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August 14, 2018

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Crypto Market Commentary

Mav's Daily Commentary

 

“Extinction Level Event”

Markets Continue To Bleed As Sell Pressure Grows

 

The reckoning is upon us.

Nearly every major cryptocurrency, except for Bitcoin, is down 80% or more from their all time high.

Ethereum, which heralded the recent wave of interest in cryptocurrency and the explosion of ICOs, has fallen hard with the revelation that many of those ICOs were scams and frauds.

Some are even calling this revelation of scam ICOs the Mt.Gox of ETH.

 

What people are forgetting is that Ethereum is not a business. If its value drops 90%, that means something very different than if Amazon or Apple’s stock were to fall 90%. Ethereum is a protocol.

Ethereum’s price means exactly what the market intrinsically wants or does not want.

 

If people are more accepting of risk, then risky assets go up in price. If people are more accepting of speculation, then they might be more open to investing in non-traditional investment vehicles, such as ICOs.

 

As such, Ethereum is not to blame anymore than the Internet is to blame for malicious activities.

 

It is extremely cheap to build and launch a DApp on the Ethereum network. It is not like the App Store where there are safeguards and manual checks and the arbitration of middlemen services. Anyone can use Ethereum because it is open to everyone.

 

That freedom is both extremely rewarding and exciting as well as extremely easy to take advantage of.

 

This freedom is inherent in this market as well. The crypto market is a hyper market that changes sentiment in minutes and is easily pushed around by market forces that are nearly impossible to predict.

 

We’ve known about scam ICOs for a long time. People have lost money due to exit scams and “hacks” and other malicious activities since ICOs got off the ground.

 

None of this is new, and yet the panic is all the same.

 

Meanwhile the Bitcoin shorts continue to pile on. We’re almost at the highest amount of BTC shorts we’ve ever seen.

Think back to when you first heard about people who were Bitcoin millionaires. Do you think they got there by always buying the top?

No, they put their interests before what everyone else was saying and bought into a “worthless” and “dying” asset.

 

People are calling today an “extinction-level event” that will wipe out 90% of the market.

And yet, where do you think we’ll be in 5 years? Do you think the price will be higher or lower than it is today?

 

How about 10 years? Or 15 years?

 

If today really is the beginning of the end, then maybe those who are jumping on the bearish bandwagon are right and you should get out while you’re 80% down.

 

Or maybe the technology hasn’t changed. Maybe this is a hypermarket predicated on speculation, manipulation, and fear of change.

 

Maybe you have an opportunity today won’t exist in five years.

 

Maybe cryptocurrency isn’t dead and people like to speak in hyperbole to exacerbate their ulterior motives.

 

Maybe guys like Vitalik Buterin, the founder of Ethereum, doesn’t care about the price of his protocol, not business, and he’s still figuring out ways to make Ethereum’s consensus faster and more efficient.

 

And he is.

 

The paper Vitalik published on his website “ A Guide to 99% Fault-Tolerant Consensus” proposes a new kind of consensus algorithm that requires just 1% of nodes to be “honest”.

“We’ve heard for a long time that it’s possible to achieve consensus with 50% fault tolerance in a synchronous network where messages broadcasted by any honest node are guaranteed to be received by all other honest nodes within some known time period (if an attacker has more than 50%, they can perform a “51% attack”, and there’s an analogue of this for an algorithm of this type)”.

“ But did you know that if you add even more assumptions (specifically, you require observers, i.e. users that are not actively participating in the consensus but care about its output, to also be actively watching the consensus, and not just downloading its output after the fact), you can increase fault tolerance all the way to 99%?”

 

Without going into too many specifics, Vitalik’s proposition is different than most consensus mechanisms that we use today. Blockchain algorithms typically focus on the validators, usually the miners, and what they’re doing.

 

Vitalik’s proposition is that if there was an independent observer, you could make sure messages are sent that are consistent with honest nodes on the network. These are known as chained signatures, and he goes on to talk about them:

 

“Notice that the algorithm uses the act of adding one’s own signature as a kind of “bump” on the timeout of a message, and it’s this ability that guarantees that if one honest node saw a message on time, they can ensure that everyone else sees the message on time as well, as the definition of “on time” increments by more than network latency with every added signature.”

 

It’s more or less a game of “telephone” where an honest node can be sure they sure the same message that other nodes did.

This is not a new schema, and he frequently cites a 1982 publication, but what’s interesting is this publication is 99% fault tolerant, a stark contrast to today’s blockchain mechanisms that can be compromised with a 51% attack.

 

So what’s the takeaway here if you don’t care about deep algorithms and theoretical use cases?

 

That price and the market itself isn’t going to prevent crypto and blockchain from evolving and innovators from making new discoveries.

 

Even if there’s a “reckoning” for 90% of cryptocurrencies, the 10% that survive are the ones we should be focusing on.

If you were not able to join us for the recent webinar “Ten Steps to Building Your Portfolio” webinar, the replay is available here.

We’ve started to produce episodes for The ReadySetCrypto Podcast; all of our episodes are posted on our blog (and on iTunes) and episode eight is now available. Episode Eight is an interview with Andrei Polgar, the author of the book “Age of Anomaly” which speaks to anticipating negative market events. Look for more episodes shortly as we comb the crypto space for valuable interviews, and create valuable content to keep you in the loop!

See you tomorrow!

Doc's Daily Commentary

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Offense – Adding Trades

Offensive Actions for the next trading day: 

  • None today.

Defense – Managing Risk

Defensive Actions for the next trading day: 

  • None.

RSC Managed Crypto Fund

[visualizer id="72847"]
How to read this portfolio: Please read through the FAQ tab

  • ETH/USD 2% added 8/10/2018 @ $363.14. (12% more to add)
  • LTC/USD 2% added 8/10/2018 @ $62.56.  (6% more to add)
What is the RSC Managed Cryptocurrency Fund?: We have one goal: To beat the market. To do this, we aim to balance risk vs. reward. Additionally, we aim to enter positions advantageously and in small increments, not all at once. As such, the pie chart you see above is representative of our “expected” portfolio, but will likely not match our “actual” portfolio. Why don’t you just buy into every position at once?: We aim to not only beat the market, but do so in a way that allows us greater leverage than simply buying in all at once. To do this, we will DCA into our positions to lower the average buy-in, and allow us greater yield from our initial capital seed. This also allows you the flexibility to follow our documented moves or immediately buy in when you want. We expect this will help you follow along easier as our moves are more deliberate. By setting targets for allocation, you know exactly how we intend to diversify our portfolio. Why are you only targeting large caps? Where is ____ coin?: We are targeting large market capitalization coins regardless of our belief in their viability as this enables us to diversify our risk and improve our chances of staying positive. We can hedge our bets by creating a fund that incorporates all of the major assets yet distinguishes between them based on the allocation. For example, we allocated more to Ethereum over its competitors as we feel it has more built-in longevity given its status as the default ICO platform. Of course, that can change, and as such we will be periodically rebalancing this fund as we redetermine viability and yield. Can I invest in this fund / can you manage my funds?: Not at this time. We are looking for ways to legally tokenize a fund such as this, but at this time no avenue exists for US citizens. Will we be adding small caps / ICOs?: It is likely we will be starting a separate fund dedicated solely to small caps / ICOs. We feel that the market simply isn’t showing favorable risk / reward signs for us to be trading them right now, but that will likely change soon. Why was the previous portfolio discontinued?: We felt it wasn’t correctly connecting with our customers as we started it in late 2017 and even during the 2018 bear market we were still very profitable. The same could not be said for customers who joined us during the bear market and tried to replicate our portfolio. Simply put: we wanted a portfolio that was easier to follow along with and less risky for our customers while still aiming for profitability.

Technical Analysis Research

This past weekend we introduced a new “fund” project that we’ll be creating over the next few months, in piecemeal form. I will be slowly and methodically creating a “fund” with (currently) 23 assets that we will do “live” or at least very plainly indicate where we intend to enter portions of assets.

 

As long as the market continues grinding down in a bear, we will use sentiment-based entries to hopefully secure a better entry.   In today’s video I discuss the current opportunity with Ethereum, and how we’ll use positive divergence readings to potentially secure better entries on the way down. .     Here are the recent swings that we’re tracking in the portfolio below; :

 

  • DGB/BTC – long @ .00000608 (7/23). My target exit is .000008BTC.
  • WTC/BTC – Long @ .00155980BTC (4/23). My target exit is at .002BTC.
  • ADA/BTC – Long @ .00003931BTC (5/1) My target exit is at .00005BTC.
  • ONT/BTC – long @ .0008905 (5/20) My target is .0013BTC.

Please keep in mind that if you want to follow these trades, I am using FIXED RISK POSITION SIZING. This means that I am using a fixed amount of risk capital that is based on my account size, like 2%. I am assuming that the trade will burn to the ground and that I will lose that entire capital position! Only in this manner can one effectively manage a position the way that you have to. If you’ve every checked your blockfolio nervously every 5 minutes when you’re underwater, this will prevent that.   I will track these positions in this area and not in the main portfolio section. I will use a public portfolio tool to do so, which you can access by clicking below:

Public Swing Portfolio Link

I hope you all got a chance to catch my webinar class from earlier this year; if not, the replay is available here.  If you missed my earlier webinar, “More Profits in 2018; Ten Ways to Chart Like a Pro.” then you can catch the replay here.   My new class “Introduction to Technical Analysis” is now available via our online store.

If you go to buy any of our courses at our online “store” you can receive $10 off the street price with your member’s “coupon code” of member18crypto..

We’ve started to do some swing trades on alts, tracked in the previous section. I am mostly focusing on the top 10-20 coins for now until we confirm that we’re back into an overall bull market.
I am doing the majority of my Technical Analysis work on TradingView, 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 and/or Delta 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.

 

I am also trialing the Profit Trailer and CryptoHopper trading apps which are working well in this choppy market.

Fundamental Currency Research

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:

Chromapolis

For flipping Good.

For long-term holding Neutral.

What is it? 

Database-centric decentralized application orientated platform with a different approach to token economy.

What is our verdict? 

What we like: A good iteration on DApp development with several built-in features that will make DApps faster and more feature-rich

What we don’t like: No alpha, Public GitHub Repo, MVP, or Whitepaper. Looks like it will be fairly centralized to start with hand-picked nodes.

  • Project name: Chromapolis
  • Token symbol: CHROMA
  • Website: https://chromaway.com/ (website of the parent company ChromaWay, website for Chromapolis coming soon)
  • White paper: TBA
  • Hard cap: $15 million (private sale contributors will own 15% of the total token supply)
  • Conversion rate: TBA
  • Maximum market cap at ICO on a fully diluted basis: $100 million
  • Bonus structure: TBA
  • Private sale / white list: TBA
  • ERC20 token: Yes (will be switched to native tokens when the mainnet is launched)
  • Countries excluded: TBA
  • Timeline: Unconfirmed whether the project will have a public crowdsale at the moment
  • Token distribution date: October 2018

Website: https://chromaway.com/

Whitepaper: TBA

2017- 2018Q2 Portfolio (Discontinued)

Desired Holdings

  How to read this portfolio: Please click on the Chart Key tab above for definitions and color codes. The colors correspond to our 7 categories in the graphic below.

Tier 4

ZIL

IAM

FT

DATA

ELEC

None.

Tier 2

MOD

 Tier 3

REQ

SUB

LINK

NANO

KNC

Tier 4

BNTY

TAU

WISH

PHR

LOCI

XBY

ELA

ECC

POE

HPB

BIX

EVE

XVG

NULS

DNA

How to read this portfolio: Ticker: Contains the ticker code for the coin. You can search this ticker in Coinmarketcap to learn more about the coin. The color denotes the risk tier by our evaluation. Dark Red = T1, Dark Green = T2, Dark Blue = T3, Light Blue = T4 (Colors in the Ticker column do not interact with the colors in the other columns) Cost Basis = Our average purchase price for this coin. Current price = The average price of the coin based on the exchanges it is listed on. Strategy = What we plan to do with this coin. Staking is receiving dividends for that coin. Master node is also staking, but with a higher return rate for having a (large) number of that coin. Stop = Our exit point, if it exists What do the colors mean? The colors in the ticker column represent the risk profile of that coin. The colors in the other columns reflect what sector(s) that coin belongs to. Some coins belong to multiple sectors, which is indicated by multiple colors. The colors correspond to our 7 categories in the graphic below

 

 

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