Weekly Market Commentary - July 1, 2019
Kevin Kelly, CFA | Market Strategist | kevin@delphidigital.io | (585) 269-0786
Total Public Market Value (ex-BTC)
12-Month Performance (Normalized)
6-Month Performance (Normalized)
30-Day Performance (Normalized)
Lead Analyst
Kevin Kelly, CFA
kevin@delphidigital.io
Sources: Coinbase, CryptoCap, TradingView, Coinmetrics.io
Bitcoin Closes Stellar Quarter As Risk Assets Get a Boost
Bitcoin capped off June with another strong month of gains, rising
nearly 30% over the last 30 days. Despite its +20% pull back over the
last few days, BTC posted one of the best performances of any asset
globally in the second quarter, with June marking its 5th straight
month of positive returns, the longest streak in almost two years. In
its limited history, bitcoin trends to perform well in July, averaging
double digit monthly gains (+10%) with positive returns in all but one
year (2014) since 2013.
Retail enthusiasm for crypto has come roaring back, evident in the
number of Google searches for "Bitcoin" and the growing premium
for Grayscale's Bitcoin Trust (GBTC). Institutional demand for the
asset manager's flagship product continues to grow, however,
making up a majority of new investment last quarter.
Volatility in the equity markets may pick up at the end of the week
depending on the highly anticipated jobs report due out Friday
morning. Fed funds futures are pricing in a 100% chance of at least a
25 bps rate cut in July, so a better-than-expected jobs number could
throw a bit of a wrench in a stock market breaking to new highs.
Chart of the Week
Litecoin (LTC) Performance Pre-Halving
1
 Research July 1st, 2019

Bitcoin Tacks on Another Big Month

BTC Price vs. Positive Daily Return Frequency
Bitcoin capped off June with another
stellar month of gains, rising nearly 30%
over the last 30 days. Despite its +20% pull
back over the last few days, BTC posted
one of the best performances of any asset
globally in the second quarter, with June
marking its 5th straight month of
positive returns, the longest streak in
almost two years. Like its retreat from
$9,000 to $7,500 between late May and
early June, we view this recent price
weakness as a healthy pullback, especially
given how rapid BTC’s ascent has been
these last few months.

In its limited history, bitcoin trends to perform well in July, averaging double digit monthly gains (+10%) with
positive returns in all but one year (2014) since 2013. The picture is a bit more muddied in the coming
months as August is a mixed bag and September has historically been one of the worst months for BTC
over the same period. The autumn months tend to bring with them substantially better performance.

Bitcoin's Monthly Returns

Sources: Coinmetrics.io
2
 Research July 1st, 2019

Retail Enthusiasm Returns

BTC Price vs. Worldwide "Bitcoin" Google Searches
Institutions are becoming more
comfortable with crypto as they realize the
vast growth potential these largely
uncorrelated assets have when stacked up
against conventional asset classes. This is
evident in the record volume and open
interest levels on CME's Bitcoin Futures
product, but can also be found in recent
commentary from a wide array of
institutions contemplating an allocation to
bitcoin or crypto more broadly. However,
much of this market is still driven by retail
investors, and the recent parabolic price
moves have given us an eerie flashback to
2017, albeit sentiment is not nearly as
dramatic.
The number of worldwide Google searches for "Bitcoin" has skyrocketed with the recent surge in prices. At
the same time, the premium on Grayscale's Bitcoin Trust (GBTC) has crept higher since the Q4 2018 sell-off,
indicating retail enthusiasm has returned, at least in part, after last year's brutal price declines.
Interestingly, institutional demand for GBTC is growing as almost 75% of investments into the Bitcoin Trust
in Q1 2019 came from institutional investors, according to Grayscale's Quarterly Digital Asset report.

BTC Price vs. GBTC Premium (7-Day Avg)

Sources: Coinmetrics.io, Grayscale, Google

3
 Research July 1st, 2019

Short-Term Technicals Mixed

BTC Price vs. Daily MACD Indicator
After breaking through just
about every resistance level
on its way from $5,000
onward, bitcoin failed to
breach $14,000 last week,
and has since fallen over 20%
back below $11,000.
Momentum indicators may
be telling us a short period of
relatively weak price action
may be on the horizon as
BTC's daily moving average
convergence divergence
(MACD) line just crossed
below its signal line, a
typically bearish event in the
near-term.

A similar crossover happened at the end of May just before BTC fell from roughly $8,600 back below
$7,500. However, we know that period of price weakness was pretty short-lived. Over the last five years,
bitcoin's price has declined approximately 1.2%, on average, in the seven days following this
bearish crossover pattern. It's important to note, however, the weekly and monthly MACD indicators
point to a continuation in the longer term upward trend for BTC, which we discuss in more depth in our
June Bitcoin Monthly Outlook.

Bitcoin's Performance After Bearish Daily MACD Crossover (Last 5 Years)

Sources: TradingView, Coinmetrics.io

4
 Research July 1st, 2019

Central Banks Stoke Risk Assets

Probability of Fed Rate Cuts at July Meeting
Outside the crypto realm, risk assets got a
substantial boost from central banks this
quarter, pushing year-to-date gains on
everything from stocks to high yield debt into
double digits. The most recent catalyst,
however, was the better-than-expected
outcome from the meeting between President
Trump and Chinese President Xi Jinping at the
G20 summit this weekend. Trump stated
Monday that trade talks have "already begun"
as the two sides agreed to put a pause on
imposing new tariffs on imported goods.

Jerome Powell spoke at the Council on Foreign Relations last week, stating he expects interest rates to
remain lower than the past and that "a lot has changed since May 1st", another indication the Fed is
seriously considering a potential rate cut as early as July. Fed funds futures tracked by CME Group’s
FedWatch Tool still show a 100% probability of at least one 25 bps cut at July’s FOMC meeting, but the
probability of a 50 bps cut has risen above 30%. In my view, the market is a bit overzealous at the possibility
of more accommodative monetary policy given the committee explicitly stated they want to see more
weakness in the economic data (i.e. inflation) before cutting rates. This Friday's jobs report may be just
the spark to produce some post-July 4th fireworks for markets.

Traditional Asset Class Returns (Year-to-Date)

Sources: The CME Group, S&P Dow Jones, MSCI, Bloomberg

5
 Research July 1st, 2019

Crypto Asset Movers & Shakers

Bitcoin was one of the best performing large crypto assets in June, widening its performance gap between
some of its top peers. NEO and ZEC also boasted +20% gains over the last 30 days, followed by strong
performances from ETH and LTC, the latter of which boasts one of the largest year-to-date price increases
(300%). Just about every large alternative crypto asset is up on the year so far, led by BNB's incredible 450%
surge. Despite being the world's most valuable crypto asset five times over, bitcoin is among the top
performers of 2019 through the end of Q2, gaining over 180% in just six months.

Top Crypto Asset Returns (30 Days)

Top Crypto Asset Returns (Year-to-Date)

Sources: Digital Assets Data 6

 Research July 1st, 2019

Crypto Asset Movers & Shakers

More recently, the crypto market has experienced a bit of a sell-off with just a handful of names posting
positive returns this week. XEM and NEO are among them, with the latter leading the market for a second
consecutive week, though neither managed to rise more than 5%. On the other hand, some of last week's
winners found themselves on the other end of the return spectrum this week, notably XMR, which dropped
roughly 20% from its highest level in about nine months.

Litecoin (LTC) saw another week of declines, falling 9% week-over-week, as it sits just over a month out from
its halving event. We noted in our June 16th edition of this report that LTC peaked almost 50 days out from
its August 2015 halving event after its price went parabolic in the few months prior. Litecoin has dropped
over 10% since (see cover page for updated performance chart).
Top Crypto Asset Returns

Data as of 06/30/19

The above table is powered by Digital Assets Data, a fintech company building a knowledge platform to manage
data and deploy investment models.

Sources: Digital Assets Data 7

 0
01
/0

20%
40%
60%
80%

-20%
100%
120%
140%
160%
180%
200%
01 1/2
/0 01

0
01 6/2 9
/1 01

20%
40%
60%
80%
100%
120%
140%
01 1/2 9
/1 01
01 6/2 9
/2 01
01 1/2 9
/2 01
01 6/2 9
/3 01
02 1/2 9
/0 01
Large-Caps Surge
Research

02 5/2 9
/1 01
02 0/2 9
/1 01
02 5/2 9

Large-Cap
/2 01
02 0/2 9
/2 01
03 5/2 9

Sources: MVIS CryptoCompare Digital Assets Indices

/0 01
03 2/2 9
/0 01
03 7/2 9
/1 01
03 2/2 9
/1 01

Large-Caps

7D
03 7/2 9
/2 01
03 2/2 9
/2 01
04 7/2 9
/0 01
04 1/2 9
/0 01

30D

*See Source link below for detail on large, mid, and small-cap index constituents.
04 6/2 9

Mid-Caps
/1 01

Mid-Cap
04 1/2 9
/1 01
04 6/2 9
/2 01
04 1/2 9
/2 01

YTD
05 6/2 9
/0 01
05 1/2 9
/0 01

Small-Caps
05 6/2 9
/1 01
05 1/2 9
/1 01
Year-to-Date Performance by Market Segment

05 6/2 9
/2 01

Recent Performance Comparison by Market Segment

05 1/2 9
/2 01
05 6/2 9
/3 01
06 1/2 9
/0 01
06 5/2 9

Small-Cap
/1 01
06 0/2 9
/1 01
06 5/2 9
/2 01
06 0/2 9
/2 01
07 5/2 9
July 1st, 2019

/0 01
1/ 9
20
19

8
 08

0
/2

0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
10 4/
/0 20
11 1/ 15
/0 20
12 8/ 15
/1 20
01 6/ 15
/2 20
03 3/ 15
/0 20
04 1/ 16
/0 20
05 8/ 16
Research

/1 20
06 6/ 16
/2 20
07 3/ 16
/3 20
09 1/ 16
/0 20
10 7/ 16
Intra-Market Correlations

/1 20
11 5/ 16
/2 20
12 2/ 16
/3 20
02 0/ 16
/0 20

Large vs. Mid-Cap

03 6/ 16
/1 20
04 6/ 17
/2 20
05 3/ 17
/3 20

Sources: Digital Assets Data, MVIS CryptoCompare Digital Assets Indices

07 1/ 17
/0 20
08 8/ 17
/1 20
09 5/ 17
/2 20
10 2/ 17
/3 20
12 0/ 17

Large vs. Small-Cap

/0 20
01 7/ 17
/1 20
02 4/ 17
/2 20
03 1/ 18
/3 20
05 1/ 18
/0 20
06 8/ 18
/1 20
07 5/ 18
/2 20
60-Day Correlations Between Top Crypto Assets

08 3/ 18
/3 20

Mid vs. Small-Cap

10 0/ 18
/0 20
11 7/ 18
/1 20
12 4/ 18

60-Day Correlations Between MVIS Large, Mid, & Small Caps

/2 20
01 2/ 18
/2 20
03 9/ 18
/0 20
04 8/ 19
/1 20
05 5/ 19
/2 20
07 3/ 19
/0 20
July 1st, 2019

1/ 19
20
19

9
Disclosures
The Research Team may own the tokens represented in this report, and as such this should be seen as a
disclosure of any potential conflict of interest. Anyone can contact Delphi Digital for full token disclosures
by team member at Team@DelphiDigital.io. This report belongs to Delphi Digital, and represents the
opinions of the Research Team.

Delphi Digital is not a FINRA registered broker-dealer or investment adviser and does not provide
investment banking services. This report is not investment advice, it is strictly informational. Do not trade
or invest in any tokens, companies or entities based solely upon this information. Any investment involves
substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential
complete loss of principal. Investors should conduct independent due diligence, with assistance from
professional financial, legal and tax experts, on topics discussed in this document and develop a stand-
alone judgment of the relevant markets prior to making any investment decision.

Delphi Digital does not receive compensation from the companies, entities, or protocols they write about.
The only fees Delphi Digital earns is through paying subscribers. Compensation is not received on any
basis contingent upon communicating a positive opinion in this report. The authors were not hired by the
covered entity to prepare this report. Delphi Digital did not receive compensation from the entities covered
in this report for non-report services, such as presenting at author sponsored investor conferences,
distributing press releases or other ancillary services. The entities covered in this report have not
previously paid the author in cash or in stock for any research reports or other services. The covered
entities in this report are not required to engage with Delphi Digital.

The Research Team has obtained all information herein from sources they believe to be accurate and
reliable. However, such information is presented “as is,” without warranty of any kind – whether expressed
or implied. All market prices, data and other information are not warranted as to completeness or
accuracy, are based upon selected public market data, reflect prevailing conditions, and the Research
Team’s views as of this date, all of which are accordingly subject to change without notice. Delphi Digital
has no obligation to continue offering reports regarding this topic. Reports are prepared as of the date(s)
indicated and may become unreliable because of subsequent market or economic circumstances. The
graphs, charts and other visual aids are provided for informational purposes only. None of these graphs,
charts or visual aids can and of themselves be used to make investment decisions. No representation is
made that these will assist any person in making investment decisions and no graph, chart or other visual
aid can capture all factors and variables required in making such decisions.

The information contained in this document may include, or incorporate by reference, forward-looking
statements, which would include any statements that are not statements of historical fact. No
representations or warranties are made as to the accuracy of such forward-looking statements. Any
projections, forecasts and estimates contained in this document are necessarily speculative in nature and
are based upon certain assumptions. These forward-looking statements may turn out to be wrong and can
be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors,
most of which are beyond control. It can be expected that some or all of such forward-looking
assumptions will not materialize or will vary significantly from actual results.

Nothing in this report can be repurposed or shared without the expressed consent of Delphi Digital. View
our Terms of use here.
10
 85 Broad Street
New York, NY, 10004
www.delphidigital.io

team@delphidigital.io

11