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January 22, 2018

 

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Crypto Market Commentary

The Empire Strikes Back

Post-Crash Consolidation Enters Second Week

This week, it was reported that 1 out of 10 bitcoin transactions is being processed in India and more than half of Russians are aware of bitcoin. The adoption of cryptocurrencies like Bitcoin and Ethereum is rising rapidly in major economies with unclear regulations and policies. Hence, if the Indian and Russian government regulate their respective cryptocurrency markets in 2018, it is likely that the cryptocurrency market will surge in terms of daily trading volume and value.

The chairman of the State Duma’s financial markets committee in Russia stated that he expects cryptocurrency regulations to be introduced in March.

“The problem is that we already have a lot of people who acquire [cryptocurrencies] and they are deceived, we need to give people the opportunity to work legally with it, to protect them as much as possible”

Analysts at Deutsche Bank released a note to clients on Friday, stating that there is a growing correlation between the price of Bitcoin (BTC) and the CBOE Volatility Index (VIX), also known as Wall Street’s “Fear Index.” They wrote in the note that a lack of fluctuation and volatility in the stock market is leading investors to look elsewhere to make money. Because of institutional investors’ growing interest in more risky investments like cryptocurrencies, the correlation between Bitcoin and VIX has increased dramatically.

“ . . . a growing number of institutional investors are watching cryptocurrencies as the frontier of risk-taking to evaluate the sustainability of asset prices. The result is that institutional investors, who are supposed to value assets using their sophisticated financial literacy, analysis, and information-gathering strengths, are actually seeking feedback about the market from cryptocurrency prices (which are mainly formed by retail investors).”

As long as volatility in the stock market is decreasing, the price of BTC and other mainstream cryptocurrencies will continue to rise as investors continue to turn to the crypto market to make money.

Now about today’s correction . . .

One of the mistakes that market pundits make is looking for correlation and “answers” to a move. The reason that this normally fails is because markets are generally efficient, meaning that all known information is already priced into an asset at that second. And this manifests itself in markets in odd ways, by seeing the price sell down after good news…because the good news was ALREADY priced into the coin and it had nowhere to go. Markets are completely irrational and illogical; one of the first things that traders must learn is that 1 + 1 does not equal “2” when it comes to financial markets. Linear logic never works, as the markets’ primary job is to separate the largest possible group of traders from their capital. Only the Smart Money wins in the end.

So how does the Smart Money operate? By fading the Herd, by taking the difficult trades that feel bad, by following their plan and doing the things that are difficult.

One thing that I would LOVE to see in the near future is one more piece of “horrible” news for crypto, another one of these sinister pieces of news that will make everyone assume, “Well, that’s IT. I am done. Crypto will never recover!” We’ll see a very hard drop which will cause a collective “puke” amongst the weak hands that bought the highs, and at that exact moment ALL of the bad news will be priced in, and there can be no further downside. These selling capitulations are when we see true, lasting bottoms. Remember, the more violent and nefarious the selling is at the lows, the stronger and longer-lasting will be the rebound. Get down on one knee, genuflect, and pray for violence to the deity of your choice….it’s time for the true washout lows.

This weekend we plan to offer a 3+ hour live training webinar where we’ll cover the who/what/where/when/how of trading crypto, and it’s meant as a primer to get you up and running if you’re just getting started with crypto. It will be held this Saturday from 10am ET (New York time) to about 1pm ET, and will released to MEMBERS ONLY for a special price of $49. We want to keep this one inexpensive and intimate for this first crypto training session. You will get to chat with us live and we’ll answer your questions as well, plus we have written materials to help you follow along. Before anyone asks, yes we will immediately host this in your Premium Member’s Home so you’ll have access to this if you have to leave early, you’re on the other side of the planet and sleeping, or have prior obligations. Watch at your convenience! Watch this space for the offer and more details on the agenda, and we expect to start signing people up on Wednesday.

In the near future we hope to release trade alerts to our premium customers through a telegram account, with which we can start sending you live trade alerts. Job number one for us right now is to strengthen and stablize our tech platform, so we appreciate your patience while we get everything nailed down. It’s been quite a week and we’re glad you’re here!

Offense – Adding Trades

Offensive Actions for the next trading day: 

  • In today’s video I showed the analysis and justification for entering NULS; pay attention to the sizing discussion as well.
  • Expanded positions in ICX, NULS, and ELF.

Defense – Managing Risk

Defensive Actions for the next trading day: 

  • Nothing specific for early this week; please see comments in holdings below.

Current Portfolio

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.

Tier 4

TAU (added 1/21)

Lamden is a suite of developer tools that speed up the process of creating new and custom blockchains and apps. The Lamden Tau token connects these new projects together and with mainchain cryptocurrencies.

BNTY (added 1/21)

A decentralized bounty hunting platform enabling anyone to manage bounty programs, and bounty hunters to receive payment for completing bounty tasks.

Tier 2

 ICX

ICON is one of the largest blockchain networks in the world. ICON boasts independent blockchains comprised of reputable institutions in major industries. ICON aims to build a decentralized network that allows independent blockchains with different governances to transact with one another without intermediaries.

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

In the large caps we’ve see a general sideways trend after a small recovery this weekend. It is very likely at this point that a correction will continue.  

Through a combination of some news from India and IOTA wallet hack the market has shown some lower highs as we have reached a total market cap in the lower 500B range. Regulation fear continues to be the rhetoric causing weak hands to panic. As we’ve noted several times, regulation would be a catalyst to legitimizing crypto, despite seeming otherwise.

Large caps continue to prove their worth as “ports in the storm”, where very few have losses above -30% over the past 7 days, compared to the rest of the top 100.

It is quickly becoming clear that the market is less responsive to these minor corrections. We saw a similar trend in September. Eventually, we will hit the point of “maximum adversity” where no more selling is prevalent, at which point the market will shift back to a buying mood.

Overall this week we are closely watching the price movement and will continue to watch this macro trend unfold.

In summary, it may be wise to buy the dip: 

 

We are very excited to see our WaltonChain ($WTC) stack is about to have a fun couple months ahead. Today Walton announced an event on the 28th which will encapsulate every reason it’s one of our T1 holdings.

I hope people are more concerned with the contents of the package rather than the packaging itself, because if you can look past the English typos, this is filled with incredibly bullish news:

7(8?) publicly held strategic contract signings in front of almost 16 Chinese media outlets. A peek at the upcoming rebranding. This is coming off the win for the 2018 Outstanding Blockchain Company Award. It seems like this event will be a pivotal moment for Waltonchain’s public image, and goes to highlight the amount of behind the scenes marketing that is actually taking place. We anticipate a Walton will be leading the market recovery with all of the positive news surrounding this project.

In addition, we are also watching for price action on ICON ($ICX) leading up their mainnet launch on the 24th and subsequent annual summit on the 31st.

Otherwise, we anticipate the markets are coiling, building up energy in anticipation of a breakout. It may be several days or weeks until we see market resurgence but we remain confident that will happen in the short to midterm.

Watch today’s free daily report video for some exploration of market psychology regarding downturns:

 

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:

FABRIC

THE FABRIC TOKEN ECOSYSTEM

When – February 15th, 2018 and runs until April 1st, 2018

Token – FT

Supply – A total supply of 100 Million FT tokens will be created, with a maximum number of 80 Million FT tokens to be sold

Price – $0.1125 for 1 FT

Platform – Ethereum

Accepting – ETH

Hard cap – 80 million FT

A link to the Fabric whitepaper

Where to participate in the Fabric token sale

Technical Analysis Research

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

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

In the last few days I’ve mentioned the need to “capitulate” before the bottom is in and it seems like we’re almost there, we have almost reached the point of maximum adversity. Remember, the majority of crypto investors (and specifically Bitcoin) must sell out their coins at great personal cost when they finally get to the point that they cannot take it any more. You normally find that this occurs all at once in a big “whoosh” to the downside marked by a long-tailed candlestick.

In today’s video I went through the process that you would go through to convert USD to crypto and then use it to buy an alt-coin on a brokerage like Binance. My first time through this drill I was a little shocked at how convoluted the process was, but I would imagine that it will get simpler in time as crypto gets more mainstream. You’ll look back on this as the “good old days” some day.

One of the important things that I showed in today’s video is risk management through sizing. You can size a swing trade like this in a block where it will not matter to you. I have written off the $100 cost of today’s trade and given it a ritual “Viking Funeral.” This is also called the concept of “duration over direction.”

In today’s video I showed why I wanted to get into NULS. I’m just taking an early entry anticipating a break from this consolidation pattern with high energy on the chop index:

:

 

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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