Information as of October 2, 2018

This report was created by:

• Professor Dmitrii Kornilov, Doctor of Economics, Member of the Russian Academy of Natural Sciences, and Leading Analyst at ICOBox;
• Dima Zaitsev, PhD in Economics, Head of International Public Relations and Business Analytics Department Chief at ICOBox;
• Nick Evdokimov, Co-Founder of ICOBox;
• Anar Babaev, Co-Founder of ICOBox;
• Daria Generalova, Co-Founder of ICOBox

This report presents data on cryptocurrency market changes during 2018. Special emphasis has been placed on an analysis of the changes that took place in the third quarter of 2018.

1. General cryptocurrency and digital assets market analysis. Market trends.

1.1 General cryptocurrency and digital assets market analysis.

Table 1.1. Trends in capitalization of the cryptocurrency market and main cryptocurrencies from January 1-October 1, 2018*

	Parameter	1-Jan-18	1-Apr-18	QoQ, %	1-July-18	QoQ, %	1-Oct-18	MoM, %
1	Total market capitalization, USD billion	612.9	263.9	-56.9%	257.7	-2.3%	223.3	-13.3%
2	Altcoin market capitalization, USD billion	376.2	145.2	-61.4%	147.9	1.9%	108.8	-26.4%
	Altcoin dominance, %	61.4%	55.0%	–	57.4%	–	48.7%	–
3	Bitcoin price, $	14 112.2	7 003.1	-50.4%	6 411.7	-8.4%	6 619.9	3.2%
	Bitcoin market capitalization, USD billion	236.7	118.7	-49.9%	109.8	-7.5%	114.5	4.3%
	Bitcoin dominance, %	38.6%	45.0%	–	42.6%	–	51.3%	–
4	Ethereum price, $	755.8	397.3	-47.4%	455.2	14.6%	233.2	-48.8%
	Ethereum market capitalization, USD billion	73.1	39.1	-46.4%	45.7	16.8%	23.9	-47.8%
	Ethereum dominance, %	11.9%	14.8%	–	17.7%	–	10.7%	–
5	Bitcoin Cash price, $	2 534.8	688.0	-72.9%	749.2	8.9%	531.6	-29.0%
	Bitcoin Cash market capitalization, USD billion	42.8	11.7	-72.6%	12.9	9.9%	9.2	-28.4%
	Bitcoin Cash dominance, %	7.0%	4.4%	–	5.0%	–	4.1%	–
6	Litecoin price, $	231.7	116.9	-49.5%	81.5	-30.3%	61.1	-25.0%
	Litecoin market capitalization, USD billion	12.6	6.5	-48.3%	4.7	-28.6%	3.6	-23.3%
	Litecoin dominance, %	2.1%	2.5%	–	1.8%	–	1.6%	–
7	Volume (24h) 4 crypto, USD billion	15.7	6.4	-59.2%	7.1	11.3%	7.5	4.7%
	Market cap 4 crypto, USD billion	441.6	189.7	-57.0%	186.7	-1.6%	170.9	-8.5%
	ZAK-4 Crypto index	3.6%	3.4%	–	3.8%	–	4.4%	–
	4 crypto dominance, %	72.0%	71.9%	–	72.4%	–	76.5%	–
8	Volume (24h) 8 crypto, USD billion	17.2	7.2	-58.0%	8.2	14.1%	8.7	5.9%
	Market cap 8 crypto, USD billion	488.6	208.7	-57.3%	205.9	-1.4%	186.7	-9.3%
	ZAK-8 Crypto index	3.5%	3.5%	–	4.0%	–	4.7%	–
	8 crypto dominance, %	79.7%	79.1%	–	79.9%	–	83.6%	–

* Data as of October 2, 2018 (all figures calculated at 03:00 UTC)
** Since December 1, 2017, the ZAK-4 index has been calculated using the cryptocurrencies Bitcoin, Ethereum, Ripple, and Bitcoin Cash.
*** When calculating the ZAK-8 index, the cryptocurrencies with the largest capitalization (not including Tether) are used. At present (October 2, 2018), the cryptocurrencies Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, Litecoin, Stellar, and EOS are used to calculate the ZAK-8 index.
**** This report uses the data of ICOBox, ICOBox Blockchain Research Center (IBRC), and coinmarketcap.com

Cryptocurrency market capitalization was more than halved during the first quarter of 2018 (see Table 1.1, Fig. 1), and during the second and third quarters it dropped by another 2.3% and 13.3%, respectively.

In the third quarter capitalization fell from $257.7 billion to $223.3 billion, i.e. by $34.4 billion. In this regard, the aggregate impact of altcoins on the change in capitalization was negative, while bitcoin, on the contrary, had a positive impact. Ultimately, the decline due to altcoins equaled -$39.1 billion, and the growth due to bitcoin equaled +$4.7 billion. As a net result, bitcoin dominance increased during the third quarter from 42.6% to 51.3% (see Table 1.1).

The dominance of the four and eight largest cryptocurrencies during the third quarter increased to 76.5% and 83.6%, respectively (at 03:00 UTC on October 1, 2018).

During the third quarter cryptocurrency market capitalization fluctuated from $303.4 billion (max) to $186.6 billion (min) (Fig. 1a), i.e. within a range of $116.8 billion. For its part, bitcoin capitalization fluctuated from $143.8 billion (max) to $103.3 billion (min), i.e. within a range of $40.5 billion.

The most significant changes in the capitalization of the cryptocurrency market and bitcoin during the third quarter of 2018 are shown in Fig. 1a and Fig. 1b. These changes were related to numerous events (see the comments below and in Table 1.4).

Figure 1a. Cryptocurrency market capitalization since July 1, 2018

Data source: coinmarketcap.com

Figure 1b. Capitalization and the bitcoin price since July 1, 2018

Data source: coinmarketcap.com

The upward trend stalled on July 24, and from the start of August a clear downward trend has been seen (Fig. 1a and Fig 1b). As reported by the Coindesk website on August 7, based on official published information the US Securities and Exchange Commission (SEC) postponed the decision on the VanEck and SolidX bitcoin ETF until the autumn. This information once again influenced cryptocurrency prices, with market capitalization dropping over the course of a day by $35 billion. We note that the SEC had previously rejected all applications on the issue of bitcoin ETFs. The SEC also requested input on the application from the Chicago Board Options Exchange (CBOE Global Markets). In our report dated July 30, we looked at examples of the impact of the previous two official announcements of the SEC (1, 2). The first, dated July 24, states that the decisions on the five applications on the issue of bitcoin ETFs submitted by the company Direxion had been postponed until September 21. In the second announcement dated July 26 the SEC rejected for the second time the application of the brothers Cameron and Tyler Winklevoss (the Bats BZX Exchange, Inc. (BZX)) on the creation of an exchange investment fund tied to bitcoin (Winklevoss Bitcoin Trust).

Price changes during Q3 2018 among the leaders of the cryptocurrency market

Table 1.2 shows the price change for 10 cryptocurrencies during Q3 2018 (not including Tether).

The price fluctuation index (High/Low) equaled from 1.41 to 3.13. Bitcoin had the most stable price among the ten presented currencies. Its price fluctuated in a range from $8,424.27 to $5,971.05 (with due account of the average figures from the coinmarketcap.com website), and the High/Low index was 8,424.27/5,971.05=1.24. Cardano, IOTA, Ripple and Ethereum experienced especially significant fluctuations. The high and low prices of these cryptocurrencies during the quarter varied by more than 3 times. For example, Ethereum’s High/Low index was 513.43/170.26=3.02 (see Table 1.2).

Table 1.2. Price changes in top 10 cryptocurrencies by capitalization during the period from July 1-October 1, 2018

№	Name	Price Open, $				QoQ,	Price change during the quarter			High / Low
		01.07.2018	01.08.2018	01.09.2018	01.10.2018	%	High, $	Low, $	D, $
1	Bitcoin	6411.68	7769.0	7044.8	6619.9	3.2%	8424.27	5971.05	2 453.22	1.41
2	Ethereum	455.24	433.9	283.5	233.2	-48.8%	513.43	170.26	343.17	3.02
3	Ripple	0.466	0.436	0.335	0.584	25.2%	0.769	0.254	0.515	3.03
4	Bitcoin Cash	749.18	780	544	532	-29.0%	880.99	413.04	467.95	2.13
5	EOS	8.15	7.36	6.44	5.74	-29.6%	9.39	4.27	5.12	2.20
6	Stellar	0.193	0.278	0.222	0.259	34.3%	0.349	0.180	0.169	1.94
7	Litecoin	81.50	80.39	61.74	61.10	-25.0%	93.65	47.67	45.98	1.96
8	Cardano	0.138	0.143	0.102	0.085	-38.3%	0.193	0.062	0.131	3.13
9	Monero	131.05	122.3	116.3	115.7	-11.7%	149.36	79.24	70.12	1.88
10	IOTA	1.010	0.944	0.713	0.568	-43.7%	1.240	0.408	0.832	3.04
	Portfolio 10 crypto					-16.3%

Data source: coinmarketcap.com

Thus, during the third quarter of 2018 the price change of the leading cryptocurrencies by capitalization ranged from -48.8% (Ethereum) to +34.3% (Stellar) compared to the start of the quarter (Fig. 2). The average yield of a portfolio consisting of equal shares of the cryptocurrencies in the top 10 (Portfolio 10 crypto) was negative, and equaled -16.3%. Overall, cryptocurrency market capitalization fell in the third quarter from $257.7 billion to $223.3 billion, i.e. by 13.3%.

Figure 2. Price change in top 10 cryptocurrencies by capitalization during Q3 2018 (not including Tether), %

(left – cryptocurrencies ranked by the amount of the fall in their prices, right – by amount of capitalization at October 1, 2018)

During the third quarter of 2018 the price of seven of the ten cryptocurrencies depreciated, with Ripple, Stellar, and Bitcoin being among the leaders in price growth. In July the fall was not as precipitous, and ranged from 1.4% for Litecoin to 11.6% for Tron. EOS and Tron showed the worst indicators. Tron continued its downward adjustment, which started after the jump in its price in late April, and the drop in EOS can be tied to the fact that vulnerabilities were found in the main network’s code. Bitcoin and Stellar had the biggest breakthroughs in July. On July 24 the price of the first cryptocurrency first passed the psychological barrier of $7,800, and then $8,000, thereby strengthening the positions achieved over the previous week. However, the bitcoin price subsequently dropped below $8,000 against the backdrop of the SEC’s repeat refusal to issue the Winklevoss brother’s bitcoin ETF (Coinspeaker).

The main news items for Stellar in this quarter were rumors on its possible listing on Coinbase, as well as its partnership with the IT giant IBM, which selected the platform for the creation of its cryptocurrency (forbes.com). Stellar was also the first cryptocurrency approved by Sharia law, which might have triggered a jump in demand among the Islamic community (cointelegraph.com).

Ripple, which was founded by the same company as Stellar, was not far behind, showing the second best result among the top 10 with a 25% growth during Q3 2018. In September Ripple’s capitalization even passed that of Ethereum for a short time (September 21) on the strength of numerous favorable news stories and events. The best news for the Ripple price was the announcement that the commercial version of the xRapid platform from Ripple would be launched “in the next month or so” (October) (cointelegraph.com).

August was the worst month for the crypto markets in the third quarter, as their total capitalization plunged by 17.7% over the month. This can be attributed largely to the bad news that impacted bitcoin, which dragged the prices of most altcoins down with it. At the same time, bitcoin dominance increased during August from 48% to 53%, which shows the higher sensitivity of altcoins to bad news, and the switch of backers from altcoins to the more stable bitcoin during an adverse market trend. The key unfavorable news item influencing market capitalization was the decision of the SEC to postpone the decision on the VanEck and SolidX bitcoin ETF until the autumn (coindesk.com). From August 7-14 there was a sharp fall in the entire market, and in particular among altcoins. The Chinese authorities also continued to ramp up measures in their fight with cryptocurrencies, the Chinese search engine Baidu introduced censorship on the discussion of cryptocurrencies (stocksgazette.com), and the blocking of access to foreign cryptoexchanges began (Coinspeaker). However, after August 24 a positive trend and stabilization were seen. This turning point was reached after the SEC announced the possible reconsideration of its decision on bitcoin ETFs (Coinspeaker).

The movement of the Monero price should be noted separately. This cryptocurrency lost the least of the seven depreciating cryptocurrencies from the top 10 by capitalization during the third quarter of 2018. From the chart it can be seen that although the price of this cryptocurrency consistently moved in tandem with market trends, over the last days of August it showed rapid growth that managed to level out all the losses incurred earlier, leaving its price practically unchanged during August while most cryptocurrencies dropped by around 20%. This can be attributed to a very positive report from the analytical company Satis Group, which mentions possible growth in the Monero price by more than 1,000% over the year (ccn.com).

It is also impossible not to comment on the largest drop among the top 10 cryptocurrencies, which happened to the second largest cryptocurrency by capitalization, Ethereum. During August and September its price fell from $433 to $233, i.e. by $200, and even briefly found itself at $170 (September 12). The exceptional depreciation of Ethereum can be tied to its mass sale by completed ICO projects (trustnodes.com). During a fall in the crypto market, most funds collected via ICO in Ethereum are immediately sold to finance and develop the startups. Research data was published in support of this theory: ICO projects sold 300,000 ETH in a month (ethereumworldnews.com). The news that the reward for a block of Ethereum may be lowered in October from 3 ETH to 2 ETH also contributed to the uncertainty of the Ethereum price (coinjournal.net), as did the sharp increases in transaction fees (see below). The news on the forthcoming Constantinople hard fork in the Ethereum network had a somewhat positive effect on the price, and in the second half of September (September 12-30, 2018) a growth from $170 to $233 was seen (coingape.com). Constantinople is the second part of the two-phase Metropolis hard fork on the Ethereum network. However, in total Ethereum lost around 45% of its price during the third quarter of 2018, and even the favorable news that Vitalik Buterin had proposed scaling Ethereum using zk-snarks technology (coindesk.com) did not help the price. You will recall that the solution involving the use of zk-snarks could resolve the network’s existing problems and increase the number of transactions to 500 per second without the need to resort to second level solutions such as Plasma or Raiden.

Calculation of the trading activity index on cryptoexchanges

To analyze trading activity on cryptocurrency exchanges, the ZAK-n Crypto index is calculated (see the Glossary). The 24-hour trading volumes (Adjusted Volume 24h, taking into account trading volumes excluding markets with no fees and transaction mining) for the four and eight dominant cryptocurrencies during the third quarter were approximately 2-2.5 lower than at the start of the year (Table 1.1), which attests to a fall in activity on cryptoexchanges.

The values of the ZAK-4 Crypto indexes are shown in Tables 1.1, 1.3. In July-September the 24-hour trading volume (Adjusted Volume 24h) of the four dominant cryptocurrencies (Bitcoin, Ethereum, Bitcoin Cash, Ripple) averaged from $6 to $9 billion (Table 1.3). However, 24-hour trading volume of up to $14 billion was seen on September 21. The daily ZAK-4 Crypto index equaled 3-4% of capitalization on average, but during certain periods (for example, September 20-21 on the back of growth in the Dow Jones Industrial Average, which managed to reach a new record high two days in a row) it exceeded 8%.

As of October 1, the 24-hour trading volume of the four dominant cryptocurrencies equaled $7.5 billion, i.e. 4.4% of their market capitalization (Table 1.3).

Table 1.3. Daily ZAK-4 Crypto index calculation (from July 1-October 1, 2018)

Crypto	Bitcoin (BTC)			Ethereum (ETH)			Bitcoin Cash (BCH)			Ripple (XRP)			4 Crypto
	Price Open	Volume (24h)	Market cap	Price Open	Volume (24h)	Market cap	Price Open	Volume (24h)	Market cap	Price Open	Volume (24h)	Market cap	Volume (24h) 4 crypto	Market cap 4 crypto	ZAK-4 crypto index
Date	$	USD billion	USD billion	$	USD billion	USD billion	$	USD billion	USD billion	$	USD billion	USD billion	USD billion	USD billion	%
Oct 1, 2018	6 620	4.0	114.5	233	1.6	23.9	532	0.5	9.2	0.58	1.4	23.3	7.5	170.9	4.4%
Sep 20, 2018	6 399	4.3	110.6	210	1.8	21.5	430	0.4	7.5	0.33	1.3	13.0	7.8	152.5	5.1%
Sep 10, 2018	6 302	3.7	108.8	198	1.5	20.2	484	0.3	8.4	0.28	0.2	11.1	5.7	148.4	3.9%
Sep 1, 2018	7 045	4.1	121.5	284	1.5	28.8	544	0.5	9.4	0.34	0.3	13.3	6.4	173.0	3.7%
Aug 20, 2018	6 501	3.7	111.9	301	1.4	30.6	570	0.4	9.9	0.34	0.3	13.6	5.8	165.9	3.5%
Aug 10, 2018	6 571	4.5	113.0	366	1.7	37.0	610	0.3	10.5	0.35	0.2	13.6	6.8	174.2	3.9%
Aug 1, 2018	7 769	4.8	133.5	434	1.9	43.8	780	0.5	13.5	0.44	0.3	17.1	7.5	207.9	3.6%
Jul 20, 2018	7 467	4.9	128.1	469	1.8	47.3	823	0.6	14.2	0.48	0.3	18.7	7.7	208.4	3.7%
Jul 10, 2018	6 739	4.1	115.5	476	1.8	47.9	733	0.4	12.6	0.47	0.2	18.6	6.4	194.6	3.3%
Jul 1, 2018	6 412	4.8	109.8	455	1.5	45.7	749	0.6	12.9	0.47	0.3	18.3	7.1	186.7	3.8%

* Adjusted Volume – Volume from spot markets excluding markets with no fees and transaction mining
** All figures given as of 03:00 UTC of the corresponding day
*** This report uses the data of ICOBox, ICOBox Blockchain Research Center (IBRC), and coinmarketcap.com

Table 1.4 shows the main events that took place in the third quarter of 2018 that had an impact on both the prices of the dominant cryptocurrencies and the market in general, with an indication of their nature and type of impact.

Table 1.4. Key events of the week having an influence on cryptocurrency prices, July-September 2018

№	Factors and events (link to source)	Date of news	Description	Nature of impact	Type of impact
1.	Binance Exchange Backs First-Ever Decentralized Bank in Malta [source: coindesk.com]	July 12, 2018	Founders Bank will be the first decentralized bank in the world belonging to the cryptocurrency community. All token holders will be considered owners of the organization.	Market ⇑	Favorable
2.	Coinbase Confirms SEC Approval to List Digital Tokens as Securities [source: Coinspeaker]	July 17, 2018	American regulators have given Coinbase the go-ahead to list tokens as securities. To do so, the company will acquire several dealers that work with securities and create new business units.	Market ⇑	Favorable
3.	South Korea Makes 2018 the Year of Bitcoin and Cryptocurrency Acceptance [source: dailyhodl.com]	July 20, 2018	The Financial Innovation Bureau will be responsible for “new developments and challenges such as cryptocurrencies,” and will regulate the fintech sector.	Market	Uncertain
4.	CME Group: Bitcoin Futures Trading Volume Reaches $572M on Wall Street [source: cryptovest.com]	July 26, 2018	On July 25 the average daily trading volume of bitcoin futures on the Chicago commodities exchange (CME Group) equaled 12,878 contracts. This is an all-time record.	Market ⇑	Favorable
5.	Ethereum Is Testing Code for Its Next Hard Fork [source: coindesk.com]	July 27, 2018	Constantinople will be the second stage of the Metropolis hard fork and is expected to improve the performance and lower transaction fees on the Ethereum network. It was also confirmed today that its activation will take place at the Devcon4 conference, which will take place from October 30 to November 2 in Prague.	Market ⇑	Favorable
6.	Bank of Thailand Allows Banks to Open Subsidiaries for Crypto Dealings [source: cointelegraph.com]	August 4, 2018	But they still cannot “perform cryptocurrency transactions.”	Market ⇑	Favorable
7.	SEC Delays VanEck-SolidX Bitcoin ETF Decision to September [source: coindesk.com]	August 7, 2018	There will be a bitcoin ETF, only later: the American regulator has postponed the consideration of applications from two New York-based companies. Sources had previously said that the application would probably be approved.	Market ⇓	Unfavorable
8.	124 Foreign Crypto Exchanges to be Forced Out of the Country by Chinese Authorities [source: Coinspeaker]	August 23, 2018	ICOs and cryptocurrency trading are already banned in China. Now the authorities have started blocking websites: the country’s regulator found 124 trading platforms being used by citizens and announced that it would block access to them in the near future.	Market ⇓	Unfavorable
9.	$6 Billion Daily Crypto Volume is Being Faked, How Can it be Combated? [source: ccn.com]	August 28, 2018	Some cryptoexchanges such as Bittrex, Kucoin, and Bithumb indicated accurate trading volumes, as their unique visitor counts are proportional to their trading volume. However, most exchanges have only tens of thousands of unique visitors but hundreds of millions in daily trading volume, showing figures that are at variance with the facts.	Market ⇓	Unfavorable
10.	Chinese Search Giant Baidu Has Officially Began Censoring Cryptocurrencies [source: stocksgazette.com]	August 28, 2018	The ban has partially come into force — several forums on digital assets have already been blocked. However, information on certain cryptocurrencies is still available.	Market ⇓	Unfavorable
11.	China Blockchain Pilot Includes Hong Kong, Macau, Guangdong [source: cryptobriefing.com]	September 5, 2018	The credit institution intends to concentrate in the coming years on researching innovations in cloud-computing, big data, artificial intelligence, blockchain, and the Internet of Things.	Market ⇑	Favorable
12.	SEC Suspends Exchange-Traded Vehicles by CoinShare Holdings for Bitcoin and Ethereum [source: Coinspeaker]	September 10, 2018	The market launched trading in bitcoin exchange-traded notes tied to the US dollar in August. Prior to this they were only available in euros or Swedish krona. Over the month participants were unable to make sense of the products, and now trading has been suspended.	Market	Uncertain
13.	Ethereum Might Not Have Bottomed Out Yet, ICO Sell-Off Is the Culprit [source: ethereumworldnews.com]	September 12, 2018	The fall of Ethereum was strongly influenced by the actions of ICO projects, believe researchers at Trustnodes. Over the past 30 days, startups have sold three times more coins than they did last month.	ETH ⇓	Unfavorable
14.	SEC Wants More Public Input on the CBOE Bitcoin ETF Proposal [source: Coinspeaker]	September 21, 2018	The Commission is supposed to approve, disapprove, or institute proceedings on the issue of bitcoin ETFs by September 30. The SEC has chosen the last option, meaning that the new instrument will almost certainly not appear on the market before the end of the year.	Market ⇓	Unfavorable
15.	Dubai Department of Finance Launches Blockchain-Based Payment System for UAE Government [source: cointelegraph.com]	September 23, 2018	Dubai has transferred all payments between state departments and banks to blockchain. The decentralization will save time: right now one transaction can take up to 45 days.	Market ⇑	Favorable
16.	Breaking: Google to Reverse Crypto Ad Ban for Exchanges Advertising in US, Japan [source: cointelegraph.com]	September 25, 2018	Clamorous discussions of bans on cryptocurrency advertising and ICOs are fading away on major media platforms. Following Facebook’s lead, Google has also decided to lift the ban. Granted, only in Japan and the US.	Market ⇑	Favorable
17.	New Coinbase Listing Process Will Allow Exchange to Rapidly Increase Supported Assets [source: cointelegraph.com]	September 26, 2018	Coinbase plans to expand the list of coins it trades and to add all assets that meet its rules and legislative requirements. A tool for submitting listing applications has appeared on the site.	Market ⇑	Favorable

 

For the most part, the events of July had a positive impact on the cryptocurrency market, leading to its growth from $257.7 billion to $277.8 billion, i.e. by $20 billion. The events in August and September, on the other hand, led to a contraction of the cryptocurrency market by approximately $50 billion and $5 billion, respectively.

The trend toward a change in transaction fees since the start of Q3 2018 for Bitcoin, Ethereum, Ripple (XRP), Bitcoin Cash, and Litecoin is given in Figure 3.

The average transaction fee for bitcoin has stabilized since July 1 at the level of $0.43-$1.33 (see Fig. 3). We remind you that prior to the implementation of the network scaling solutions (Segregated Witness and Lightning Network), the transaction fees had reached $55 in December 2017. This reduction is due to the fall in the number of transaction in the network (Fig. 4) and the gradual introduction of SegWit and Lightning.

As can be seen from Figure 3, in July and August the average amount of fees in the Ethereum network was several times higher than the fees in the Bitcoin network. On July 2 they reached $5.5, but by early September they had already fallen to $0.16-$0.3. In particular, according to the version of btcmanager, two events were responsible for the growth in fees in the Ethereum network on July 16: the airdrops on the recently created Chinese exchange FCoin and EOS bots “spamming” the Ethereum network. The bots created a fake ERC20 token called iFish, which initiated thousands of additional empty transactions with the iFish smart contract. The daily expense of fuel to finance the bot accounts exceeded 50 ETH.

Figure 3. Average Bitcoin, Ethereum, Ripple (XRP), Bitcoin Cash, and Litecoin transaction fees

Data source: https://bitinfocharts.com

The number of transactions in the bitcoin network has dropped by approximately 2-2.5 times since December 2017, i.e. approximately the same as its value. That being said, starting in March 2018 a clear weekly cycle in the number of transactions with lower/upper limits of around 150,000/250,000 per day can be seen from Figure 4. On the weekends the number of transactions falls (minimum), and it increases by mid-week. Similar data on the number of confirmed daily bitcoin transactions can be found at https://www.blockchain.com/ru/charts/n-transactions.

Figure 4. Number of Bitcoin transactions

Data source: https://bitinfocharts.com

According to information from sifrdata.com (Fig. 3), over the past three months a fairly close correlation has been seen between the indicators of the leaders on the cryptocurrency market – Bitcoin, Ethereum, Bitcoin Cash, Stellar, Litecoin, Monero, Dash, Ethereum Classic, NEM, Zcash, and other cryptocurrencies (highlighted red band).

Figure 5. Correlation between cryptocurrencies

Data source, on September 27, 2018: sifrdata.com

It is assumed that the closer the correlation matrix is to 1, the closer the correlation between the price change trends of cryptocurrencies. If the ratio is close to zero, there is no correlation between the indicators. If the ratio is close to -1, the ratio is inverse.

Table 1.5 gives a list of events, information on which appeared last week, which could impact both the prices of specific cryptocurrencies and the market in general.

Table 1.5. Events that could have an influence on cryptocurrency prices in the future

№	Factors and events (link to source)	Date of news	Date of event*	Description	Nature of impact	Type of impact
1.	Japan’s Financial Regulator Considers Revising Crypto Exchange Regulation: Report [source: ccn.com]	July 4, 2018	n/a	The Japanese regulator may change the legal status of cryptocurrencies due to security problems on the country’s cryptoexchanges.	Market	Uncertain
2.	‘A New Era for Capital Markets’: The Swiss Stock Exchange is Launching its Own Cryptocurrency Exchange [source: uk.businessinsider.com]	July 6, 2018	Q1 2019	Switzerland, together with Gibraltar and Malta, heads up the list of the most crypto-friendly countries in Europe. It is not surprising, then, that this country was one of the first to decide to unite the digital and traditional financial spheres.	Market ⇑	Favorable
3.	G20 Crypto Regulations Could Unleash Real Blockchain Change [source: coindesk.com]	August 3, 2018	October	So far, the financial community does not have a uniform approach to the topic of crypto regulation, but the first decisions are expected to be prepared as early as October, and their implementation will change the crypto environment (first and foremost, by allowing institutional players to enter the ecosystem).	Market	Uncertain
4.	Japan Self-Regulatory Crypto Exchange Association Considers Trading Cap for Some Clients [source: cointelegraph.com]	July 28, 2018	n/a	The Japan Virtual Currency Exchange Association (JVCEA) has developed a number of measures obligating cryptocurrency exchanges to establish a maximum limit on trading volumes for certain groups of traders.	Market ⇓	Unfavorable
5.	Korea’s Financial Watchdog Calls for Stock Trading on a Blockchain [source: ccn.com]	August 3, 2018	n/a	South Korea is studying the experience of the world’s largest stock exchanges — the country’s regulators are advocating the replacement of old technologies with blockchain and would like to launch share trading on blockchain.	Market ⇑	Favorable
6.	Japan’s Licensed Crypto Exchanges Formally Apply for Self-Regulatory Body [source: ccn.com]	August 7, 2018	October	An association of Japanese cryptoexchanges may receive a new status. This will allow it to establish rules for working in this area in the country.	Market ⇑	Favorable
7.	SEC to Reconsider the Latest Rejection of Three Bitcoin ETFs [source: Coinspeaker]	August 24, 2018	October	The decision on nine bitcoin ETFs is not final. A representative of the American Securities and Exchange Commission has announced that the regulator may reconsider its refusal.	Market ⇑	Favorable
8.	Iran Seen as Removing Crypto Ban by End-September [source: cryptovest.com]	August 28, 2018	October	The removal of the ban is connected with the country’s issue of its own cryptocurrency. The government has already prepared the legislative base for regulation of the digital market.	Market ⇑	Favorable
9.	Bitcoin ETF May Become a Reality Rather Sooner Than Later as the SEC Gets Another Crypto Supporter; Market Reaction Is Muted So Far [source: fxstreet.com]	September 7, 2018	n/a	The new member of the Commission is a politician who is a crypto supporter.	Market ⇑	Favorable
10.	Coinbase Plans to Join Forces with BlackRock for Bitcoin ETF [source: Coinspeaker]	September 7, 2018	n/a	The largest US cryptoexchange will join the ranks of the companies wanting to open bitcoin ETFs. Coinbase has already begun talks with professionals to receive approval.	Market ⇑	Favorable
11.	South Korean Banks Withdraw Services to Anonymous Crypto Accounts [source: coingeek.com]	September 12, 2018	November	Credit organizations are promising to place restrictions on the import and export of funds in Korean won if traders do not switch to verified accounts by a certain date.	Market	Uncertain
12.	Bithumb and Coinone Terminating Fiat Withdrawals for Unverified Crypto Traders [source: news.bitcoin.com]	September 17, 2018	October 1, October 15	The possibility to withdraw fiat on Bithumb will be terminated on October 1 for corporate market participants. For individual users this restriction will only come into force on October 15.	Market ⇓	Unfavorable
13.	Ethereum’s Constantinople Hard Fork to Ropsten Testnet in October, No Date for Mainnet Yet [source: coinjournal.net]	September 17, 2018	October	Ethereum has crossed the lower limit of production under the current hash rate. Due to this, miners interested in fiat have begun blocking their GPU farms or switching them to mine other coins, analysts note. If the fall in the cryptocurrency’s price continues, rewards for blocks will be reduced from 3 ETH to 2 ETH.	ETH	Uncertain
14.	Brazil’s Largest Independent Broker Is Launching a Crypto Exchange [source: coindesk.com]	September 21, 2018	“the coming months”	CEO of Grupo XP Guilherme Benchimol has announced that the company simply did not have other choice — the cryptocurrency market is growing at such a pace it is impossible to ignore. The site will support trading in bitcoin and Ethereum.	Market ⇑	Favorable
15.	Ripple Could Launch xRapid Solution ‘In the Next Month or So,’ Says Exec [source: cointelegraph.com]	September 18, 2018	October	The commercial version of the xRapid payment platform might be launched “in the next month or so.” The XRP price jumped by more than 20%.	XRP ⇑	Favorable
16.	US Lawmaker Introduces 3 Pro-Cryptocurrency Bills to Congress [source: ccn.com]	September 21, 2018	n/a	Three new draft bills on cryptocurrencies and blockchain have been introduced for the consideration of the American Congress. The documents will introduce support for startups, and state that miners will not need to be registered and users will not have to pay taxes until there are clear rules.	Market ⇑	Favorable
17.	Unlocking the Ethereum Bull Code [source: coingape.com]	September 22, 2018	October 30	Constantinople is the second part of the two-phase Metropolis hard fork on the Ethereum network.	ETH	Uncertain
18.	‘500 Transactions a Second’: Vitalik Says Zk-Snarks Could Scale Ethereum [source: coindesk.com]	September 24, 2018	n/a	The decision to use zk-snarks could solve the network’s existing problems and increase the number of transactions to 500 per second without the need to resort to second level solutions such as Plasma or Raiden.	ETH ⇑	Favorable
19.	JPMorgan’s Ambitious Ethereum-Based Blockchain Payments Trial Adds 75 New Banks [source: ccn.com]	September 26, 2018	n/a	The world’s largest banks are planning to use blockchain for payments amongst themselves. JPMorgan’s large-scale project has been joined by 75 more institutions.	Market ⇑	Favorable

* The event will take place in the future (date, year, n/a – not available)

1.2 Market trends

The weekly cryptocurrency and digital asset market trends from December 31, 2017, to September 30, 2018, are presented as graphs (Fig. 1.1-1.5).

Table 1.6. Legends and descriptions of the graphs

Global Figures	Figure*	Description
Total cryptocurrency market capitalization, USD million	Fig. 1.1	This figure shows cryptocurrency and digital asset market capitalization trends from December 31, 2017.
The rate of market change (as a % to the beginning of 2017)	Fig. 1.1	This figure shows the % change in cryptocurrency and digital asset market capitalization compared to December 31, 2017.
Change in the market capitalization (in USD million compared to previous period)	Fig. 1.2	This figure shows the weekly change in USD million (increase or decrease) in cryptocurrency and digital asset market capitalization from December 31, 2017.
The rate of market change (as a % compared to the previous period)	Fig. 1.2	This figure shows the % of weekly change (increase or decrease) in cryptocurrency and digital asset market capitalization from December 31, 2017.
Number of cryptocurrencies and digital assets	Fig. 1.3	This figure shows the trends in the increase of the number of cryptocurrencies and digital assets circulating on cryptocurrency exchanges. On January 1, 2017, their number was 617, and as of September 30, 2018, this number had already reached 1,920 (coins and tokens on which there is information on capitalization and/or turnover were considered).
Average market capitalization, USD million	Fig. 1.3	This figure reflects the growth in the average cryptocurrency and digital asset market capitalization from December 31, 2017, i.e. the ratio between the market capitalization of all cryptocurrencies and digital assets and their number.
Forecast of total cryptocurrency market capitalization	Fig. 1.4, 1.5	This figure shows the time trend (forecast) change in cryptocurrency and digital asset market capitalization.

* NB! Average daily data are given in the graphs below. For this reason, the figures in the graphs may differ from the data in Table 1.1, where all figures were calculated at 03:00 UTC. These differences in the values may be significant during periods of high cryptocurrency market volatility.
** This report uses the data of ICOBox, ICOBox Blockchain Research Center (IBRC), and coinmarketcap.com.

Figure 1.1. Total cryptocurrency market capitalization (weekly trend)

* Average daily data (according to the data of coinmarketcap.com)

Figure 1.1 shows a graph of the weekly cryptocurrency market change from December 31, 2017, to September 30, 2018. Over this period, market capitalization dropped from $572.5 billion to $222.5 billion, i.e. by 61%. Last week (September 23-30, 2018) cryptocurrency market capitalization changed slightly from $225.9 billion to $222.5 billion (as of September 30, 2018, based on the average daily figures from coinmarketcap.com).

Figure 1.2. Change in market capitalization (weekly trend)

The market is susceptible to sudden and drastic fluctuations. Nine of the thirteen weeks in the first quarter of 2018 were “in the red,” i.e. capitalization fell based on the results of each of these weeks, and the weekly fluctuations ranged from USD -136 billion to USD +250 billion.

Six of the thirteen weeks in the second quarter were “in the red.” The market grew based on the results of the other seven weeks. As noted earlier, a growth was seen in April, while in May and June there was generally a reduction in capitalization. The weekly fluctuations ranged from USD -72 billion to USD +62.2 billion.

In the third quarter seven of the 13 weeks have seen an increase in capitalization, and six a decrease (with due account of average daily data of coinmarketcap.com, see Fig. 1.2). In July there was an increase of $20 billion, but August saw a decrease of $49 billion. On the whole, since the start of September capitalization has fallen by approximately $6 billion.

Figure 1.3. Number of cryptocurrencies and digital assets (weekly trend)

Data source: coinmarketcap.com (coins and tokens on which there is information on capitalization and/or turnover were considered)

Since December 31, 2017, the total number of cryptocurrencies and digital assets presented on coinmarketcap has increased from 1,335 to 2,017. However, when calculating cryptocurrency market capitalization only those coins and tokens on which there is information on trades (trading volume) are taken into consideration. Over the past week their number increased from 1,902 to 1,920, while average capitalization fell to $115.9 million. In total, over the past month 112 new coins and tokens have appeared on coinmarketcap.com. However, it should be noted that a number of other coins and tokens were also excluded from the list. Among the tokens that were added to coinmarketcap.com last week, ZB and Paxos Standard Token showed high trading volumes.

 Figures 1.4 and 1.5. Forecast of total cryptocurrency market capitalization

The influence of major institutional players on the market increased, as did the impact of state regulatory processes. However, the effect of these factors is not always clear cut, and at present it is largely negative. Hacker attacks also continue to have an adverse impact on the cryptocurrency market. Over the first nine months capitalization has fallen by 64%. All these factors increase risks and lower the appeal of the cryptocurrency market, but, at the same time, billions of dollars have already been invested in blockchain. The market is experiencing a lull related to the gradual change in trends and the creation of infrastructure and launch sites for the arrival of major institutional backers. Competition is becoming more serious and global, and the quality requirements on projects are increasing along with their ability to effectively use internal resources and to cut organizational expenses.

Annex – Glossary

Key terms	Definition
Market capitalization	Value of an asset calculated based on its current market (exchange) price. This economic indicator is used to assess the total aggregate value of market instruments, players, and markets. [Source: Wikipedia.org].
Cryptocurrency market capitalization	The market value of an individual coin or token circulating on the market.
Total cryptocurrency market capitalization	The market capitalization of cryptocurrencies and digital assets, i.e. the aggregate market value of cryptocurrencies and digital assets (coins and tokens) circulating on the market.
Dominance	Market share, i.e. the ratio of market capitalization of a particular cryptocurrency (coin, token) to total cryptocurrency market capitalization. Expressed as a %.
Not Mineable	A coin that is not mineable. The term is used for cryptocurrencies (coins, tokens) which cannot be mined or issued through mining.
Pre-mined	A pre-mined coin. The term is used for cryptocurrencies (coins, tokens) which are issued through mining, and a certain number of coins (tokens) have been created and distributed among certain users at the start of the project.
The rate of market increase (as a % compared to the beginning of the year)	The rate of market increase (as a % compared to the start of the year), i.e. by how many % points did market capitalization increase compared to the start of the year.
The growth rate of the market (as a % to the beginning of the year)	The rate of market growth (as a % compared to the start of the year), i.e. by how many times did market capitalization grow compared to the start of the year.
Increase in market capitalization (in USD million compared to the previous period)	Increase in cryptocurrency and digital asset market capitalization (in USD million compared to the previous period), i.e. by how many USD million did market capitalization increase over the period.
The rate of market increase (as a % compared to the previous period)	The rate of market increase (as a % compared to the previous period), i.e. by how many % points did market capitalization increase over the period.
The market growth rate (as a % compared to the previous period)	The market growth rate (as a % compared to the previous period), i.e. by how many times did market capitalization grow compared to the previous period.
Number of cryptocurrencies and digital assets	Number of cryptocurrencies and digital assets. At the beginning of 2018 over 1,300 cryptocurrencies and digital assets (coins and tokens) were circulating on the market.
Average market capitalization	Average market capitalization, i.e. the ratio of the market capitalization of all cryptocurrencies and digital assets to their number.
ZAK-n Crypto index	The index is calculated as a percentage and represents a ratio between the trading volume (transactions) on cryptocurrency exchanges per day (Volume 24h) for n dominant cryptocurrencies to their total market capitalization. ZAK-4 Crypto index calculations include four dominant cryptocurrencies with the greatest market capitalization: Bitcoin, Ethereum, Bitcoin Cash, and Ripple. ZAK-8 Crypto index calculations include the trading volume and market capitalization for eight cryptocurrencies.

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