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January 18, 2018

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Crypto Market Commentary

A Dream Of Spring

Crypto Progresses Higher But Market Remains In Downtrend

As the land of crypto begins to pick itself back up, we’re beginning to see life again. As the adage goes, a rising tide floats all boats, and conversely, the same happens when the tide drains. Bitcoin is that tide, and as we’ve seen time and time again, the market goes where Bitcoin leads. Given its scalability issues, over the past year it has lost its status as a transfer of value, but still retained its role as the de facto trading pair and as a store of value, i.e., “digital gold”. But as we see from weeks like these, Bitcoin represents more than that. Even if it is somewhat outdated, it acts as the heart and soul of the crypto market. Most new investors are Bitcoin investors as the digital currency is ubiquitous and, quite simply, it’s Bitcoin. Love it or hate it, it’s here to stay for the time being.

The reason I bring this up is that you can use Bitcoin’s trading movement as an indicator of the “heartbeat” of the market. This is somewhat akin to reporting the DOW or S&P numbers for the Stock Market. As always, use the price history chart as perspective to reassure yourself that when it really comes down to it, this was a minor correction coming off the back of another correction. Bitcoin faced three similar, if not worse corrections in 2017.

On the off chance that you bought over the last couple of months or at close to the ATH, the worst thing you can do now is sell in panic and lose your principal. You shouldn’t have more cash in crypto than you can stand to lose, so it shouldn’t be an issue to hold up a couple of months. You need to understand that 30% corrections in crypto is relatively normal. This past fall we had a 40%  flash correction over similar China fears. Unless there is an orderly breakdown like we had amid the Mt.Gox situation, the market always recovers.

As I said in today’s free video, ask yourself, “what has changed?” Has the technology changed or been compromised? Has the potential? If no, then it’s going to be alright.

For long haul holders a decent system is to capture profit each December and swallow the capital gains taxation liability, park a reserve of fiat at Gemini (whose US dollar stores are FDIC-protected) and essentially hold up till around late January to early February to re-enter the market at a markdown and hold all year until next December. As we’ve seen, this correction around this time is somewhat systemic. You can keep a little sum in your T1 and T2 coins so as to exchange around different Q1 openings you foresee. Others may decide to just do nothing and simply continue holding all through January which is likewise a fine technique. The cyclical correction normally settles toward late January and early February, at that point we see an ascent in March and for the most part are recovered by end of April. As we’ve said, the market historically goes strong from Q1 to Q2. If it’s anything like it was last year, right now is when you want to be accumulating.

Clearly this choice whether to sell in December to benefit on the plunge and pay tax liability or to simply hold will rely upon your individual tax situation. Do your own math at some point in November and stick to this same pattern.

So to recap this week, we saw the following combine to instill fear, uncertainty, and doubt within the market:

Despite this week clearly belonging to the bears, there are many positive indicators going forward, and the market has clearly shaken off weak hands who have little tolerance for such drops.

I don’t think we’ll have a total meltdown like some are anticipating, yet some more torment might be approaching. 

Essentially set aside this opportunity to consider how you can improve your investment style and strategy. Make a commitment to value things rather than chasing FOMO, and take your time to make a decision. Long term investment or a systemic approach will grant you much more returns than being reactionary and short-sighted.

We’ll see you this weekend.

Offense – Adding Trades

Offensive Actions for the next trading day: 

  • Please follow Doc’s comments re: bottoming signals in the technical section below.
  • Let WTC consolidate first before entering; see alt-coin technical section below.
  • Don’t be in a rush to pick up inventory, let the Bear play out first.

Defense – Managing Risk

Defensive Actions for the next trading day: 

  • Nothing specific for Friday; please see comments in holdings below.

Current Portfolio

 

 

 

No new holdings today.

No expanded holdings today.

I am currently carrying no BTC; in the upcoming days I will detail my exit from this position in 2017.

ReadySetCrypto’s 7 Categories Of CryptoCurrency

Tier 1 coins are those coins which we have considerable assets invested, are firm believers in the project direction and execution, and have very little reason to sell within short to mid term. These are coins which we risk evaluated to be very solid, and have a high probability of existence duration.   

NEO

NEO ($NEO) is classified as a Dividend and Platform coin. As our largest holding, we believe NEO has the potential to become a dominant smart contract and DApp platform in 2018. It’s four most compelling features are:

  • An innovative consensus algorithm which will allow for greater TPS (transactions per second) over its competitors.
  • A dividend structure for holders, incentivizing coin retention and network stability / diversity.
  • SE Asia location, enabling NEO to break into markets more easily than competitors.
  • Agnostic smart contract language, allowing for smart contract developers to use existing mainstream programming languages, which allows for cheaper smart contract implementation as compared to Ethereum who’s proprietary smart contract language, Solidity, can be a barrier to integration.

NEO is best acquired through Binance. Storing NEO on the Binance exchange will result in a GAS distribution once a month on the first. We recommend the NEON wallet for safe storage. GAS will be distributed on the NEON wallet daily.  

WaltonChain

WaltonChain ($WTC) is classified as a Dividend and Utility coin. Waltonchain is on the cutting edge of using RFID hardware to enable supply chain management 2.0. We believe Walton has the potential to become a dominant IoT blockchain solution

Waltonchain is the only truly decentralized platform combining blockchain with the Internet of Things (IoT) via patent pending RFID (Radio Frequency Identification) technology.

The custom RFID chips are able to digitally sign and verify transactions at the integrated circuit level, automatically and instantly reading and writing data to the chain without human intervention.

This unique implementation of blockchain + IoT facilitates the true interconnection of all things in the real world with the virtual world, creating a genuine, trustworthy and traceable business ecosystem with complete data sharing and absolute information transparency.

Walton has two major competitive advantages:

  • A recently confirmed (to be signed) partnership with China Mobile’s IoT Alliance. China Mobile is the largest mobile telecommunications service in the world as well as the world’s largest mobile phone operator by total number of subscribers. Walton’s Management system is set to be implemented through mobile communication networks, and China Mobile is the largest one. Waltonchain is positioning themselves to be the single connector of the entire Internet of Things initiative put forward by the China Mobile IoT Alliance.
  • They implement the blockchain through the RFIDs at the foundational layer. Their technology is patent-pending and gives Waltonchain a solid claim as the only blockchain that connects the physical world with the virtual world with truly reliable data. This is because all other IoT solutions tag items through API, and this means all the data is first passed through a centralized intermediate, a potential point of vulnerability.

 

Ethereum

Ethereum ($ETH) is an open blockchain Platform that lets anyone build and use decentralized applications that run on blockchain technology. Like Bitcoin, no one controls or owns Ethereum – it is an open-source project built by many people around the world. But unlike the Bitcoin protocol, Ethereum was designed to be adaptable and flexible. It is easy to create new applications on the Ethereum platform, and with the Homestead release, it is now safe for anyone to use those applications.

Tier 2 coins are those coins which have performed extremely well, we have a large amount of assets with, and we believe will continue to operate with high marks. What separates these coins from our Tier 1 status is a flaw or they haven’t yet proven their defining feature, though we believe they will.

OmiseGO

OmiseGO ($OMG) is classified as a Dividend and Utility coin.

OmiseGO is a Southeast Asia-based company creating an e-wallet that will make transfer of assets and currencies possible. Merchants and users of the wallet can transfer whatever asset or currency they desire. For example, you could use your ethereum, bitcoin, international fiat, or even your airline points to buy groceries using the e-wallet app on your mobile phone. Transfers can happen across borders, or even while traveling abroad. Unlike Western Union or PayPal for example, the fees are almost negligible, and the transfer is instant. Because it’s based on a blockchain, there are no intermediary banks necessary and users don’t need bank accounts to access those funds. This is especially good for migrant workers who send money home and often don’t have bank accounts and are forced to use expensive wire services instead.

NAVCoin

NAVcoin ($NAV) is a Privacy coin with upcoming Platform features. NAVcoin has been around for 3 years. It is not minable, instead being based on a Proof of Stake system in which stakers earn 5% annual returns. Theoretically this means there could be 5% inflation on the supply, however, that would require every coin holder to stake, so likely there will be very marginal inflation between 1 and 3% year over year. It is a currency originally based off of Bitcoin version 0.13, which should tell you it’s got a good foundation from which to build its feature set. Being based off Bitcoin, it currently is a method of transaction, with notable upgrades in the form of Segwit (with possible lightning network integration in the future) and 30 transaction times with extremely marginal fees. That’s great but a lot of coins have that going for them, so thankfully we’re just getting started with the real interesting pieces of NAV. The first and currently only implemented feature, NavTech is a unique dual blockchain technology. Essentially, NAV runs on these two blockchains in order to completely disconnect the sending wallet (your wallet), to the receiving wallet (where the money is getting sent). Think of it like a VPN, NavTech completely strips the sender’s details so the transaction is completely anonymous. The anonymous transaction space has really gotten big lately, with Monero’s recent price action and Ethereum’s implementation of ZKSnarks being two big examples that come to mind.Moving on to the roadmap, there are two big upcoming features for NAV:

  • The first is Polymorph, which is a really cool blend of Nav’s anonymous transactions and Changeally’s instant exchange. What this means is that, for example, I wanted to pay someone in Bitcoin but I wanted to do it anonymously. Polymorph would take my bitcoin, turn it into navcoin in order to be processed and sent anonymously using the Navtech dual blockchain, then turned back into bitcoin at the to be sent to the receiving wallet. This will certainly set NAV apart, as it guarantees anonymous transaction for all of the coins on changeally. This is huge for exposure, and a great opportunity for NAVcoin to gain trust, which is absolutely critical anonymous transaction coins.  
  • The second big upcoming feature is ADApps, or Anonymized Decentralized Apps. This is also a huge potential win for Nav as there is already a huge amount of interest in the crypto space surrounding Dapps, such as Ethereum and Omni. Adding in the anonymous layer would attract projects that would value the anonymity. Nav is still in the planning stages for this project so it could still be awhile before it comes to fruition, but we should see the whitepaper for it soon, and if they could be first to market with ADapps that could prove to be a killer feature for them as it would give them first access to the interested demographics.

ICON

Simply put, ICON ($ICX) is a massive scale blockchain Platform that allows

  • Decentralized Application (DAPPS) – Build DAPPS on ICON Platform like on Ethereum and NEO. Yes, soon, you will see ICOs happening on ICON platform for different DAPPS
  • Interchain (Interoperability with Blockchains) – Allows different blockchains connecting to one another through their protocol. ICON is fully compatible with traditional blockchains like Bitcoin and Ethereum and in future can bridge other public blockchains such as Qtum, NEO and many others to achieve their mission statement – “Hyperconnect the world”
  • Artificial Intelligence (AI) – Use of AI to ensure all nodes contributing to ICON Republic/platform are rewarded fairly and not to have certain powers over distribution policies. AI will continue to learn a variety of variables to determine optimal distribution policies and achieve complete decentralization.
  • Decentralized Exchange (DEX) – ICON will integrate different DEX protocols on their platform to facilitate exchange of ICX and other future ICON platform currencies. Bancor protocol will be their first DEX protocol when mainent launches this month end and Kyber and others will follow. Not just throwing Kyber’s name out there, it was confirmed they are working with each other, official partnership yet to be announced.

Ripple

Ripple ($XRP) is a real-time Payment protocol for anything of value. It’s a shared public database, with a built-in distributed currency exchange, that operates as the worlds first universal translator for money. Ripple is currency agnostic and has a foreign exchange component built right into the protocol. Ripple acts as a pathfinding algorithm to find the best route for a dollar to become a euro or airline miles to become Bitcoin. It will look at all the orders in the global order book. The case for XRP comes down to the following: 1) Payment systems work best with bridge assets to focus liquidity. 2) There are good reasons to expect a cryptocurrency to be the most popular bridge asset. 3) There are good reasons to expect that cryptocurrency to be XRP.

  • Open, decentralized payments will have lots and lots of assets, including national currencies of all kinds and cryptos. A significant fraction of payments will be among assets that aren’t the most popular. Using intermediary assets to settle those payments concentrates liquidity and reduces spreads.
  • National currencies are always tied to jurisdictions and can’t be universal. Systems built around them will never be as open and inclusive as systems that aren’t.
  • XRP settles faster than any other major crypto. It higher transaction rates than other major cryptos. It is beat by others only by the amount of liquidity available today. And, most importantly, XRP has a company that is devoted to making sure XRP succeeds for this specific use case.

 

Tier 3 coins are those coins which we have moderate investments and we believe have a possibility of high performance in the future, but as of yet have not shown enough consistant performance to reduce their risk profile. Tier 3 coins are coins which are moderately risky, but due to our risk analysis of the project and team we believe have minimal chance of failure.

 

Tier 4 coins are coins which we have minimal stake in, are highly risky, and we are contributing no more than 2% of our portfolio to. These coins represent the outer fringe of our risk analysis, in that we have little information to work with, have little insight into the coin’s performance, and at the very best we are making an educated guess that they will be successful. If a coin performs well and proves that it has a commitment to its compelling feature, it will be moved to the Tier 3 status.  

Fundamental Currency Research

Today saw a mild recovery across the board as we returned to having positive numbers for the 24hr change field. Most most cryptocurrencies are still down and have far to go for their 7 day change metric, we believe progress is being made.

Of particular note is Ripple ($XRP), which yesterday was one of the fastest falling, but today recovered the strongest. No news seems to be attributed to this, it was simply oversold.

NEM ($XEM) and Stellar ($XLM) were also strong recoveries today, as the market tends to be very forgiving of platform type cryptocurrencies given their importance. That being said, NEO only had a fraction of the positive price movement from yesterday. We expect that’s due to it being the star of yesterday’s recovery and both traders and investors should wait for a better long-term setup before entering new positions.

Lastly, we’ve caught wind of a interesting IOTA ($MIOTA) rumor that IOTA will move from PoW to Network-bound PoW. Details are scarce and it may only be a rumor, but this is an exciting continuation of IOTA’s DAG model continuing to evolve.

As our expanded and new coin selections this week should indicate, we are very bullish on certain coins within the top 20-50 range, while also feeling out some new and interesting additions to the crypto space.

We still believe this is a solid time to expand one’s position with discounted prices. While the market struggles to get back to its feet over the next couple weeks, and is vulnerable to any additional “bad news”, we highly recommend you spread out entry points using dollar cost averaging.

Vechain ($VEN) announced today it will partner with Fanghuwang, one of the fastest growing online lending platforms in China.

Oyster ($PRL) just announced their new roadmap, which shows it aiming to run decentralized JS applications. File storage may just be one of its pearls. Coming off their announcement that they are rebranding, have a new website and testnet coming makes this an incredibly compelling project to get behind.

We will continue to look for opportunities as the market is still net down and will do our best to notify you of them.

In this section we’ll feature a daily ICO or new coin we think you should check out. Based on your country, you may not be able to participate in the ICO, but you will be able to trade the coin once it is listed on an exchange following its ICO (usually only a couple of weeks). ICOs are where a lot of money in crypto is made. Here’s proof.

That said, we should warn you: ICOs are highly risky endeavours and you need to mitigate any potential losses. Treat it as money you’ve lost the moment you contribute to the ICO. We are not responsible for the ICO’s performance.

Today’s featured ICO / New Coin is:

TERNIO

Blockchain For Digital Advertising

Ticker: TERN
Accepted Currencies: BTC
Token distribution:

30% – The operating team

15% – Rerve

49% – Public Crowd-funding

6% – Developers / Advisors

Unfortunately there is not much information on Ternio just yet as it is so new.  According to them, “TERNIO is a crypto currency months in the making that will change the way we transact with publishers, work with advertisers, and verify users. Immediately following the token sale, Ternio will become available to select ad networks and publishers.”

What’s interesting is that Ternio is built off of Stellar ($XLM) which specializes in lightweight-ICOs. This should allow them to quickly and cheaply go to market.

This may be an interesting addition to the slew of advertising focused blockchain solutions coming to market, such as Basic Attention Token ($BAT) and Oyster ($PRL).

WP: https://ternio.docsend.com/view/4jji4v4

Website: https://www.ternio.io/

Technical Analysis Research

The current top ten coins by market cap (as of today):

  • Bitcoin
  • Ethereum
  • Ripple
  • Bitcoin Cash
  • Cardano
  • Litecoin
  • NEM
  • Stellar
  • NEO
  • IOTA

Are we there yet? In today’s video I cover the concept of “capitulation” which is actually an odd thing for me to see since we haven’t had any kind of capitulation selling in the overall stock market since February 2016, which seems like….uh…YEARS ago. Not in the Crypto world, however! Capitulation selling has occurred several times in just the last year alone, and the violence of the waterfall decline is directly proportional with the strength of the rebound. Even though I’m a little skeptical of the overall utility of Bitcoin itself as a currency, there’s not a better-charting asset on this planet. I haven’t seen charts this clean in years.

If you’re new to this concept of Capitulation, understand that a market bottom is a purely EVIL thing. I know that this sounds odd to the new trader’s ear, but the purpose of any financial market is to separate the maximum amount of capital from the greatest number of participants. You see, people invariably make decisions that are harmful to them (buying at the highs chasing after a screaming coin, or selling out at the lows as the price pukes out) because they are obeying their subconscious minds, as well as decades of training to “be safe” or “do the rational thing.”

Financial markets are none of these. If you want a great buy point, you have to go against the crowd screaming in terror. Want to sell your assets for the maximum price? Sell into rallies where everyone’s investing. The recent rally in BTC was a great example of the herd effect.

In today’s video I’ll discuss the difference between a “V-Bottom” and a “Complex Bottom.” (It’s not what you think)

I might tackle the very religious topic of HODL’ing this weekend. I’m not sure how I want to approach this because I don’t want the mobs with pitchforks descending on me that are certain to disagree vehemently.

In today’s video I finished with a look at ICX, which frankly looks really good from a technical perspective. Entering at this level would not be a bad choice, or you can also wait for it to break the flag pattern. This will have to outperform BTC for this to break.

REQ has a nice double bottom look and has rocketed off the bottoming test in the last couple of days. No problems with this one.

Finally, SUB is hanging out in the same pullback as the rest of the market while it consolidates. Nice swing test however it might produce a little more pain (like many other coins) in the short-term.

I am doing the majority of my Technical Analysis work on TradingView and Coinigy, and I have a BitFinex app on both my iPad and Android smartphone. All of these charting platforms call a TradingView API. TradingView is the 800 lb. gorilla in the Crypto charting space until the “established” players want to make a go at Crypto, like Ninjatrader, Tradestation, eSignal, Sierra charts, etc. My sense is that TradingView has such a head start that it will be very difficult for the big boys to make a dent in this space for a while. Until that point, TradingView has almost a monopoly in this space.

If you have a particular tool that you think is superior, please let me know. You can access the BitFinex and TradingView platforms for free, however there are some paid features that you might want to consider depending on your needs, such as expanded watchlists, different study sets, account alerts, etc.

Coinigy is a great tool for determining prices on each exchange, however I may not have access to the full suite of tools on TradingView charts. I am currently not using it as a front-end GUI for my exchanges, which it supports.I also use Blockfolio to give me a quick snapshot of my holdings, and find that it does an excellent job to aggregate all of my holdings into one easy-to-read snapshot of my cryptocurrencies, which are typically located in many different places.

 

 

 

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