The Daily: BCH Outpaces LTC, Where Next for DEXs?
Saturday’s edition of The Daily builds upon some of the stories that have been developing all week. The last few days have been action-packed, with the coming Bitcoin Cash upgrade dominating the news cycle. We’ll take a look at how BCH has been faring as a payment network compared to Litecoin, and also check in on the health of decentralized exchanges in the wake of Etherdelta’s SEC smackdown.
Bitcoin Cash Maintains Higher Onchain Volume Than Litecoin
Cryptocurrency analytics site Coinmetrics.io has shared a side-by-side comparison of how the Bitcoin Cash (BCH) and Litecoin (LTC) networks have been performing since the start of the year. The chart shows that since April, BCH has outstripped LTC for onchain volume, when expressed in dollar terms. “From May 2018 onwards, Litecoin went into relative disuse while Bitcoin Cash’s usage remained robust,” tweeted Coinmetrics.
BCH is shown in blue alongside LTC in grey
By July, litecoin’s onchain volume had dropped to around $60 million per day, while bitcoin cash was recording over $170 million. The data, which has been adjusted to remove the BCH stress test that may have otherwise skewed things, show’s litecoin’s volume to have plummeted sharply from October, while BCH’s surged towards the $200 million mark, aided by renewed interest due to the forthcoming Nov. 15 fork.
Troubled Times for Decentralized Exchanges
The SEC’s decision to penalize Etherdelta founder Zachary Coburn for selling unregistered securities on his decentralized exchange (DEX) has given other operators pause for thought. While DEXs, like all cryptocurrency exchanges, have been monitoring the regulatory climate closely for some time, the near-$400,000 fine imposed on Coburn has spurred other DEX teams into action. On Nov. 8, decentralized token trading protocol 0x released a statement in response to the case, writing:
0x protocol is a technical standard for peer-to-peer exchange of blockchain-based tokens … our belief is that relayers are in the best position to determine how to utilize the 0x protocol, which types of tokens they want to make available to their users, and how to follow the legal requirements applicable for those tokens and users.
The statement continued: “Both centralized and decentralized exchanges can learn from the Etherdelta case. The guidance from the SEC provides confirmation that legal requirements must be followed if certain tokens meet the definition of a security … the industry is working through the best way to do that and we plan to be part of the effort to help educate regulators about the technology.”
The head of the SEC’s new cyber unit, Robert Cohn, has also commented on the Etherdelta case, saying: “The focus is not on the label you put on something or the technology you’re using. The focus is on the function, and what the platform is doing. Whether it’s decentralized or not, whether it’s on a smart contract or not, what matters is it’s an exchange.”
Predicting ETH’s Price Based on ‘Abnormal’ Movements
The question of whether large cryptocurrency exchange deposits presage a drop in price has been a matter of debate for months. A number of Telegram and Twitter bots alert traders to such activity, with a view to providing advance warning of an impending dump. Coinfi has just published new research into the matter, in a bid to resolve the question “Can abnormal movements of ETH in or out of exchanges predict ETH price movements?”
The red dots show the number of times Coinfi’s signal was triggered, predicting an ETH drop.
They explain: “When looking at intraday returns on the day of the signal trigger, [ETH] prices tended to go down. But looking at the next day returns, price tended to go back up,” before concluding “Abnormal movements of ETH into or out of exchanges does have a correlation to prices … the first 24 hours would generally correspond to a decrease in prices, while the next 24 hours would generally correspond to a recovery in ETH prices.” It seems, at least in the case of ethereum, that there may be some wisdom in watching for whales sending huge sums to cryptocurrency exchanges.