CRYPTO MARKET UPDATE 18 June 2018

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1 CRYPTO MARKET UPDATE 18 June 218 Major crypto assets report 7-day losses with Bitcoin price down 4.7%, Ether -6.6%, Ripple -11.5%, EOS -7.4%. The mixed sentiment on the back of the bitcoin futures manipulation investigation and main networks technical updates affect the volatility, while volumes are low. SEC confirms Ethereum is not a security, ETH futures could be offered soon Ethereum may implement Casper and sharding together Bitcoin Core Version.16.1 released EOS Mainnet was halted Coinbase announces support for Ethereum Classic and officially launches Index Fund Binance receives UK exchange license and will add Euro trading support Date 18 June 218 Crypto MktCap 24H Volume $275 bn $1 bn BTC dominance 4% Research Analysts: Marina Alekseenkova Marina.Alekseenkova@nkbgroup.io David Arvay David.Arvay@nkbgroup.io This report is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. All market prices, data and other information contained in this document has been prepared from sources believed to be reliable, but we give no representation or warranty that the information is complete, accurate or current. Past performance is not a reliable indicator of future performance. Not for further distribution. Investments in cryptocurrencies associated with essential risks, including risk of losing 1% of value. Not for the distribution in countries where digital assets are recognized as illegal. *Pricing as of 11:2 GMT 18/6/218.

2 Bitcoin Ethereum Ripple Bitcoin Cash EOS Litecoin Stellar Cardano IOTA TRON Tether NEO Dash Monero Binance Coin NEM VeChain Ethereum Classic Ontology OmiseGO Qtum Zcash ICON Bytecoin Lisk Decred Zilliqa Aeternity Bytom Bitcoin Gold x % -11% -9% -9% -12% -16% -6% -11% -11% -18% -14% -17% -22% -7% -7% -5% -6% -7% -12% -14% -11% -7% -12% -11% -3% % 4% 16% 1% MARKET MOMENTUM The crypto market remains bearish. The major crypto assets lost 5-15% over the last 7 days. Bitcoin was -4.6%, Ethereum -6.6%, Ripple -11.5%, EOS -7.4%, Bitcoin Cash -1.6%. Best performers among the top- 4 crypto assets were Binance Coin (+16%), Ethereum Classic (+1%), and Bytom (+4%). Figure 1. The performance and market capitalisation of top-4 cryptocurrencies (by MktCap) % 5% 8 3% 6 4-5% -7% 1% -1% -3% 2-5% -7% MktCap, $mn 7D performance, % Source: coinmarketcap.com, as of 18 June 218 as of 11:2 BST Figure 2. Best performing digital assets* (7 days) Figure 3. MktCap of best performing digital assets* Docademic OneRoot Network GINcoin DubaiCoin Game.com Linda Divi PACcoin Karma MediShares TokenClub Binance Coin eosdac SONM SmartCash Blox Ethereum Classic Unobtanium NKN Bread 47% 35% 34% 28% 25% 22% 21% 19% 16% 16% 15% 15% 12% 11% 1% 1% 1% 9% 8% 169% Docademic OneRoot Network GINcoin DubaiCoin Game.com Linda Divi PACcoin Karma MediShares TokenClub Binance Coin eosdac SONM SmartCash Blox Ethereum Classic Unobtanium NKN Bread Source: coinmarketcap.com, *) MktCap>$1mn Source: coinmarketcap.com, *) MktCap>$1mn

3 3 Figure 4. Worst performing digital assets (7 days) Figure 5. MktCap of worst performing digital assets Cobinhood -26% Neurotoken -26% TomoChain -26% HTMLCOIN -27% Pura -27% Qbao -27% Silent Notary -27% Primecoin -27% Maker -28% QuarkChain -29% Holo -29% Eximchain -31% Oyster -32% Aurora DAO -32% Delphy -32% Skycoin -35% Centrality -36% Electrify.Asia -36% WaykiChain -36% Banca -38% Cobinhood Neurotoken TomoChain HTMLCOIN Pura Qbao Silent Notary Primecoin Maker QuarkChain Holo Eximchain Oyster Aurora DAO Delphy Skycoin Centrality Electrify.Asia WaykiChain Banca Source: coinmarketcap.com, Mkt Cap >$1mn Source: coinmarketcap.com, Mkt Cap >$1mn A number of events affected the market s performance last week. The US regulator s investigation of bitcoin futures price manipulation is still creating pressure on the market. EOS Mainnet halted last week, with a 5 hour interruption to fix a problem. US SEC confirmed ETH is not a security. Ethereum developers discuss Casper and sharding.

4 4 REGULATORY NEWS SEC confirms Ethereum is not a security, ETH futures could be offered soon The US regulator official William Hinman (head of the SEC s corporate finance division) said that transactions involving the ETH token are not subject to federal securities rules. Hinman said that it is possible for cryptocurrency to begin as a security and then transform into another type of asset. CBOE Global markets president Chris Cocannon said that Ethereum futures could soon be offered, according to Bloomberg. The SEC s clarification on ETH means that the US regulator would allow the options exchange to add Ether futures to their portfolio. CBOE launched bitcoin futures in Dec 217 and has been considering adding ETH since then. Italian authorities seized bitcoins from BitGrail wallets The Italian authorities seized bitcoins stored in the local cryptocurrency exchange BitGrail s wallets. The authorities removed the funds from the exchange s wallets following the court order by the Tribunal of Florence. The court decision was a result of a petition filed by over 3 claimants, ex-users of the exchange who lost their funds in BitGrail s hack, asserting that the exchange is bankrupt under the Italian bankruptcy law. BitGrail fell under a cyber attack in Feb 218 causing the loss of 17mn Nano (XRB) worth $187mn. The hack caused a dispute between the exchange and the Nano foundation, with them arguing about the reasons behind the hack. The Nano Foundation announced it would support a legal fund to provide all victims of the hack with equal access to representation to pursue their interests in the exchange s insolvancy. BitGrail suspended operations under the court decision. Lithuania issues cryptocurrency guidelines The Lithuanian Ministry of Finance has released comprehensive guidelines on Initial Coin Offerings, security tokens and cryptocurrency taxation as a step towards transparency and trust in the country. The document covers a wide range of regulatory aspects like taxation, accounting, AML/KYC policies as well as the Counter-Terrorist Financing laws. Guidelines clarify a specific asset class of tokens and how taxation will apply on several cryptocurrency activities. According to the Lithuanian Minister of Finance, Vilius Šapoka, Lithuania already has an exceptional regulatory advantage, Šapoka further stated that We are one of the first (countries) in Europe who have prepared comprehensive guidelines on the legal framework for ICO projects covering regulation as well as taxation and accounting. CRYPTO MARKET NEWS Ethereum developers discuss Casper and sharding The meeting held by Ethereum developers has reportedly discussed the two major updgrades of the network, Casper and sharding, which may be released together. The new proposal suggests that Casper may be released on a shard or sidechain. Earlier, the Ethereum network planned to release Casper as a smart contract separately from the sharding upgrade. Sharding, or a method when a node stores just a part of the distributed registry and relies on other nodes for the rest of information, will increase the

5 5 number of transactions that a blockchain can produce. Sharding was announced by the Ethereum team in April 218. According to V. Buterin, the launch of sharding and Casper would scale the chain up to its maximum. The rescheduling of upgrades would reduce the deposit amount from 1,5 ETH to 32 ETH. The new model would allow the developers to launch Casper without disturbing the Ethereum network; it can be developed as a separate chain and with its own rules. Bitcoin Core Version.16.1 released Bitcoin Core version.16.1 has been released with new features, various bug fixes and performance improvements. The new version removed miner block size recalling the depreciation of the blockmaxsize option for miners to limit their blocks sizes. The new version affects the wallets which are not compatible with versions prior to.16. The previous upgrade was released in February 218 and provided a full support for Segregated Witness. EOS Mainnet was halted EOS mainnet block producers reported the EOS Mainnet halted on 16/6. The 21 block producers and standby nodes reported the issue as fixed in 5 hours, during which the blockchain was pausing due to technical issues. The pausing on the network is a mechanism to avoid a hard fork when the problem is identified. The network is suspended until the problem is fixed and re-launched with all 21 block producers and nodes synchronised and continues the block production. EOS had problem with the launch as they did not have enough of a stake to activate the voting. Exchanges holding EOS users funds helped Block.one to launch the network using those funds and the network finally went live last week. There are some issues reported by Jackson Palmer and other critics of the network, including its centralization. Coinbase announces support for Ethereum Classic and officially launches Index Fund Coinbase has announced the addition of Ethereum Classic (ETC) to widen their token offer for their clients. Once ETC is integrated, which according to their blog might take a couple of months, and reaches sufficient liquidity, it will be available across the entire spectrum of Coinbase products like Coinbase Markets, Pro and Coinbase Prime as well as Coinbase Index. Coinbase is working on ETC custodial solutions. ETC was created in June 216 as a response for a major DAO hack, a fundraising vehicle for the new projects, which has lost $5 million worth of ETH. ETC is currently ranked as number 18 according to CoinMarketCap and was up almost 25% after the Coinbase announcement. After an announcement made in March this year, Coinbase s Index Fund is now officially launched, however it s not yet open to everyone. Currently, only US-resident accredited investors may participate with the minimum ticket size ranging from $25k up to $2 million. This fund will provide access to all assets listed on Coinbase. Thomson Reuters to track Top 1 Cryptocurrencies Financial data company Thomson Reuters will be tracking sentiment data of the top 1 cryptocurrencies in partnership with MarketPsych Data LLC, a company which focuses on quantitative behavioral science. Thomson Reuters new MarketPsych Indices (TRMI) will use machine learning and natural language processing to measure the sentiment across news and social media sites. TRMI monitors more than 2, global news platforms and 8 social media sites including historical data back to 29. Thomson Reuters global head of investing, Pradeep Menon, said that, Adding a cryptocurrency-focused sentiment feed to our suite of cross-asset solutions has...enabled us to provide our customers with invaluable insights that may help them make strategic investment decisions.

6 6 Tether linked to bitcoin price manipulation by a university study According to a study from the University of Texas, Tether, which is a U.S dollar pegged cryptocurrency, may have had significant impact on the market during December s massive market spike. With more than $2.2 billion of Tether issued between March 217 and January 218, Tether seems to be used both to stabilize and manipulate Bitcoin prices, according to the co-author of the research, professor John Griffin. Another major concern of critics is the question whether Tether actually holds the real dollars in reserve for each tether issued, as they claim to have even though there is no legal audit, nor any other proof. Binance receives UK exchange license and will add Euro trading support With an average of $1.5 billion daily volume, Binance will allow Euro trading to its customers within 218 from its operations in Malta. Eventually Binance aims to add more fiat currency options. In addition, the company is about to receive an exchange license from the Financial Conduct Authority to open an office in Jersey, a self-governing dependency of the United Kingdom. In an interview with Bloomberg, CEO of Binance, Changpeng Zhao said, Binance will receive an exchange license from Jersey in the Channel Islands, and plans to open an office there with as many as 1 staff. Binance is supposedly in talks with Taiwan authorities and banks regarding the possible expansion into this country.

7 CRYPTOASSETS PERFORMANCE Bitcoin stays below $7, after a major drop on 1th June. The current levels of $6,4-6,5 are supported by low volumes. The bitcoin futures pricing investigation may still affect the bitcoin performance, however the CBOE positive mood around the potential ETH futures launch may prove to be supportive. Figure 6. Bitcoin price, USD (YtD) Close price 9DMA 2DMA Momentum Volume, BTC Source: cryptocompare.com, NKB Research

8 Litecoin price moved below.15 BTC, indicating an uncertainty of market participants about the potential bitcoin price movement. Figure 7. Litecoin price, BTC/LTC (YtD),24,22,2,18,16,14,12,1,3,25 close 9DMA 2DMA,2,15, Momentum Volume Source: cryptocompare.com, NKB Research

9 Ethereum s price went below the $5 level, with 9DMA staying below 2DMA. The support level at $47 may still play a role. Ethereum looks stronger as the blockchain development goes ahead on the back of other competitors problems and delays. Figure 7. Ether price, USD (YtD) close 9DMA 2DMA 2 1 Momentum Volume Source: cryptocompare.com, NKB Research

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