Crypto Weekly: Winter is Coming... Will a Stock Market Collapse Drive Crypto Rotation

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DISCLAMER: The information contained in this note issued by Enigma Securities Limited is not intended to be advice nor a recommendation concerning cryptocurrency
investment nor an offer or solicitation to buy or sell any cryptocurrency or related financial instrument. While we provide this information in good faith it is not intended to
be relied upon by you and we accept no liability nor assume any responsibility for the consequences of any reliance that may be placed upon this note. Enigma Securities
Limited is an Appointed Representative of Makor Securities London Ltd which is authorized and regulated by the Financial Conduct Authority (625054).
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14 November 2018
The Enigma Weekly
De-Coding Crypto
Our Market View
Winter is Coming…
The Goldman Sachs Stock Market Indicator is flashing red. Will a stock market collapse drive a rotation into crypto? As the
holiday countdown begins, and advent calendars are starting to appear in shop windows, it feels like the crypto community is
also counting down the days till some event. The question is: what? Binance CEO, Changpeng Zhao, recently summed up this
sentiment: "Even if I don’t know what will catalyse a bitcoin bull run, I am certain it will happen... Sooner or later, something will
trigger it." Like Zhao, we, at Enigma, continue to question what the catalyst will be that jolts the crypto market back into action.
Recently, on our weekly call, a member of the Coindesk advisory board remarked that crypto is an “oddly news-immune
market.” Indeed, this week, arguably, the only market-moving news is tomorrow’s Bitcoin Cash hard fork. BCH is up 3 percent
this morning. Meanwhile, regulatory developments, the biggest wild card, remain difficult to forecast. As the year is nearly over,
it seems that an ETF approval is more likely a 2019 event. Yet, from our perspective, the lack of volatility has not been an
entirely negative phenomenon. For example, the relative lack of price action has caused previously-wary institutional investors
to feel comfortable moving funds into crypto. The period of relative calm has acted as a convenient entry point. That said, it
does feel like we are at an intermission, and the second act of the show has yet to begin. Take your seats…
Performance Snapshot as of 9am GMT 14/11
Name Ticker Wk Close Wk Change YTD Change Record High Mkt Cap
Bitcoin BTC $6,369.080 -1.0% -54.9% $20,089.00 $110,460,270,504
Ethereum ETH $207.400 -5.3% -72.3% $1,432.88 $21,310,307,846
Ripple XRP $0.513 -4.0% -77.2% $3.84 $20,465,201,923
Bitcoin Cash BCH $526.680 -13.2% -79.2% $4,355.62 $9,082,004,891
Stellar XLM $0.254 -2.5% -29.5% $0.93 $4,814,597,207
EOS EOS $5.320 -7.2% -39.3% $22.89 $4,735,029,239
Litecoin LTC $50.050 -9.4% -78.2% $375.29 $2,959,227,927
Cardano ADA $0.073 -8.2% -89.5% $1.32 $1,895,371,097
Monero XMR $105.770 -6.2% -69.6% $495.84 $1,733,128,152
Tether USDT $0.971 -2.0% -3.9% $1.22 $1,677,339,136
TRON TRX $0.022 -8.4% -52.7% $0.30 $1,439,812,662
IOTA MIOTA $0.505 -0.6% -85.7% $5.96 $1,375,265,904
DASH DASH $161.910 -4.4% -84.6% $1,642.22 $1,353,104,518
Enigma Research
Lead Analyst: Aliya Itzkowitz
aitzkowitz@enigma-securities.io

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Chart of the Week
ICO Funds Raised
Despite the slowdown in the crypto market, ICOs are raising more money than ever. According to a new report by Ernst & Young,
nearly 22 billion has been raised by ICOs in the first half of this year. That represents an increase of over 15 billion dollars from
last year. This may come as a surprise given that 2018 has been a rather dismal year for the crypto market. Yet, while the price of
Bitcoin has plummeted since 2017, funding for ICO projects continues to skyrocket.
The amount raised by ICOs this year has already far outpaced 2017 levels
The surge in investment is particularly surprising since ICOs have been at the receiving end of a lot of bad press. Indeed, after a
series of scams and failed projects the word ICO has become a sort of ‘bad word’ in the crypto space. As Robleh Ali, a former
crypto specialist of the Bank of England puts it, “The problem with ICOs is that they’re called ICOs.”
As a result, over the last few months, it seems as though the STO (security token offering) is replacing the ICO. Through our
communications with the founding teams of several projects we get the sense that many entrepreneurs are considering re-
marketing themselves as STOs, rather than ICOs, in the hope of catering to this growing preference from investors. Stablecoins
are a “craze” right now, according to Coinjar co-founder. The surge in popularity of STOs is largely the result of investors fearing
the ‘pump and dump’ behaviour we saw from some ICOs in the past. Indeed, in the same report by Ernst & Young, it was revealed
that of all the projects launched in 2017, only 13 percent have thus far come out with a working product. There is a fear among
investors that they could be left with worthless ICO token a year later.
We, at Enigma, are committed to carefully screening projects for our clients, particularly since the quality of ICO projects varies
widely. Among the top three projects represented above are EOS, one of our top picks, and Petro, a currency we are sceptical
about. We have previously written about how we believe EOS could eventually rival the Ethereum blockchain, whereas, in a
previously weekly report we advised our clients to avoid Petro due to credibility issues.
Overall, we see the massive amount of funds raised through ICOs as a vote of confidence in a maturing market. We feel that the
silver lining of the scams of last year has been a ‘clean up’ in the market. We continue to be impressed by the quality of projects
we are seeing, and expect the funds raised to yield better results, particularly as the crypto market recovers.

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Currency of the Week
XLM
Blockchain, the bitcoin wallet company, is in the process of an unprecedented “air drop” of Stellar coins. The air drop will amount
to $125 million worth of Stellar. According to management, this is part of a desire to democratize cryptocurrency and speed up
mainstream adoption. “ XLM, enables quick, low cost, worldwide transactions, even when millions of people are using it at once,"
Blockchain CEO Peter Smith wrote in a blog post introducing the giveaway. Similarly, Stellar co-founder Jed McCaleb said, “We
believe that airdrops are central to creating a more inclusive digital economy. Giving away [coins] for free is an invitation to
communities to design the services they need.”
The simplicity of the project conveys this aim of making crypto more accessible. A banner on the air drop homepage reads, “Never
owned Crypto? Cool. We’ve never given away $125,000,000.” Those interested simply need to have a Blockchain wallet, and can
then submit their email to the waitlist in order to participate.
Up about 12 percent on the month, Stellar has now broken into the top five cryptocurrencies – overtaking EOS in the rankings.
Stellar’s backers say it is more technologically advanced and better suited to large-scale usage. We have made a similar argument
about EOS in the past. Indeed, Ethereum’s lack of scalability is its biggest weakness right now, and provides an opening to rivals
such as Stellar, and EOS that could provide faster, more reliable networks on their blockchains.
Initially, XLM was up about 7 percent on the news. However, the price has faltered as of late. Nevertheless, significantly, XLM/USD
broke the $0.28 resistance level and, at one point, neared the $0.2878 level last touched in September. This will be the next big
resistance level for Stellar.
Initially, news of the air drop sparked a rally in XLM. The $0.29 resistance level was tested.

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ICO of the Week
ACX
***Enigma Securities is pleased to announce exclusive allocations in several private sales*** If you would like more information
on our ICO allocations please contact our team – info@enigma-securities.io
The Proposal
Access (ACX) will be the first fully decentralized mobile banking network, powering financial services in Africa. Africa currently
lacks local and secure banking options, with millions of people unbanked. The mission of Access is to, as the name suggests,
give everyday people access to banking. There is tremendous white space for blockchain solution via cryptocurrency. Access
aims to set up the first crypto exchanges in Senegal and Ghana. They will do this with their partner, Atlas Money. Atlas currently
has a 500-strong human teller network and 30,000 users. User and deposit numbers have been growing 30 percent month over
month. Africa is global leader in mobile money with digital currency heavily in use. However, individuals rely on Telcos who are
unable to provide robust financial services. Access will harness smart contracts capabilities to provide superior and automated
banking services to Atlas clients. The easy-to-use Atlas App is currently live in the App Store. The various functionalities of the app
will drive user engagement and demand for the ACX token which will be the currency of this ecosystem.
Enigma Rating: BUY
Africa is a large, untapped market for cryptocurrency. Access will function as an ‘access’ point to this sought-after, high-growth
region. The Atlas business is already up and running and is developing very fast. Weekly user numbers are already outpacing
30,000. The roll-out of products in 2019, though ambitious, is realistic as it should be achieved through a variety of partnerships.
For example, Access is not building the exchange themselves. Instead, they will partner with Huobi which will accelerate the roll-
out process. Governments in both countries view cryptocurrency favourably and the team does not foresee any obstacles in getting
up and running on the ground.
The Team
Mickey Costa, Co-founder & CEO and his partner, James Shuler, spent two years working in Ghana building out the Atlas business.
They are familiar with the region and have many friends. Designated leaders for Ghana and Senegal have connections in their local
communities.
Noteworthy Partnerships
Barclays Africa is an official partner. Access will be partnering with crypto exchange Huobi to set up the exchanges in Ghana
and Sengal. They are currently in conversations with Makerdao about converting digital local fiat into a local Stablecoin.
Noetworthy advisors to the project include Bogolo Kenewendo, Minister of Investment & Trade in in Botswana. She is
passionate about the mission of Access and sits on several U.N. committees. Magatte Wadde, a successful entrepreneur from
Senegal, is also advising the project.
Transaction Details
The ACX token is a utility token on which the exchanges will function.
Initial token price: $0.0125 – this is a 50% discount
Hard cap: $15mm ($7mm raised so far, $7mm is target for private sale)
Interested investors may have the ability to purchase equity in Atlas.
Roadmap
Year-end 2018: End of Sale / 2019: Official launch of Access & Crypto Exchange, Launch of DA Development & Dapp, Local
stablecoins ***Details Subject to Change***

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Regulation Watch
In a first, the SEC has cracked down on an unregistered crypto trading platform: EtherDelta. The move is part of a pattern:
regulators are beginning to treat cryptocurrency like any other traded asset. Also, in the U.S., last week’s Midterm Elections saw
the election of several pro-Blockchain governors and congressmen. For example, Jared Polis, governor of Colorado, has promised
to make Colorado a “national hub for blockchain innovation.” The Congressional Blockchian Caucus – a bipartisan group of pro-
blockchain Congress representatives did well in the elections, with both co-chairs and 10 out of 12 members retaining their seats
in the election.
Elsewhere in the world, there were multiple reports that China might be lifting their ban on cryptocurrency last week. The story
gained a lot of traction but turned out to be unsubstantiated. As of now, the trading of cryptocurrencies in China remains banned.
Key Dates
November 15 – Bitcoin Cash hard fork
December 12 – Launch of Futures Contracts for trading on Bakkt
What We’re Reading
Binance CEO: Market Still in Good Position — Real Crypto Volume 2x Larger Than Reported Stats – In an interview on CNBC,
Binance CEO Changpeng Zhao stated that the crypto market and Binance are still in a good position even after nearly a year of
downward price movement. He stated that the volume of Binance is down nearly 90 percent since January due to the correction
and partially because of the high level of stability Bitcoin (BTC) has demonstrated over the past three months. “Compared to
January [of 2018], we are probably down 90 percent. So we only have one-tenth of the trading volume compared to what we
had in January. But, compared to like a year or two years ago, we’re still trading at huge volumes. Business is still okay, we are
still profitable, and we are still a very healthy business,” CZ said. CZ said he expects another bitcoin "bull run" to happen "sooner
or later."
SEC Charges EtherDelta Founder With Operating an Unregistered Exchange – The Securities and Exchange Commission
announced settled charges against Zachary Coburn, the founder of EtherDelta, a digital "token" trading platform. This is the
SEC's first enforcement action based on findings that such a platform operated as an unregistered national securities exchange.
According to the SEC's order, EtherDelta is an online platform for secondary market trading of ERC20 tokens. The order found
that Coburn caused EtherDelta to operate as an unregistered national securities exchangeWithout admitting or denying the
findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and
a $75,000 penalty.
Bitcoin to $250K by 2023 Prediction is ‘Absolutely Solid,’ Says Tim Draper – Speaking during the giant Web Summit tech
conference in Lisbon which ended November 8, Draper, who is well known for his optimistic outlook on Bitcoin, in particular,
doubled down on his price forecast few others have dared rival. “I have a pretty good sense of what’s going on four, five, six ten
years from now because that’s my business – to meet with young entrepreneurs who are putting a future into my mind,” he told
a panel which also featured Blockchain CEO Peter Smith and Managing Capital co-founder Garry Tan. All three panelists, with
varying degrees of reluctance, meanwhile agreed that BTC/USD $6373.45 +0.26% should trade higher this time next year, Smith
additionally confirming he was still accumulating bitcoin.

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How Institutional Investors Are Changing The Cryptocurrency Market – It’s official: institutional players have entered the
crypto race. Bloomberg reported that large buyers such as hedge and endowments funds have been consistently purchasing
over $100,000,000 worth of digital coins through private transactions. Miners are now scheduling regular, over-the-counter
(OTC) coin sales. Some have even set up their own liquidity desks and operations to accommodate the estimated $250 million to
$30 billion in trades. Previously, large investors have stayed clear from the crypto-investing space due to high volatility of the
key currencies. As bitcoin and ether prices have seemed to reach certain equilibrium this year, more and more traditional
financial institutions have started diversifying their portfolios with crypto assets.
The Problem Bitcoin Solves – Modern financial history is littered with hyperinflation, defaults and currency devaluation. Bitcoin
could put an end to that, says Saifedean Ammous. Hyperinflation has occurred 57 times since the end of the first world war,
afflicting several billions of people. In every instance, it has been the type of money whose worth is supposedly protected by
men with guns that has become, well, worthless. Indeed, hyperinﬂation is a form of economic disaster unique to government-
created money. There was never an example of hyperinﬂation when economies operated a gold or silver standard.
Canada's Versa Bank to provide safety deposit box for crypto currencies – VersaBank is pleased to announce that its subsidiary,
VersaVault, has successfully completed beta testing for its previously announced digital safety deposit box and is initiating
commercialization of its services.The first phase of the rollout will be to provide digital safe keeping as well as multi signature
services for cryptocurrency exchanges and crypto based investment funds. The beta testing focused on designing a seamless,
efficient and timely experience for our clients, but one which maintained the unique features of the VersaVault; providing our
clients with the most technologically advanced digital and cyber-security solutions while maintaining their absolute privacy.
$20 Trillion US Debt Will Inevitably Lead to Big Crypto Boom: Prominent Investors – ShapeShift CEO Erik Voorhees has said that
the growing debt of the US, which hovers at around $21.7 trillion as of November, will inevitably cause a big spike in crypto.
“When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can’t possibly ever pay
it back and thus must print it instead, and thus fiat is doomed. Watch what happens to crypto.” Voorhees suggested that to
repay the national debt, the government and the federal reserve will be forced to print more fiat money, leading to inflation and
a decline in the purchasing power of the US dollar.
Cryptocurrency Market on Brink of 'Price Explosion' – Overstock CEO Patrick Byrne said that he still expects the mass adoption
of cryptocurrency, without specifying which one. Speaking to bitcoin enthusiast Naomi Brockwell on her YouTube channel, Mr
Byrne said he remained highly sceptical of the traditional financial system. When asked if he saw bitcoin becoming a worldwide
currency, he pointed to countries like Venezuela that have experienced significant financial turmoil in recent years. "When
people start getting into it is when their own financial systems collapse," he said. "Whether bitcoin is the one, whether bitcoin
has solved its speed problem, or it's another cryptocurrency, only time will tell."
Is 2019 the Year in Which Crypto Finally Gets Connected to the Global Financial System? – Looking at the state of the
blockchain in 2018, we have to ask ourselves - is crypto banking the unbanked or unbanking the banked? Following the
incredible bull run of 2017, which attracted unprecedented attention towards Bitcoin and other cryptocurrencies, 2018 was
marked by an equally forceful regulatory backlash. While Bitcoin remains legal in most OECD jurisdictions, the crypto market and
its participants are being increasingly penalized for using the digital assets of their choice.
Goldman Sachs Stock Market Indicator Goes ‘Flashing Red’ to Predict a Collapse as Bitcoin Speculators Look for a Boost – Two
matters are currently top of the discussions within the cryptocurrency community; the upcoming Bitcoin Cash hard fork and the
SEC’s impending decisions on Bitcoin ETFs. The approval of Bitcoin ETFs is expected to cause a massive influx of institutional
investors into the crypto market. According to a post on Bloomberg, the reluctance of large companies to delve into the crypto
space results from a lack of concern. However, this could change soon – the stock market is getting more unpredictable by the
day, whereas the price of Bitcoin is stabilizing. If this trend persists, institutional investors could turn into the more stable crypto
investments.
Until next week - thank you for reading.
Please reach out to info@enigma-securities.io with any questions.

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