Crypto ≠ risk pandemic vaccine
Wednesday, March 4, 2020Choosing between selling n95 face masks in exchange for stablecoin and publishing data driven insights about crypto, we clearly prefer the latter. In this update we shed light on exchanges (Deribit and FTX) looking to set the benchmark for crypto vol trading and carve a niche ahead of the incumbents.
Wars, pandemics, and crypto volatility
If you’re active in crypto like us, you are inclined to think about financial markets, “black swan” events, and exponential events. Nassim Nicholas Taleb and Naval are our saviors. The first quarter of this new decade has given us plenty of geopolitical events that have caused many crypto pundits to salivate and want their cake and eat it.
- “Rooting for WW3 and BTC all-time-high” – The assassination of an Iranian general by the US in January and subsequent tension in geopolitics was paired with an uptick in price and plenty of “BTC is a safe haven” comments from your crypto twitter pundits.
- “Party like it’s 1999” – Bitcoin crossed 10k in February while equities, tech stocks and risk-assets rallying in dot-com fashion. Familiar memes like “This time it’s different”, “Institutions are coming” and “This will be the last time Bitcoin will cross 10k” popped up everywhere.
- “Want a slice of lime with it?” – While the crypto community has done an amazing job analyzing and debunking stories about corona/n-covid 19 most of us have been silent about Bitcoin prices falling in line with risk-on assets while gold and treasuries have rallied. Until mask manufacturers start accepting bitcoin as a means for priority delivery or all of Asia refuses to touch cash, crypto as pandemic-hedge seems far fetched to us.
This market volatility has benefited the incumbent (spot) trading venues. Coinbase and Binance have seen volumes bounce up in the first two months of the year. However, the more impressive growth comes from the derivatives exchanges that focus on crypto volatility products.
2 phases of volatility trading
Taking a simple approach, we distinguish between two phases of crypto volatility trading:
- In phase 1 of crypto volatility trading, exchanges offer the ability to trade on margin and leverage for people who want to get even more exposure to the volatility of the underlying cryptocurrencies. Bitmex is the best example of leveraged crypto trading for retail punters and CME and Bakkt set the standard for “old fashioned” financial institutions wanting a little go at Bitcoin through cleared futures.
- In phase 2 of crypto volatility trading, exchanges offer instruments that allow volatility itself to be traded through options, straddles and volatility indexes.
Two exchanges have emerged as the pioneers of phase 2 through significant growth and innovative product offerings: Deribit and FTX
Read the full articleCrypto M&A: Barbarians on the Blockchain
Sunday, November 24, 2019Crypto M&A – A comprehensive review
Crypto M&A is alive and kicking. 350 acquisitions involving cryptocurrency and blockchain companies have taken place since 2013. However, beyond anecdotes, press releases and high level summaries, there haven’t been any thorough or forward-looking analyses, until now.
What follows is a condensed version of a full research report that can be downloaded for free:

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Deal Activity
350 acquisitions involving cryptocurrency and blockchain companies have taken place since 2013. M&A activity peaked in 2018 with more than 160 deals, and we estimate 90-100 deals for 2019.
M&A activity is volatile and seems positively correlated to crypto prices and industry sentiment. Monthly activity peaked in early 2018 as prices and industry attention soared.
Deal Value
We estimate total deal value at $4 Billion since 2013, with $2.8B of M&A activity in 2018 and $700M in 2019. These figures might sound impressive, but are small compared to the total network valuation of cryptocurrency networks ($200B+). This makes sense given the early stage of this industry: most companies are less than 5 years old and a significant IPO seems years away.
A closer look at marquee transactions and interesting deals shows only one $100M+ transaction in 2019, versus five in 2018. However, 2019 has seen interesting acquisitions such as the acquisitions by Facebook for its Libra project, the consolidation in the crypto custody space (Coinbase-Xapo custody) and the first token merger.
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