Oct 16, 2020
CF Benchmarks Recap - Issue 4
- New LINK-USD Benchmarks
- Fidelity even more bullish Bitcoin\
- Stoneridge reveals 10,000 BTC custody empire
Benchmarked: LINK to DeFi goes boom
Strong LINK wins Benchmark
The ChainLink protocol is little more than three years old, but its LINK token has gained and – unlike rivals – retained a significant return, trading more than 2,300% above its June 2017 launch price. LINK has also long met eligibility criteria for benchmarking status. These criteria are the stringent standards upheld by authorised benchmark administrator CF Benchmarks. With LINK meeting these standards, it was only a matter of time before its benchmark would be launched. The day came this week, with LINK’s role as an incentive for oracle creation continuing to combine with the undisputed top crypto trend of the year, DeFi. Read more on page 2.
High Fidelity BTC pitch
In its second major publication of the year on Bitcoin, Fidelity Digital Assets has dispelled any remaining doubts about its crypto intentions. Titled ‘Bitcoin investment thesis: Bitcoin's role as an alternative investment’, the note details Fidelity’s estimate that BTC’s current market cap will prove to be a "drop in the bucket". It also outlines a scenario under which a portfolio allocation of as much as 5% might be justified. Download the PDF here.
Stoneridge’s stone-cold $1bn BTC storage
The week’s highlight in ‘institutional crypto capitulation’: Stone Ridge Asset Management’s disclosure that it owns 10,000 Bitcoins (currently worth some $114m). It arrived at this juncture following the establishment of subsidiary, New York Digital Investment Group (NYDIG) in 2017. Together with client holdings, NYDIG custodies more than $1bn in cryptocurrency assets, quietly positioning it as one of the biggest institutional investors of its kind.
The latest exchange reality check was in form of a withdrawals freeze at Malta-based OKEx on Friday, after police ‘took away’ its founder.
Below LINK, Tezos is among distant runners up in 2020 price returns. The “self-amending” blockchain’s token, XTZ, a would-be Ethereum rival, has benefited from tailwinds for the dominant layer-2 protocol, rising 147% so far this year. Still, as the chart below shows, most gains were posted early in the year, leaving XTZ underwater since May.
Figure 1 - CF Tezos-Dollar Settlement Price 28-04-2020-15-10-2020
Featured benchmarks: LINK, BTC
It’s time for a LINK Benchmark
LINK to DeFi
By now, it’s quite the cliché to state that the year in crypto has been the ‘Year of DeFi’. But it’s still true of course. DeFi Pulse’s popular Total Value Locked (TVL) metric hasn’t meaningfully retreated for at least a year. Judging by TVL, the trend leaves gross value embodied by myriad DApps - smart contracts and protocols powering lending, staking, yield farming, wrapped/unwrapped digital assets and more - well above $10bn.
And guess which DeFi-linked coin is now the biggest by market capitalisation? With a full market cap of around $10.9bn, LINK wins that accolade. With DeFi booming (almost as much as it sometimes seems it could burn up) demand for the decentralised network of ‘oracles’ aggregated under the ChainLink protocol* is also in play.
*Oracles are smart contracts that link the ‘off-chain’ or decentralised world to the on-chain realm, allowing verified, low- or no-trust information to pass between the two.
In turn, the increasing number of enterprises holding LINK on their balance sheets will soon need to book and value the tokens with price data that stand up to external scrutiny.
Financial services providers that are obliged to use only regulated benchmark price data-can begin to offer products involving LINK for the first time. (Read the rest of this article on our website).
Square’s Bitcoin news was bigger than it looked
Square’s $50m BTC investment was followed by a significant surge in verified volume
$11,000 and chill
Bitcoin sentiment remains fair at the start of the week after definitive strides the week before saw price indisputably trade back above $11,000 for only the second clear occasion since August’s correction.
Still, price progress has continued in its weeks-long vein of slow and steady, undermining the significance of recent major industry news like Square Inc.’s $50m investment.
CF Benchmarks’ regulated CME CF Bitcoin Reference Rate topped out for the year so far at $12,165.74 on 17th August. It then based at 10,048.42 on 7th September.
XBT-USD then hovered at just over $10,000 till early October. As such, the advance to $11k—a round number that technical chart watchers regard as ‘psychological’—has enhanced market significance.