Bering Waters OTC Desk Year-End Review

This article was originally published on January 30, 2020.

Our Highest-returning OTC Deals in 2019

Bering Waters OTC Desk specializes in unreleased tokens and blocks of liquid altcoins.

Throughout 2019, Bering Waters OTC worked extensively on selected projects which we were able to source for our onboarded clients.

2019 Highlights & case studies of our top highest-returning deals

Attached below, the overview of these 4 selected opportunities, including ROI calculations, as well as the respective Data Rooms and Reports.

COSMOS (ATOM)

Cosmos overview
Cosmos has been one of the market’s most widely anticipated projects, a scalable and interoperable ecosystem of decentralized blockchains, described as the “internet of blockchains.” As such it secured funding from key institutional investors like Bain Capital and Paradigm.

The Cosmos initial coin offering (ICO) was well-structured and conducted fairly, having distributed 75 percent of tokens, including 5 percent for seed investors, and 10 percent for the Interchain Foundation (the governance foundation behind Cosmos).

Unlike the vast majority of blockchain projects raising funds via ICO, Cosmos Network did so with a strongly viable protocol behind its token. Its unique approach to scalability and interoperability devised a realistic solution to many of the long-standing limitations of decentralized networks.

Bering Waters OTC Activity in ATOM market
In February 2019 we ran an auction for an allocation of Cosmos ATOMs attracting significant interest. Our thesis was that, given the limited liquidity of Cosmos ATOMs allocations in OTC, interest for Cosmos and the anticipation of its token release created a context in which an Auction as a model of sale was the most conducive to achieving a fair OTC market price. The reputation of our desk in the market and the trust we inspire prompted high rates of participation in the auction process. In addition to our onboarded clients, investors from the network of brokers cooperating with Bering Waters OTC, as well as new investors, were able to participate in the auction. The top bid won the auction, and the transaction was successfully executed.

Data Room: https://docsend.com/view/9xyydzz

Deal opportunity with Bering Waters OTC
Entry
: February 10–28, OTC only: between $1.4 and $2
(Confidential data, it’s confidential for an auction)

Exit & ROI
1) ATH, June 3: $7.249
Approximate multiple with exit at ATH: x3.62 — x5.18
BTC and ETH performance during comparable period:
BTC February 10–28 ($3753) to June 3 ($8100):
x2.15*
ETH February 10–28 ($133.58) to June 3 ($249.6):
x1.87*

2) Exit suggested by Bering Waters OTC: on Poloniex, within the first week of listing, April 22–29: up to $5.17
Approximate multiple at the suggested/realistic exit price:
x2.58 — x3.69
BTC and ETH performance during comparable period:
BTC: February 10–28 ($3753) to April 22–29 ($5259):
x1.40*
ETH: February 10–28 ($133.58) to April 22–29 ($164.25):
x1.23*
*Source: BitMEX; for longer periods SMA of set length

ARWEAVE (AR)

Bering Waters OTC activity in Arweave token market
We ran around 50 transactions for transferable Arweave tokens during the course of 2019. Arweave tokens have been transferable since June, 2018, and the project has not yet been officially listed on exchanges.

The impact of the bear market in Q4 2018/Q1 2019 on the token was significant, devaluing its OTC price by up to 86% relative to its Private Round price, and up to 89% to its Public Round. In Q1 and Q2 these dynamics created an attractive opportunity, due to:
- the project’s strong fundamentals;
- low circulating supply;
- tokens transferability;
- reputable funds on the cap table, which in Q3 & Q4 of 2019 expanded with other notable funds, such as a16z, Multicoin & Union Square Ventures.

The only trusted market for institutional investors has been OTC. Since October 30, 2019 retail investors have been able to purchase Arweave tokens on Bilaxy exchange. However, the effective volume on this exchange is extremely low and the slippage will impact prices negatively for orders of larger volume. The legitimacy of the exchange has not been verified. For those reasons the Arweave token price on Bilaxy market is not representative of institutional, large-volume trades.

Arweave token market in 2020
Filecoin, a comparable project in the file storage segment, raised at a $10bn valuation, while Arweave has raised at a $48m valuation. Arweave is currently valued at <$50m, and has operated successfully for over a year.

We consider that in 2020 Arweave remains an interesting opportunity because of the following factors:
- transferable tokens, no counterparty risk;
- opportunity to invest alongside the most reputable funds in the space involved directly in the project;
- opportunity of entry close to the private round’s price;
- entry before official exchange listing.

Data Room & OTC prices: https://docsend.com/view/k273sem

2019 Deal opportunity with Bering Waters OTC
Entry:
From January 12, via OTC, $0.08 with prices progressively increasing throughout the year
February-Mid May: $0.3
June-Mid July: $0.75–0.8

Exit & ROI
ATH: August 5–15, $1.5, via OTC

ROI for $0.08 buyers
Approximate multiple with exit at ATH:
x18.75
BTC and ETH performance during comparable period:
BTC: January 12 ($3613) to August 5 ($11814):
x3.27*
ETH: January 12 ($124.35) to August 5 ($233.35):
x1.88*

ROI for $0.3 buyers
Approximate multiple with exit at ATH:
x5
BTC and ETH performance during comparable period:
BTC: February-Mid May ($4560) to August 5 ($11814):
x2.59*
ETH: February-Mid May ($147.76) to August 5 ($233.35): x1.58*

ROI for $0.75–0.8 buyers
Approximate multiple with exit at ATH:
x1.87-x2
BTC and ETH performance during comparable period:
BTC: June-Mid July: ($10061) to August 5 ($11814):
x1.17*
ETH: June-Mid July: ($276.96) to August 5 ($233.35):
x0.84*

Exit suggested by Bering Waters: OTC, July 20 — August 5, 2019: $1.2–1.4

ROI for $0.08 buyers
Approximate multiple at the suggested / realistic exit price:
starting at x17.5 down to x15
BTC and ETH performance during comparable period:
BTC: January 12 ($3613) to July 20 ($10760):
x2.98*
ETH: January 12 ($124.35) to July 20 ($228.20):
x1.84*

ROI for $0.3 buyers
Approximate multiple at the suggested / realistic exit price:
starting at x4.67 down to x4
BTC and ETH performance during comparable period:
BTC: February-Mid May ($4560) to July 20 ($10760):
x2.36*
ETH: February-Mid May ($147.76) to July 20 ($228.20):
x1.54*

ROI for $0.75–0.8 buyers
Approximate multiple at the suggested / realistic exit price:
starting at x1.87 down to x1.5
BTC and ETH performance during comparable period:
BTC: June-Mid July: ($10061) to July 20 ($10760):
x1.07*
ETH: June-Mid July: ($276.96) to July 20 ($228.20):
x0.82*
*Source: BitMEX; for longer periods SMA of set length

HEDERA HASHGRAPH (HBAR)

Bering Waters Activity in HBAR market
We ran around a dozen of 6 and 7-figure transactions for HBAR tokens.

Buy-side interest was seen mostly for tranches of first round tokens, due to the investors preference for an immediate liquidity, to Hedera Hashgraph being one of the major projects in the space at time of raise, as well as the expectation that HBAR would be listed on major exchanges. The spread in prices between SAFT 1, SAFT 2 & SAFT 3 created a dynamic where the earliest-round investors de-risked at a profit, and OTC buyers entered at prices close or below to the SAFT 3 Round price.

Early Q3 SAFT Amendments, which impacted liquidity and circulating supply after listing, created a strong risk/reward opportunity and stimulated interest in the first tranche.

We issued a report on the impact of the SAFT Amendment on the token’s liquidity, and on the price during its first day of trading. HBAR’s initial listing drew impressive volumes, for the reasons detailed below.

Bering Waters was featured on Hedera Hashgraph official website as a venue to acquire tokens and featured in Cointelegraph, Coindesk, Bitcoin.com, Forbes, Messari, Xueqiu & other media outlets, as a venue to buy the HBAR token.

Hedera Hashgraph overview
Hedera Hashgraph created a proprietary consensus mechanism suitable for running enterprise applications, and as such has attracted attention from a number of large corporations. The platform presents itself as a secure, high-throughput environment that can process transactions cheaper and faster than a blockchain.

Unlike conventional blockchains, Hashgraph implements Directed Acyclic Graph (DAG) technology whereby throughput increases as the network processes more transactions. This is highly attractive for high-throughput enterprise applications such as micropayment or Internet of Things networks, and Hedera has signed 39 of the world’s leading corporations and institutions as governance members, including Boeing, IBM, Nomura, and Deutsche Telekom.

Report: https://docsend.com/view/wvcybgj

Deal opportunity with Bering Waters
Entry:
Possibility of entry in Q1-Q2 (before SAFTs Amendments), OTC only, starting at $0.03 with prices progressively increasing
Our focus: deals after SAFTs Amendments
August 15 — September 16 (after SAFTs Amendments), OTC only,
$0.1

Exit:
ATH, first day of trading:
Upbit, September 17–24: peaked at
$0.56 for a brief moment, and first week average price of $0.22
Bittrex, September 17–24:
$0.42, first week average price of $0.06
OKEx, September 17–24:
$0.2, first week average price of $0.05

ROI:
Approximative multiple with entry at $0.10:
Up to 5.6x on Upbit peak
BTC and ETH performance during comparable period*:
BTC August 15 ($10290) to September 17 ($10184):
x0.99*
ETH August 15 ($188.1) to September 17 ($208.1):
x1.1*
*Source: BitMEX; for longer periods SMA of set length

SYNTHETIX NETWORK (SNX)

Synthetix Network overview
After rebranding and restructuring, interest in Synthetix exploded over the last 10 months, with value locked going from less than a million dollars in March to $171 million in December, and daily trade volume growing from under $1m in August to nearly $10 million in December.

Synthetix has created a viable staking model that rewards users for securing the platform’s liquidity and stability, and it is evidently gaining traction with over $133m locked in collateral (making it the second-largest DeFi platform by value of assets locked). Per the model, 0.3 percent of all transaction fees are distributed proportionately to SNX stakers, and as the platform continues to increase in trading volumes this will generate network effects. To spur initial growth, the Synthetix team have implemented a limited inflationary supply, and to date this has proved effective in attracting new users.

This, coupled with Synthetix’ innovative crypto-derivatives “infinite liquidity” model, has made the SNX token highly attractive to investors. Considering the scope of the multi-trillion-dollar derivatives market, first-movers like Synthetix, as well as its native token, have significant room to grow.

In Q4 a number of top venture funds announced investments in Synthetix tokens and/or equity, most notably a16z, Spartan Group, and Framework Ventures. Currently, volumes on exchanges are limited and OTC market has remained the main market for institutional investors. We executed multiple transactions settled on the spot market.

Synthetix Network in 2020
Given the parabolic increase in inflows of collateral into Synthetix in 2019, we expect that growth will accelerate as the platform and the broader crypto-derivatives market attracts attention from retail and institutional investors. Synthetix’ current market capitalization ($153m) and daily volumes (approximately $10m) do not reflect this potential, and have significant room for upside. BitMEX, one of the largest venues for Bitcoin derivatives, has a valuation of approximately $4.8b. As Bitcoin and the overall crypto market increase in capitalization, we believe it is realistic for Synthetix — a decentralized alternative offering a far broader range of assets than BitMEX — to surpass a $1b cap. This would equate to a >7x return on SNX from current levels.

Data Room: https://docsend.com/view/2yh7vfh

2019 Deal opportunity with Bering Waters OTC:
Entry: Since September 2, from $0.40 & progressively increasing

Exit & ROI
ATH on Kyber & Kucoin, November 28: $1.56
Approximate multiple at the ATH price:
x3.9
BTC and ETH performance during comparable period*:
BTC: September 2 ($10391) to November 28 ($7424):
x0.71*
ETH: September 2 ($179) to November 28 ($150.95):
x0.84*

Suggested exit, OTC or Kyber, depending on the volume: November 22 — December 31, $1.2–1.4
Approximate multiple at the suggested/realistic exit price: from x3.5 to x3 for $0.4 deal buyers
BTC and ETH performance during comparable period*:
BTC: September 2 ($10391) to average price of period November 22 — December 31 ($7262):
x0.7*
ETH: September 2 ($179) to average price of period November 22 — December 31 ($140.07):
x0.78*
*Source: BitMEX; for longer periods SMA of set length

About Bering Waters OTC Desk

Bering Waters OTC Desk is based in Hong Kong and specializes in unreleased tokens and blocks of liquid altcoins since 2018.

Ewelina Leszczak, Founder & CEO of Bering Waters

Projects we worked on

Projects we recommend to follow in 2020

Media about us

Contact

Bering Waters OTC Desk
www.beringwaters.com
28 Queen’s Rd, Central, Hong Kong
telegram: t.me/beringwaters

Disclaimer:
The information and any attachments contained in this email are confidential and intended solely for the individual or entity to whom they are addressed. They may contain confidential, legally privileged or information protected from disclosure. Views and opinions are those of the sender. Bering Waters Limited (“Bering Waters”) makes no representation that this e-mail or any attachments herein are free of computer viruses or other defects. If you are not the addressed recipient, please destroy and delete all copies in your possession, and notify Bering Waters immediately if it has unintentionally or inadvertently reached you. Please do not read, disclose or use the content in any way and delete this e-mail from your system. Any review or dissemination of or the taking of any action in reliance on the information contained herein is expressly prohibited. This content is not intended to provide any investment, financial, legal, regulatory, accounting, tax or similar advice, and nothing in it should be construed as a recommendation by Bering Waters, its affiliates, or any third party, to acquire or dispose of any investment or security, or to engage in any investment strategy or transaction. An investment in any strategy involves a high degree of risk and there is always the possibility of loss, including the loss of principal. Nothing in this content may be considered as an offer or solicitation to purchase or sell securities or other services. The provided data arises from Bering Waters records or are based on the indicated sources. BTC and ETH performance is extracted from BitMEX according to the indicated methodology and is provided as indicative information.

Bering Waters Group specializes in blockchain projects with untapped potential. It comprises of three industry leading businesses-OTC Desk, Ventures, and Tech.

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