeeze. However, Ethereum is due to undergo a planned hard fork in early December and miners will be bracing themselves for the difficulty time bomb.
On that note, the Ethereum network is producing less ETH than a few weeks ago, with block rewards for miners down from around 13,500 ETH a day to 12,500. Data from Etherscan suggests this drop is not a result of more uncles (orphans), but because the block reward itself has fallen from 13,000 to 11,800. Block times are also increasing. If this is in fact linked to the difficulty time bomb, it would suggest that there will be no delay in activation and, in turn, put pressure on miners to support the transition to Ethereum 2.0 or risk seeing their issuance fall more than necessary.
All this should prove supportive for the Classic chain, especially as it is due to undergo its own hard fork which focuses on its interoperability with Ethereum. Also of note, active addresses (the sum count of unique addresses that were active in the network that day) for Ethereum Classic (ETC) is actually ahead of Ethereum and only trails Bitcoin (BTC).
In other news, Bitcoin mining giant Canaan Creative has raised just $90 million in its initial public offering (IPO) — 75% less than they expected. According to Bloomberg, which quoted filings from United States regulator, the Securities and Exchange Commission (SEC) on Nov. 20, Canaan sold 10,000,000 shares for $9 each. A major setback came last week when Canaan lost its biggest partner bank, Credit Suisse. As a result, the size of the IPO was dramatically reduced: documents submitted at the time contained a projected $100 million goal and did not mention Credit Suisse. According to Bloomberg, citing “people familiar with the matter,” Credit Suisse “was concerned whether the offering could secure sufficient orders.”
Elsewhere, the Monetary Authority of Singapore (MAS), published a consultation paper on Wednesday, seeking to green-light what it calls "payment token derivatives" for listing and trading on "approved exchanges" in the country under its Securities and Futures Act (SFA). The proposal comes as a response to demand from international institutional investors for regulated products to be able to hedge their exposure to payment tokens such as bitcoin (BTC) and ether (ETH), the agency said. According to MAS, Singapore has four approved exchanges, namely Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited.
Thank you for reading,
The BeQuant’s Analytics team