CRYPTO MARKET UPDATE 6 August 2018

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1 CRYPTO MARKET UPDATE 6 August 218 Bitcoin has been in a downward trend since last week correcting from over $82 to below $7. Bitcoin s dominance continued to appreciate slightly then declined from 47.5% last week to 47.3%. Most of the token prices corrected down following Bitcoin. Best performers among top-4 crypto were Ethereum Classic (2%), Binance Coin (1%). Worst performing top-4 assets were Zilliqa (-22%), Bitcoin Gold (-21%), Stellar (-21%), Lisk (-21%). Coinbase Custody announces plans for 4 digital assets and adding GBP pairs Indian State partners with Mahindra to build blockchain district A crypto mining company raised $32.5m via IPO on LSE SmartDrops - benefits: discussions around Airdrops continue SEC subpoenas Long Blockchain The Philippines is close to issuing new crypto regulation potential JP Morgan Chase s Jamie Dimon comments on blockchain Date 6 August 218 Crypto MktCap 24H Volume $254 bn $11 bn BTC dominance 47.3% 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 8:5 AM UCT 6/8/218.

2 2 MARKET MOMENTUM The market sentiment was corrective over the past seven days after Bitcoin s climb over the previous 2 weeks. The best performers among the top-4 crypto assets were Ethereum Classic (+2%) and Binance Coin (+1%). Bitcoin was down 14%, Ethereum 11%, Bitcoin Cash 15%, while Zilliqa (-22%), Bitcoin Gold (-21%), Stellar (-21%), OmiseGo (-21%) lost the most. Figure 1. The performance and market capitalisation of top-4 cryptocurrencies (by MktCap) 14, 12, 12,557 1% 1, 5% 8, 6, 4, 2, -14% -11% -5% -15% -14% 41,48 16,833 12,29 6,359-21% -1% -18% -1% % -2% -13% 2% -17% -13% 1% -17% -9% -15% -21% % -15% -15% -22% -21% -19% -21% -17% -19% -18% -14% 4,458 4,327 3,389 2,486 2,439 1,946 1,875 1,788 1,774 1,696 1,36 1,299 1, Bitcoin Ethereum XRP Bitcoin Cash EOS Stellar Litecoin Cardano IOTA Tether TRON Monero Ethereum Classic NEO Dash Binance Coin NEM Tezos Zcash OmiseGO VeChain Qtum x Zilliqa Lisk Bytecoin Bitcoin Gold BitShares Decred Aeternity Maker MktCap, $mn 7D performance, % % -5% -1% Source: coinmarketcap.com, as of 6 August 218 as of 8:5 AM UCT Figure 2. Best performing digital assets* (7 days) Figure 3. MktCap of best performing digital assets* Metaverse ETP Ravencoin MOAC ODEM Iconomi Peercoin Ethereum Classic Aurora Binance Coin TrueUSD Tether Hshare Holo Dai bitcny PRIZM Cube DEW BnkToTheFuture % % -2% -3% -3% -4% -5% 5% 3% 2% 2% 1% % % % 24% 21% 17% 16% Metaverse ETP Ravencoin MOAC ODEM Iconomi Peercoin Ethereum Classic Aurora Binance Coin TrueUSD Tether Hshare Holo Dai bitcny PRIZM Cube DEW BnkToTheFuture Source: coinmarketcap.com, *) MktCap>=$4m Source: coinmarketcap.com, *) MktCap>=$4m

3 3 Figure 4. Worst performing digital assets (7 days) Figure 5. MktCap of worst performing digital assets Ontology Waves PIVX SALT Stratis ICON Neblio iexec RLC Vertcoin Skycoin Pundi X Loopring Elastos Waltonchain Ethos Byteball Bytes Wanchain QuarkChain Mithril Scry.info -29% -3% -3% -3% -3% -3% -31% -32% -32% -33% -34% -35% -35% -35% -35% -35% -38% -39% -41% -43% Ontology Waves PIVX SALT Stratis ICON Neblio iexec RLC Vertcoin Skycoin Pundi X Loopring Elastos Waltonchain Ethos Byteball Bytes Wanchain QuarkChain Mithril Scry.info Source: coinmarketcap.com, Mkt Cap >=$4m Source: coinmarketcap.com, Mkt Cap >=$4m A number of events affected the market s performance last week. The newsflow around regulation was mixed, with some negative news coming from the U.S. SEC, and news on more regulatory framework coming from Asia The correction week in BTC and other crypto was mostly a technical correction, in our view.

4 4 REGULATORY NEWS Indian State partners with Mahindra to build blockchain district The Indian Telangana state government is planning to build a district within the state capital dedicated to blockchain startups with Tech Mahindra. The IT department of the Telangana state government signed a memorandum of understanding with Mahindra to build the country s first blockchain district that will be located inside Hyderabad, the state s capital. The state government will be responsible for buildings and infrastructure while Tech Mahindra will offer expertise focused on the blockchain ecosystem and technological skills. Tech Mahindra is working on developing a blockchain platform tailor-made for startups in the country s Eleven1 protocol. SEC subpoenas Long Blockchain The SEC subpoenas Long Blockchain, the beverage maker. following a claimed blockchain pivot. The firm received the subpoena on 1th July with the SEC seeking the production of certain documents. The firm delisted from the Nasdaq stock exchange after losing an appeal over the decision and a drop in its stock. The company, which was named Long Island Iced tea before the pivot, is being accused via a series of public statements designed to mislead investors and to take advantage of general investor interest in bitcoin and blockchain technology. Similar subpoenas were received by Riot Blockchain last year. The Philippines is close to issuing a new crypto regulation The Philippines is close to approving a new regulation governing ICO. The country s SEC published draft rules governing ICOs and now collects feedstock before those rule come into effect. The regulation assumes that all tokens issued in all ICOs conducted in the Philippines are securities by default unless the issuers can prove otherwise. The regulator announced that most ICOs conducted in the Philippines have argued that their tokens were not securities and should not be governed by the SEC. However, the regulator believes it would be dangerous to let investors make the judgement over the matter as they do not have sufficient resources to identify which ICOs might be scams. Unde the regulation, companies registered in the Philippines and wishing to make a token sale would have to submit the initial assessment application to the SEC at least 9 days ahead of the issuance. The application must contain the review of the ICO proposal, its credibility and the legal opinion from an independent third party to justify it is not a security. South Korea plans to end tax benefits for Crypto Exchanges The South Korean government has announced a new set of laws, which will end major tax benefits for cryptocurrency exchanges. Under the amended proposals, cryptocurrency exchanges will no longer be eligible for income and corporate tax deductions. In the official statement, government authorities wrote, from next year, virtual currency handling businesses will be excluded from the industries eligible for the tax reduction for SMEs (small and medium-sized enterprises). Under the current tax exemption rules, income tax and corporation tax are reduced by 5% to 1% for 5 years for business startups, SMEs and venture companies.

5 5 The SEC may delay its decision on Bitcoin ETF proposal to Q1 219 In a twitter thread, legal expert Jake Chervinsky clears up some of the initial confusion around the VanEck/SolidX Bitcoin ETF proposal. According to Chervinsky, the SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed Bitcoin ETF until March 4th, 219. Chervisnky added further that he can t imagine the SEC will approve the first ever bitcoin ETF without taking all the time allowed by law. CRYPTO MARKET NEWS SmartDrops benefits: discussions around Airdrops continue The article by David Johnston & team, supported by CoinDesk, presents a view on SmartDrops, where projects targeting a large network by distributing tokens to everybody with an ethereum address should use a more targeted approach. In 217, OmiseGo used an airdrop of its OMG tokens to expand its community. As a result, over 46, people with ETH addresses and ETH balances over ETH.1 received OMG, thus creating interest in the platform. Airdrops help projects to fast-track community growth, raise brand awareness and incentivize early adopters, thus increasing network effect. Projects have an incentive to give tokens to as many users as possible in order to show exchanges the high number of wallets. Examples of Dfinity and Polymath have won praise for their smart approach. Polymath rewarded early users for joining their Telegram channel, for providing ETH wallet address and for filing out a short survey about themselves. As a result Polymath gained over 4, members in their Telegram community. Dfinity announced its plan to airdrop $35m worth of tokens to community members that passed a KYC and AML verification process. Quantstamp used their proof of care campaign to incentivize users based on their engagement, community involvment and wallet tracking algorithm. The general advise to projects using airdrops is to reward users aligned with the project values, incentivize milestone-based distributions,include proof of identity options for receivers, and carefully select the recipients, allowing good incentives for the right audience. A crypto mining company raised $32.5m via IPO on LSE UK-based Argo Mining (LSE:ARB) has raised GBP 25m ($32.5m) via IPO on LSE. The company provides accessible crypto mining via a subscription service. This is the first crypto company listed on LSE. The company sold c.156m shares accounting for 53.2% of its issued share capital at a price of GBP.16, that provides the market capitalisation of GBP 47m ($61.2m). The company received an approval from the UK Listing Authority in May. It released its crypto mining subscription services in June 218. Argo offers its users three packages depending on the capacity of mining power provided. It supports ETH, ZEC, ETC and BTG. According to CoinDesk, all packages are sold out. Argo wants to be the Amazon Web Service of crypto. According to Coindesk, the market leading crypto mining company Bitmain is planning a pre-ipo funding round and then will go public, Canaan Creative and Ebang Communication have both filed IPO applications with the Hong Kong Stock Exchange.

6 6 JP Morgan Chase s Jamie Dimon coments on blockchain potential Mr Dimon shied away from commenting on cryptocurrency, however he said that fiat payment apps are the biggest potential disruption to our buiness in his interview to HBR. The blockchain technology is real and JP Morgan Chase will use it for a whole lot of things. Bitmain $1.1 billion in profit in Q1 218 China-based cryptocurrency mining giant Bitmain reportedly earned $1.1 billion in profits in Q1 218 compared to a net profit of $1.2 billion for all of 217. The company controls a significant amount of bitcoin and bitcoin cash hash rate, and sells mining hardware. Bitmain expects to make $2 to $3 billion in profit for the 218 fiscal year. The total value of all bitcoin mined in Q1 218 was $1.3 billion. The company is also in the final stages of preparing for IPO on the Hong Kong stock exchange (HKEX), the date of the Bitmain s listing has yet to be announced. Galaxy Digital to begin trading on Toronto Stock Exchange Cryptocurrency bank Galaxy Digital LP began trading on Canada s TSX as of 1st of August. The New York-based firm completed the Reverse Take Over (RTO) of an inactive Canadian shell company earlier in January 218. According to ex-fortress fund manager and Founder of Galaxy, Mike Novogratz, the whole process took a frustrating 8 months. As we reported last week, the company lost $134 million for Q Galaxy Digital has had a pretty rough start of trading, when stock started trading at $2.75 CAD and closed below $2 CAD at $1.92 CAD later that day. Coinbase Custody announces plans for 4 digital assets and adding GBP pairs Coinbase Custody has announced its expansion in terms of custodial services for institutional clients. Among the assets under consideration are Ripple, EOS, Monero, VeChain, Cardano, Bitcoin Gold, and Telegram. According to Sam McIngvale, Coinbase Custody product lead, all of these assets are only being considered by Custody at this time, and this announcement has no bearing on trading-based products. In the very same week, Coinbase announced adding British Pound support, enabling their customers to deposit, buy, sell and withdraw fiat via their UK bank accounts. UK banks have been conservative in terms of working with crypto businesses and we re proud to be one of the first companies to get access to domestic banking, the CEO of Coinbase UK, Zheeshan Feroz said. Binance acquires annonymous mobile wallet for Ethereum tokens The leading cryptocurrency exchange Binance has acquired the anonymous and open-source mobile application Trust Wallet which is capable of storing more than 2, digital assets. Changpeng Zhao, CEO of Binance, commented on the acquisition of Trust Wallet, as follows: Wallets are the most fundamental interface to the crypto economy, and a secure and easy-to-use wallet is key to proliferate the adoption of cryptocurrencies. He further added that Binance want to keep Trust Wallet as an independent brand and product.

7 7 CRYPTOASSETS PERFORMANCE Bitcoin price dropped 14% in a week, now remaining at $7,. The correction may continue and reach more affordable levels for buyers, as a lot of technical trading comes through BTC. Figure 6. Bitcoin price, USD (YtD) Close price 9DMA 2DMA Momentum 1 5 6, 4, Volume, BTC 2, Source: cryptocompare.com, NKB Research

8 8 Litecoin recovered slightly versus Bitcoin on the back of Bitcoin s price correction. The Litcoin volumes were high and the momentum remains above 1. Bitcoin remains a trend setter for LTC-BTC pair, thus we do not expect an impressive climb for LTC soon. Figure 7. Litecoin price, BTC/LTC (YtD) close 9DMA 2DMA Momentum 9 7 3,, 2,, Volume 1,, Source: cryptocompare.com, NKB Research

9 9 Ethereum fell below $4. The current level of $46-48 indicates a strong support provided below the $4 level. Ethereum needs a bit more of a positive newsflow to disrupt the side trend. We do though expect ETH to go a bit higher. Figure 8. Ether price, USD (YtD) close 9DMA 2DMA Momentum 3 Volume 2 1 Source: cryptocompare.com, NKB Research

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