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January 25, 2018

 

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Crypto Market Commentary

Markets Remain Choppy

Bears Still in Control

Today’s coins are trading in a relatively low volatility environment. With weekend-like volumes, narrow trading ranges were prevalent in most of the largest currencies. The day commenced in a bullish fashion, peaking in the mid 570’s, but the rally slowed yet again. The market is little changed compared to yesterday’s levels.

It has been a depressing fortnight for anybody reading various mainstream headlines touting the ‘end of Bitcoin’ and the arrival of the ‘crypto bubble’ crash. As we mentioned in our Daily Report, according to the mainstream media Bitcoin dies at least twice per week. Unsurprisingly, the most recent cryptocurrency market slump has led to naysayers stepping onto their soapboxes, crying out messages of ‘I told you so’.

Their rhetoric is not unfounded, given that the overall cryptocurrency markets have suffered two dramatic corrections in under a month, one just before the end of the year and the most recent beginning last week. So-called industry experts are speculating on the crypto bubble being burst without any real evidence to show that the markets are irreversibly damaged.

A wave of uncertainty in South Korea led to massive sell-off of cryptocurrencies last week, as traders unloaded amid fears of regulatory clamp downs from the government. Those fears were led by misleading reports of an all out cryptocurrency trading ban in a country which accounts for 20 percent of global trades.

Fears somewhat subsided as it was soon understood that South Korea will only ban anonymous trading – meaning people wishing to trade cryptocurrencies need to do so through authorised exchanges using a registered bank account.

This was coupled with murmurs of further regulatory moves in China, which has already banned cryptocurrency exchanges in the country. Unsurprisingly, the markets reacted as they would with any hint of bad news, which has led to bearish attitude.

Compounding the news, institutional investors weighed in. Financial service giant UBS is particularly bearish towards Bitcoin. Speaking at the World Economic forum this week, chairman Axel Weber said the company had advised clients to steer clear of investing in Bitcoin.

“Retail clients, who don’t fully understand these products, should be protected from going into these products, because if there is a retail client affected in the future, the question will be again who was the bank that sold them these products and then banks will be blamed again for what has happened.”

Weber went on to say that the growing interest in cryptocurrencies around the world will inevitably lead to further regulation. Regulations, as he told Bloomberg in another interview, could lead to further market corrections.

One theme that is becoming increasingly clear is that mainstream investment institutions are still worried about regulations crippling the future of cryptocurrencies. Investors’ interest is always piqued by growth in value of any asset, and while cryptocurrencies have not gone unnoticed, the uncertainty of their future is too risky for institutional investors to go in 100 percent.

However, what goes unspoken by critics is that any positive moves by countries could bring about exponential growth and adoption of virtual currencies. This year undoubtedly will hold a lot in store for crypto, and those who are completely dismissive either don’t understand it, or are too quick to write it off.

As an example of positive movement, Robinhood is launching a Crypto Trading app to compete with Coinbase. Robinhood is a popular app that allows fee-free stock trading. With an average user age of 26, it is mostly used by Millenials with small accounts. They only say that crypto can be purchased with cash (up to $1K deposits without Gold membership). I don’t think they’re trying to become a full fledged exchange like Coinbase has with GDAX as the back end, they’re simply a flowthrough to other exchanges. You’ll only be able to purchase BTC and ETH, and it will only offered in 5 states:
California
Massachusetts
Missouri
Montana
New Hampshire

That being said, this is just the beginning of their offering. Competition in the fiat exchange space is incredibly important as Coinbase, while by far the largest, also charges some of the highest fees. It’s no wonder they beat their earnings estimates by 300M dollars. Centralization in this aspect of crypto is completely unacceptable. Though happenly less frequently as of late, last summer anytime Coinbase would go offline, the markets would sell-off. No one exchange should have that power. Hopefully these are the first steps to challenging Coinbase and their near monopoly.

Registration is now open for our Member’s Only class, held this Saturday at 10AM ET (New York) The class is called “Introduction to Cryptocurrency Trading” and you can view more about it and join us by visiting this link here.

 

Have a great weekend.

 

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Offense – Adding Trades

Offensive Actions for the next trading day: 

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

Defense – Managing Risk

Defensive Actions for the next trading day: 

  • Nothing specific for early this weekend; 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

MyWish (added 1/23)

MyWish platform is an ecosystem of smart contracts accumulating a complex of blockchain solutions designed to integrate high technologies into the real sector.

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

 ELF

Based in Singapore, aelf is a crosschain blockchain protocol that intends to become the new internet infrastructure to support the next generation of digital businesses.

The team and its advisors have been advising numerous blockchain projects in the past and they see a few industries who could be the early adopters of aelf: financial services, insurance, digital identity and IPs, smart city, and internet of things.

Aelf will actively identify new business opportunities and dApps to be part of the aelf ecosystem. Below are some of the things that they are planning to do:

Interoperate with existing dApps on existing chains
Nurture new start-ups ideas
Educate and transform established companies to be blockchain savvy
As a “third generation” blockchain, aelf strives to provide a breakthrough in 3 areas: performance, resource segregation, and governance structure. We will explore these features in more detail below.

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 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’re seeing a sideways trend but the larger downtrend is still in effect. It is likely at this point that a correction will continue, but a recovery may soon be in the works.  

The massive upward movement in cryptocurrencies over 2017 has not gone unnoticed. The participants at the World Economic Forum (WEF) in Davos are being questioned about cryptocurrencies.

The traditional investors are still not willing to accept the rising clout of the cryptocurrencies and are pushing for tighter regulation. Only recently, Nordea Bank banned its employees from owning Bitcoin by Feb. 28. However, this move is facing strong opposition from the large unions.

Even the fears of a cryptocurrency ban by South Korea gathered a massive petition opposing the move. Finally, the Korean government only banned the traders from using anonymous bank accounts for cryptocurrency trading.

The classical investors and regulators fail to understand that these kinds of bans are unlikely to dent the popularity of the cryptocurrencies.

The CME futures expire tomorrow, and everyone is panicking that Wall Street will manipulate the price downward to gain the most profit. But it’s not that simple; CME has limits on what any given entity can hold, that make it almost unprofitable given the cost of manipulation.

Any entity is limited to owning 1k contracts containing 5 BTC each. Every $5 move in Bitcoin is a $25 profit/loss on a contract. In the recent month, we saw the price move from $19k to $10k potentially tomorrow at expiration – accounting for a $9k price move, meaning $45M possible profit (per entity holding the maximum 1k contracts; every $1k move in btc price equals a $5M profit/loss). I am a realist, and do believe that multiple entities could collect and agree on a direction (for example 10 groups) meaning the profit would be $450M for the month of January. However, open interest today says this isn’t happening (more on that below).

To manipulate the price today, it costs about $15M to buy all the BTC within $1k of the current price (based on the depth chart in GDAX). The group of 10 entities (referenced above) could agree to spend $15M to move the price lower by $1k, thus gaining the group of 10 a total of $50M (or a $35M profit for the group by spending $15M). This will not hold the price down the $1k, however, and many traders would instantly gobble up the orders at the lower price, meaning the entities would need to do this multiple times to keep the price low. A realistic strategy for Wall Street is going to be to hold their “manipulation money” until right before the market closes, and push price down in the hours leading up to expiration (4pm London time, or 11am Eastern Time for CME futures).

As the market matures and becomes more balanced, these opportunities will be harder to accomplish, but I don’t think it’s unreasonable that this could happen tomorrow. If so, it will be likely in the 9am-11am hours, and immediately rebound back.

Finally, the open interest on the futures expiring tomorrow is currently at 1,459 contracts, meaning the total Bitcoin in play here is 7,295 BTC or ~$80M, meaning the cost of manipulation will dramatically cut into profits. This also means there is not a conglomeration of entities teaming up to manipulate the price.

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

Watch today’s video on our picks for the top safest cryptocurrencies here:

 

 

 

 

We were extremely pleased to see our constant accumulation of Aelf ($ELF) this week has paid off nicely with a DCA buy in around 40% gains. This surge was in response to increased awareness and a listing on Bitfinex.

Our attention is fully focused on WaltonChain ($WTC) and ICON ($ICX) this weekend with both hosting a very important conference. We have very high hopes for both of these coins.

We recently saw a new coin rapidly break into the top 50. IOStoken ($IOST) is up 177% for the week, but also down 21% for the last 24hrs, which tells us that there is an element of pump and dump mixed with FOMO here.

As always, we condemn the use of pump and dump groups as they are very easy ways to lose money. The “inner circle” will buy into a coin before they release their pick, and the people in the “outer circle” will get horribly burned buying in at the ATH with no recourse of regaining their money as the coins PnD groups often pick are dead or have very little activity.

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:

 

Datawallet

Decentralized C2B data exchange on a mission to give people back data ownership

 

Overall, we like both the flipping and long-term potential for this ICO. Our thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flipping

Good. The project has a promising idea that could see mass market appeal.

For long-term holding

Neutral. While novel in concept, breaking the data monoply of the tech titans will not be an overnight or easy task.

When – Early Q1 2018, exact dates still to be announced

Token – DXT

Supply – A total supply of 750,000,000 DXT tokens will be created, with a maximum number of 250,000,000 DXT tokens sold

Price – $0.18

Platform – The first iteration is on the Ethereum blockchain, the second will be on QTum

Accepting – ETH, BTC and BCH

Hard cap `- $30 million

A link to the Datawallet whitepaper

Where to participate in the Datawallet token sale

Technical Analysis Research

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

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

I have been going on and on about how we are “not there yet” on finishing the correction. I do believe that this will go on and on until the recent “weak hands” (who bought in December) fold up their tent, proclaim that “Bitcoin is a scam!” and sell out. Normally a true bottom requires just one catalyzing piece of horrid news to shake them out. It’s not fun, but the band-aid needs to be ripped off.

Many coins, however, are putting in excellent consolidation patterns and should absolutely roar out of this holding pattern when it’s finished.

I hope you’re able to join us for this weekend’s class. (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. Hope to see you there!.

  Last week I talked to you about ELF and how I would like it if it broke its current pattern to the upside. That occurred today. It’s still good although less so than if you have bought on the breakout. I play price patterns only; I depend on Mav to find the “good coins” and then I use charts to identify a good entry point….or exit.

 

 

 

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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