Premium Daily Crypto NewsletterFebruary 10, 2018
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Crypto Market Commentary
Week In Review
All Time Low For Year Leads To Weak Recovery
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What a wild week for cryptocurrency.
If nothing else, understand that this has been one of those weeks that we’ll remember for a while as being a milestone in the colorful history of crypto.
We’ve had some highs, and some (literal) lows, and some things in between.
Let’s start with the good news:
The CFTC and SEC met with Congress on Tuesday to discuss the future of cryptocurrencies, ICOs, and blockchain technology itself. While there were many concerns raised, the overall rhetoric was one of regulators seeking to work with the blossoming technology and not against it.
Watch our video here regarding the implications this meeting could possibly raise.
In an internal report attributed to J.P. Morgan, the publicly hostile to crypto organization had a very different tone:
“Cryptocurrencies are the face of the innovative maelstrom around the Blockchain technology that is bringing both massive price volatility and a constant trial-and-error of new product try-outs and failures.”
The report continued, “The underlying technology for CCs [cryptocurrencies] could have the greatest application in areas where current payment systems are slow, such as across borders, as payment, reward tokens or funding systems for other Blockchain innovations and the Internet of Things, as well as parts of the underground economy.”
Now let’s discuss some exchanges.
First, as we vehemently stated several times, Binance was not hacked, they encountered a database issue and did a lot to resolve it. No, it’s not what we wanted to happen, of course, but the team was very open with what they were doing with updates every two hours.
Let’s now compare that to another exchange, Bitgrail.
In January Bitgrail started to limit withdrawals for customers: https://twitter.com/BitGrail/status/957636456851308544
A few days ago, Bitgrail suspended XRB (Nano) markets: https://twitter.com/BitGrail/status/961643213936300032
Now today, the revelation is made that Bitgrail has been hacked 15M Nano (formally Raiblocks), currently worth around $132M. Not good. What’s made the situation even worse is their actions throughout the month of January indicate that Bitgrail knew about the hack weeks before the public announcement today and have been doing their best to cover it up.
As we learned from the Nano team’s official statement on the matter, the Bitgrail owner contacted them to attempt to fork Nano to invalidate the stolen funds, similar to how Ethereum forked after the DAO hack. While we’re not experts on the block lattice technology powering Nano (to be fair, it’s proprietary to Nano), it’s apparent that the Nano team believes a fork would not be possible or warranted in this situation. The Bitgrail owner went on to threaten the Nano team, which just further cements his position as the most hated person in crypto right now.
If you were affected by this hack, our thoughts are with you as we lost some crypto as well, but thankfully not a lot.
Both examples of Binance and Bitgrail highlight the absolute importance of getting your funds off exchanges if you care about protecting them. Don’t become a victim of one of these hacks.
As a last little piece of news, we’ve been watching the top 100 Bitcoin addresses gain over these past few weeks. All in all, this highlights what we already knew, those who can look past the FUD and weak hands are those who will walk away from this bear market that much richer. The crypto rich get richer while the weak hands get poorer. Which camp do you want to belong to?
See you Monday.
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Offense – Adding Trades
Offensive Actions for the next trading day:
- No specific actions.
Defense – Managing Risk
Defensive Actions for the next trading day:
- No specific actions.
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.
VeChain is a global leading blockchain platform for products and information. VeChain is the world’s leading Enterprise-focused dApp/ICO platform for products and information. It aims to connect blockchain technology to the real world by providing robust infrastructure as well as IOT integration, with scalability up to 10,000 tx/s and pioneering in building real world applications. This is being achieved through partnerships and collaborations with innovative brands and industries. As of today, VeChain has established partnerships with PricewaterhouseCoopers, DNV GL, Renault Group, KUEHNE+NAGEL, D.I.G., China Unicom, etc., and accumulated extensive experience in an ever expanding list of industries including pharmaceuticals, liquor, auto, luxury goods, retail, logistics, supply chain,food and cold storage and more.
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) 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 ($WTC) is classified as a Dividend and Utility coin. Waltonchain is on the cutting edge of using RFID hardware to enable supply chain management 2.0. We believe Walton has the potential to become a dominant IoT blockchain solution Waltonchain is the only truly decentralized platform combining blockchain with the Internet of Things (IoT) via patent pending RFID (Radio Frequency Identification) technology. The custom RFID chips are able to digitally sign and verify transactions at the integrated circuit level, automatically and instantly reading and writing data to the chain without human intervention. This unique implementation of blockchain + IoT facilitates the true interconnection of all things in the real world with the virtual world, creating a genuine, trustworthy and traceable business ecosystem with complete data sharing and absolute information transparency. Walton has two major competitive advantages:
- A recently confirmed (to be signed) partnership with China Mobile’s IoT Alliance. China Mobile is the largest mobile telecommunications service in the world as well as the world’s largest mobile phone operator by total number of subscribers. Walton’s Management system is set to be implemented through mobile communication networks, and China Mobile is the largest one. Waltonchain is positioning themselves to be the single connector of the entire Internet of Things initiative put forward by the China Mobile IoT Alliance.
- They implement the blockchain through the RFIDs at the foundational layer. Their technology is patent-pending and gives Waltonchain a solid claim as the only blockchain that connects the physical world with the virtual world with truly reliable data. This is because all other IoT solutions tag items through API, and this means all the data is first passed through a centralized intermediate, a potential point of vulnerability.
Ethereum ($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.
OmiseGO ($OMG) is classified as a Dividend and Utility coin. OmiseGO is a Southeast Asia-based company creating an e-wallet that will make transfer of assets and currencies possible. Merchants and users of the wallet can transfer whatever asset or currency they desire. For example, you could use your ethereum, bitcoin, international fiat, or even your airline points to buy groceries using the e-wallet app on your mobile phone. Transfers can happen across borders, or even while traveling abroad. Unlike Western Union or PayPal for example, the fees are almost negligible, and the transfer is instant. Because it’s based on a blockchain, there are no intermediary banks necessary and users don’t need bank accounts to access those funds. This is especially good for migrant workers who send money home and often don’t have bank accounts and are forced to use expensive wire services instead.
NAVcoin ($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.
Simply put, ICON ($ICX) is a massive scale blockchain Platform that allows
- Decentralized Application (DAPPS) – Build DAPPS on ICON Platform like on Ethereum and NEO. Yes, soon, you will see ICOs happening on ICON platform for different DAPPS
- Interchain (Interoperability with Blockchains) – Allows different blockchains connecting to one another through their protocol. ICON is fully compatible with traditional blockchains like Bitcoin and Ethereum and in future can bridge other public blockchains such as Qtum, NEO and many others to achieve their mission statement – “Hyperconnect the world”
- Artificial Intelligence (AI) – Use of AI to ensure all nodes contributing to ICON Republic/platform are rewarded fairly and not to have certain powers over distribution policies. AI will continue to learn a variety of variables to determine optimal distribution policies and achieve complete decentralization.
- Decentralized Exchange (DEX) – ICON will integrate different DEX protocols on their platform to facilitate exchange of ICX and other future ICON platform currencies. Bancor protocol will be their first DEX protocol when mainent launches this month end and Kyber and others will follow. Not just throwing Kyber’s name out there, it was confirmed they are working with each other, official partnership yet to be announced.
Ripple ($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.
Fundamental Currency Research
Something we saw this week was general excitement in crypto that has seemed to be lacking since the new year. Always remember that no matter how bleak the market may look, how bad the news, humans are species of innovation and blockchain is a technology of disruption.
What we need to consider is the total volume is currently only around half to a third of what we were seeing at the beginning of the year. We won’t see a true bull market again until the volume matches the uptrend, otherwise we’ll continue seeing these weak recoveries.
We’ll get there. People will regain faith and the greed will return, and we’ll get a whole new set of weak hands to flood the market. It’s the cyclic nature of markets, and once you’ve seen it you’ll know what to look for next time.
Decentralized exchanges, sometimes denoted as DEX, are exchanges that allow you to buy and sell crypto that they support while still retaining the private key associated with your crypto.
Two of the ones we use are IDEX and EtherDelta.
The advantage of using decentralized exchanges, besides the advantage of being better secured as you are not giving up your private key, is that they often will have the new coins listed first. This in turn allows you to scoop up a crypto before it gets listed on larger exchanges, further leading to better returns for you. Decentralized exchanges can be a little tricky to learn, especially EtherDelta, but the pain is worth the reward of getting the new cryptos first.
Regardless if you use a centralized exchange like Binance or a decentralized exchange like EtherDelta, once you have bought a crypto you need to get it off the exchange if you do not intend to trade it. As we saw this week from Binance and Bitgrail, exchanges are the last place you want your crypto if you’re at all concerned about the safety and security of it.
We like Coinomi as a choice for a multi-coin wallet, and MyEtherWallet, despite their internal politics this week, is still a good choice for storing ERC20 coins. Make sure you coin is supported by these platforms and look up how to send it before you do anything.
For flipping Good.
For long-term holding Good. Blockchain ecosystem bridging tech is pretty hot right now.
What is it?
Omnitude is a radical concept in blockchain ecosystems.
Not only creating our own blockchain solutions that integrate enterprise systems, supply chains and eCommerce platforms. But also enabling a community of app developers that can imagine, build and deploy blockchain solutions to real world problems.
What does it achieve?
Omnitude enables businesses to solve problems in ways that were not previously possible without the rise of blockchain technology.
Omnitude will help achieve:
The creation of transparent and accountable manufacturing and supply chains.
A significant reduction in eCommerce fraud.
The enablement of a single customer identity for use across any Omnitude connected eCommerce site.
Blockchain integration between enterprise systems such as ERP & WMS.
… And many more solutions from Omnitude and the community built as Omnitude Apps.
What is our verdict?
What we like: The crypto that can pull this off will be easily in the top 10. Omnitude has a lot of things going for it.
What we don’t like: Very competitive area in crypto right now
Technical Analysis Research
Crypto assets are quite volatile, so wondering if the stop loss should be more like 15% in the crypto market.
Do you have a different stop loss strategy for different markets?” OK, let me set the record straight, as I know how confusing that this can be; the Golden Rule of Risk Management is:
Let no one position incur more than a 2% loss to your account.
There are several ways that we can apply that…but first of all please note that it is NOT a 2% stop on a position! Let’s show a couple of examples on how I can apply this to a $10,000 account…
First off, 2% of a $10,000 account is $200. With me so far?
Now if you had ALL OF YOUR FUNDS IN ONE POSITION, then yes, you’d need a two-percent stop loss on your position to enforce the golden rule. But we aren’t going to put all of our account into one position, are we? ARE WE?! (no!) I would rather that you spread out your risk and not lump it all into one huge target.
One way to do this is to specify a “fixed risk” position of $200. Buy $200 of your favorite altcoin, and it’s easy to do because crypto allows you to shave sizes to eight decimal points. Now you can forget about that position because you have limited the risk to 2% of your account. This is my favorite way to manage positions.
But let’s say that you put 5% of your account into a position. 5% of $10,000 would be $500. To limit the risk on that position to 2% of your account, you would limit your risk to $200, so you could set your “stop” to get out of that position when the loss has hit $200, or the position is now only worth $300.
I would rather that you built up your portfolio with several small positions and left a good cash balance, than a couple of massive positions which are going to cause you to hurl every time the price goes up and down.
Not much to report on the top ten coins….same patterns, although a nice little bump off of the bottom. Some are also breaking trendlines which is a start. Breakouts were violent in 2017…will they be the same this year, or do we still have to pay penance for December 2017?
We held an excellent class recently, Introduction to CryptoCurrency Trading. (Click here for more information and to sign up) This class is really targeted at the Crypto investor who wants to get moving but is somewhat uncertain about what they should do, and how to go about it. Another great candidate would be the recent investor who bought in at the top and is unsure of their actions. While you can’t attend the live class and the Q&A any more, the content is all there and we give you the slide download as well.
The green plot is the HPB/USD chart that we’re looking for; if you view this as a sideways, consolidating chart, you’d be correct. There is one additional place that we can look, which is the online broker itself that is listing this coin for sale, Kucoin:
Ahhhh….candlesticks. This is HPB/BTC so it’s going to look somewhat different than the HPB/USD version, especially that BTC has gotten a little lift in recent days. This is truly a chart that offers no specific patterns that I’d normally look for, however it’s clear that the price is near to “support” and might be a good buy point with a fixed-risk position. Dedicate a fixed portion of capital that is well-below 2% of your account, enter the position, and you have no stop to it. Your risk is fixed from day one and creates a liberating “don’t-care” condition to your mentality.
TradingView seems to be the big dog in crypto charting these days; I’d like to hear from you if you’ve found a different/better platform that works for you. (support at readysetcrypto.com) I’m wondering when the “big boys” of charting platforms are going to commit to this market, such as eSignal, qcharts, Sierra, TradeStation, etc. I’m particularly eager for us to get some of the more advanced scanning tools into this space, so we can scan for specific chart patterns.