Blockchain Bites: Bitcoin’s Latest Billionaire Bull, Zcash’s Upgrade, Grayscale’s $10B Breakthrough

Bitcoin continues to rally, with one indicator suggesting the bulls have room to roam. Zcash, the privacy-minded blockchain network, had its first halving. And acting Comptroller of the Currency Brian Brooks may stay on for a five-year term.

Top shelf

Top or not?
At least one obscure indicator suggests bitcoin’s bulls have room to roam. Already notching 80% gains in the past six weeks and fast approaching an all-time high of $20,000 set in 2017, the cryptocurrency’s Mayer Multiple – the ratio of price to the 200-day moving average – is showing the current rally may be in early stages. Standing at a 16-month high of 1.67, this indicator is still well short of the 2.4 threshold that has historically signaled the final leg of the bull markets. It was this key metric that preceded the end of the 2019, 2017 and 2013 bull runs. Things are different this time around, compared to three years ago there is less retail interest in bitcoin and significantly more institutional involvement.

New money
Mariner Wealth Advisors, a registered investment advisory (RIA) with a network of financial planners managing some $29 billion, is the first to join a new bitcoin-focused separately managed account (SMA). This SMA will allow Mariner’s 346 wealth managers to offer bitcoin trading, custody and tax services for their 23,000 clients. Set up by crypto firm Eaglebrook Advisors, the SMA is targeting high-net-worth clients in the $5 million to $10 million range, offering many who did not participate in the 2017 bull run a chance to jump in. Eaglebrook is offering bitcoin custody services through Gemini Trust Company at launch. As of Tuesday, Mariner is Eaglebrook SMA’s only customer, though the company states it can easily scale to other RIAs.

$10 billion
Grayscale Investments has broken above $10 billion in digital assets under management for the first time. The New York-based firm, wholly owned by CoinDesk’s parent company DCG, now oversees $10.4 billion in assets including bitcoin, ether and other altcoins held across nine single-asset investment trusts and a diversified fund. At last count on Oct. 30, Grayscale held $7.6 billion worth of crypto, meaning the latest milestone is largely due to price appreciation across the digital asset sector.

Halving an upgrade
Zcash, a privacy-centered fork of Bitcoin, has completed its first halving, which not only cut miner rewards but triggered a network upgrade. At 12:37 UTC, the automatic event reduced the miner subsidy from 6.25 ZEC to 3.125 ZEC. It also triggered the Canopy upgrade, which established a new development fund and eliminated the controversial Founders Reward, in a move to more equitably fund network development. With the upgrade, miners will receive 80% of the block rewards, as before, with 20% divided among a grant fund, the Electric Coin Company (ECC) and the Zcash Foundation. Previously, critics said too much of the block reward was directed to the EEC.

Deep pockets
Mexican billionaire Ricardo Salinas Pliego told the world that 10% of his liquid portfolio is now tied up in bitcoin. Tweeting Wednesday, he said, “Bitcoin protects the citizen from government expropriation.” Engaging with startled and ragingly bullish Bitcoiners, Salinas Pliego said the other 90% of his investments are “in precious metals miners,” recommended reading “El Patron Bitcoin” and dismissed government-issued fiat. The billionaire made his fortune as founder and chairman of Grupo Salinas, a collection of companies with stakes in telecommunications, media, financial services and retail.

Quick bites

• PLAY GROUND: Vietnam’s Ministry of Education will use TomoChain to archive student records on a blockchain. (CoinDesk)
• SECURITY BREACH: Crypto exchange Liquid said a domain name hosting provider slip up may have exposed sensitive customer data. (CoinDesk)
• THE EDUCATOR: Incoming Wyoming senator Cynthia Lummis said a key item on her agenda will be explaining bitcoin to her new colleagues in Washington, D.C. (CoinDesk)
• TWITTER OBLIGES: Bridgewater’s Dalio tweeted, “I’d love to be corrected” on bitcoin, after denouncing it last week. (CoinDesk)
• TELCO TRANSFORMER: OXIO wants to use blockchain to make “Telecom-as-a-Service” as common as SaaS for major brands. (CoinDesk)

Market intel

Institutional interest
Open interest for bitcoin futures traded on CME Group’s exchange hit a new high of $976 million Monday. “The number of large open interest holders (LOIH) is once again at a record 102 holders,” a CME spokesperson told CoinDesk. The previous record of $948 million in outstanding CME derivative contracts was set in mid-August, following bitcoin-positive statements from respected financiers Paul Tudor Jones, Stanley Druckenmiller and Bill Miller. While open interest may be “indicative of institutional investors wanting exposure to bitcoin,” according to Chainalysis Chief Economist Phillip Gradwell, it’s important to note that CME’s recent surge comes as incumbent exchanges BitMEX and Huobi face ongoing regulatory challenges and flat or declining open interest through Q3 and Q4.

At stake

Banking head
Acting Comptroller of the Currency Brian Brooks may take on a full-term position. Yesterday, outgoing President Donald Trump nominated the  former bank executive and chief legal officer for Coinbase to lead the national bank regulator for a five-year term.  

Since taking office temporarily, Brooks has pushed forward a number of policy decisions seeking to clarify and ease national banks’ working relationship with the digital asset sector. Most notably, the OCC has published two letters telling nationally regulated banks they could offer crypto custody services and hold funds for fiat-backed stablecoin issuers.

While taken as a positive signal, the true effect of these statements has yet to fully play out. Kristen Smith, founder of the Blockchain Association, a Washington, D.C., crypto advocacy group, said in September, following the stablecoin guidance, that any practical changes will likely be muted. 

That has not kept some government officials from criticizing Brooks’ focus on cryptocurrency and fintech. Last week, a group of House Democrats published a sharply worded letter saying Brooks’ priorities have been misplaced during a severe economic downturn and public health crisis.

“Arguably, the immediate needs of millions of at-risk individuals who have not yet received an economic stimulus check and/or cannot deposit their funds in a bank, deserve greater attention than an effort to increase access to financial services to the ‘banked community’ via mobile phones,” they wrote.

CoinDesk regulatory reporter Nikhilesh De writes that Brook faces several hurdles to confirmation. The U.S. Senate Banking Committee oversees the OCC, and will likely hold a confirmation hearing before the entire Senate votes to confirm or reject Brooks’ nomination.

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