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March 3, 2018
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Crypto Market Commentary
Week in Review
Some positive signals shining through, but a long way to go
We end this week up overall by nearly 40 Billion. This is some consolation given that last week was almost completely bearish, but the market volume still remains thin and the price action is slow.
One of the biggest stories this week was the SEC issuing subpoenas to the largest US based ICOs. The regulator apparently wants to have insight into the mechanisms employed by ICOs and pre-sales leading up to public crowdsales.
This comes right after the news that the total funds raised by ICOs in February has fallen 55% compared to January. Clearly, we are starting to see a shift in the market as ICOs are beginning to anticipate the coming regulations. This was all but confirmed when SEC Chairman Jay Clayton said earlier in February, “I believe every token I’ve seen is a security,” despite ICOs labeling their tokens as a utility and not a security.
While we are likely still far away from actual legislation for handling ICOs and anything related to crypto as a whole, uncertainty is the bane of a free market and will likely continue to limit confidence in crowdsales.
As we discussed in length earlier this week, we heavily disagreed with the comments made by Bill Gates, who said that cryptocurrencies were being used to facilitate the purchases of illicit drugs such as fentanyl.
While there are a number things that are inaccurate or incorrect about that sentiment, our chief concern is the tautology, the repeated idea, that bitcoin and cryptocurrencies are the tools of the “dark web” and criminals. Perhaps in your own experience when discussing cryptocurrencies with friends and family you’ve found that they know about them, but the only belief or knowledge they have is what you could have described Bitcoin with back in 2011. Bitcoin was limited in use. Bitcoin was used for illicit drugs through portals such as Silk Road. It seems those perceptions are hard to kill, even as crypto has entered a new era. Some people will never be convinced of the potential and that’s bound to happen with any new technology. Know anyone who still doesn’t have a cell phone? Or use the Internet?
As we discussed on Thursday, Bank Frick in Liechtenstein has started selling major cryptocurrencies to their customers and actually selling the assets themselves. This is important as they handle all the elements that average investors would rather not touch: asset management, security, and transfer. What’s also important is that this is one of the first banks that actually sells cryptocurrency, not a certificate or binary option. We believe this will become a growing trend, but will be slow at first.
To that end, a number of banks have come out saying that cryptocurrencies are a direct threat to their business model. Bank of America, Chase, and now Goldman Sachs have all cited cryptocurrencies as directly compete against them if they gain widespread adoption.
“Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies,” Bank of America said in a regulatory filing.
“Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation,” Chase wrote in their annual report.
“We may be, or may become, exposed to risks related to distributed ledger technology through our facilitation of clients’ activities involving financial products linked to distributed ledger technology, such as blockchain or cryptocurrencies, our investments in companies that seek to develop platforms based on distributed ledger technology, and the use of distributed ledger technology by third-party vendors, clients, counterparties, clearing houses and other financial intermediaries,” Goldman disclosed in a filing with the US Securities Exchange Commission (SEC).
Adding to the growing cacophony of concern, Daniel Masters, a former high-flying JPMorgan trader turned cryptocurrency fund manager says banks “have absolutely failed to innovate in any way, shape, or form and now they’re paying the price” in the cryptocurrency market.
Said Daniels, “The analogue financial services companies are not in this game at all. They don’t want to touch the core currency, which is Bitcoin or ethereum, they’re suspicious about the industry itself. A lot of people think it’s a criminal enterprise and a Ponzi scheme and a scam,” which echoes my comments from before.
What I do need to stress through all of this is that crypto isn’t trying to break banks. It’s a nice side-effect that these institutions, which are deemed “too big to fail”, are feeling the heat, but crypto isn’t about better banking or lower fees or being faster than VISA. It’s about peaceful social consensus. Of course, monopolies protected by a forceful state would have never invented cryptocurrencies because it would have undermined their power. When it comes down to it, crypto is about rebalancing the entire power structure between banks, the financial sector as a whole, the state, protected industries, and citizens themselves.
Of course, the rebuttal to that is that people will look at the early Bitcoin backers who are multi-millionaires or they’ll cite my recent video on masterndoes and say, “It’s just one group of rich people replacing another group, how does that change anything?”
It’s a good point, but I think it’s important to stress that we’re not even close to the tipping point here. The reason people made millions on Bitcoin was because they had to hold through some of the most bleak periods in crypto history. The Silk Road getting shut down and Mt.Gox getting hacked make the last two months look quite trivial in retrospect. So, there’s an element that your investment could absolutely go to zero here. That being said, investment in crypto doesn’t necessarily mean desiring more fiat currency, but wanting more purchasing power in the future, believing that crypto you buy today with fiat will have the capability of buying you more goods in the future relative to the amount of fiat you might have held otherwise. Crypto can enable consensus on value possession and transfer, which it needs to have to be relevant.
Those that understand that peaceful consensus is significant will be more inclined to hold long term, waiting until we hit the “tipping point” and crypto functions as a real currency, rather than cashing out in the short term as other will do. It’s important to note that “consensus” with currencies is just one use case. Networks such as Ethereum enable consensus on data, whereas networks like Bitcoin are restricted to mere value transfer and ownership, which is why the paradigm of crypto has shifted in the past year and people like Bill Gates do not see it while Chase and Goldman fear it.
Lastly this week we saw Vladimir Putin endorse cryptocurrencies. He said that economies benefit from being industrially and technologically diverse. Cryptocurrencies and blockchain in general is an emerging industry with a lot of use-cases and it would make sense for Russia to adopt it in order to future-proof its own economy. Putin stated, “The Stone Age has not ended due to the lack of stones, but because new technologies have appeared.”
What’s interesting to us is the potential geopolitical implications of cryptocurrency being endorsed by Russia. Would adversaries, such as the United States, endorse blockchain proliferation because they wouldn’t want to be seen lagging behind the Russian state technologically? It’s a compelling narrative to consider.
Have a good weekend.
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Offense – Adding Trades
Offensive Actions for the next trading day:
- Entered SLT position
- Expanded OMG position
- Upgraded OMG position
- Upgraded TRAC position
Defense – Managing Risk
Defensive Actions for the next trading day:
- None.
Current Portfolio
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
ELA
HPB
CPC
SLT
Tier 1
WTC
Tier 3
TRAC
Tier 3
REQ
SUB
LINK
NANO
Tier 4
BNTY
TAU
WISH
PHR
LOCI
HPB
XBY
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 ($ETH) is an open blockchain Platform that lets anyone build and use decentralized applications that run on blockchain technology. Like Bitcoin, no one controls or owns Ethereum – it is an open-source project built by many people around the world. But unlike the Bitcoin protocol, Ethereum was designed to be adaptable and flexible. It is easy to create new applications on the Ethereum platform, and with the Homestead release, it is now safe for anyone to use those applications.
OmiseGO
OmiseGO ($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.
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.
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.
Fundamental Currency Research
Bitcoin’s dominance has once again crossed the 40% threshold, currently near 42%, which is up from its all-time low of 32% back in January. This is a sign that investors are shifting to safer coins during these uncertain times. We’ve been in a tennis match between $400 Billion and $500 Billion for weeks, which is a clear signal that new money just isn’t entering the market right now. Those investors that are active are making the shift from altcoins back into Bitcoin, which has been the markets response in the past to downward markets. This is evident by Bitcoin having some of the highest returns over the past week throughout the top 100. Through all of this, the market is much slower and has less volume than a few months ago, so we encourage patience instead of trying to chase returns right now. What we need to stress is how much easier it is to make a mistake during downturns. There’s opportunities, yes, but there’s much greater pitfalls as well. Everyone feels like a genius during a runaway bull market, and a lot of people make mistakes during a down market. Crypto will come back, and we will see new horizons, even if that’s hard to believe right now. The technology is only getting better, the breakthroughs are still happening, and fundamentally we are getting closer to governmental acceptance. Crypto’s time to shine is coming, and we have every reason to be onboard when that happens.
The main mission of Smartlands Platform is the creation of new class of low-risk tokens based on real high-profitable assets. This new class of tokens – called Asset Based Tokens (ABTs) – to be issued on Smartlands Platform and will favor significant demand from investors, while tokenized business is motivated to cooperate with Platform to issue tokens (you can find additional information about ABTs in our Whitepaper). The major idea of Smartlands Platform is the tokenization of agricultural assets. In the process of tokenization of the agricultural assets, we also deal with the tokenization of the the real economy assets that are closely related to agriculture (e.g. walnut processing line, pig farms, grain elevators). It means that our platform must be suitable for both farms/orchards and other production assets. Taking a closer look at the issue we decided to expand Platforms coverage to real economy assets, especially related to agriculture, given there is no other tokenization protocol similar to ours. We made an expansion of OmiseGo ($OMG). OmiseGO has a LOT going for it right now. There are a lot of different products and projects: Whitelabel wallet SDK Decentralized exchange Cash in / cash out points Plasma development We see OMG as a natural expansion of the Ethereum ecosystem, which is further solidified by Vitalik Buterin’s work with it. Plasma is a big deal even though it’s still far away from production status. OMG is not a flashy play right now but rather a slow burn grower, and as such, we’ve also upgraded it to our coveted Tier 1 status. We expect investment in this crypto will be a stable return, which is exactly what we like to see in a Tier 1. We need to make a clarification regarding ICON ($ICX). You do need to make the token swap in the future, but only those who participated in the ICON ICO are eligible for the upcoming airdrop. If you are eligible, you will have received an email from the team explaining the details of the airdrop. Token swap details will be released later this month, at which point we will provide an instructional video.
Datarius
For flipping Neutral.
For long-term holding Neutral.
What is it?
As a P2P platform, the system enables users to decide themselves whether to use any of variable services and applications. This in turn allows to almost completely reduce transaction costs. Datarius serves as a direct link between lenders, borrowers, and the related services – managers, analysts, insurance companies, funds, trading terminals.
What is our verdict?
What we like: Very interesting project with a clearly ambitious team.
What we don’t like: Their whitepaper is a bit thin and their project has serious technical hurdles to overcome building their own blockchain with only a few devs.
Website: https://datarius.io/
Whitepaper: https://datarius.io/Whitepaper_eng_compressed_05_02_2018.pdf
Technical Analysis Research
But institutional participation will be a good thing, in time. More capital will flow in, the volatility will reduce, two-way trading and derivatives will be introduced, and much simpler forms of trading will be seen….not this crazy “move LTC to Binance and then swap it for…” style of trading known today. But one thing will not change, and that is digital security. So enjoy being a pioneer in this space. The moves that you make and the knowledge that you gain during this time will be known some day as “the good old days.” As I get time going forward, I’ll continue to develop the short-term swing trades that we can take on the 30 minute chart that I first discussed in last weekend’s report. The key to securing commission-less trades will be to use limit orders in which we are the market-maker on both sides of the trade, in and out. Stop orders are traditionally market orders, so that might introduce a level of noise that we’ll have to work around. Fees are not cheap in this regard at .25% for BTC. If Stops are necessary (vs. mental stops and using limit orders to exit) then perhaps LTC would be a better instrument at .3% taker fees, which if my math is right is $.66 vs. a $26 commission for BTC. If I get more interest I will also also consider securing a license for profit trailer to see if we can set up trades. Here are the elements that I think that one needs to successfully participate in short-term swings:
- Instrument/Asset to Trade: What you’re trading needs to be liquid enough that your position is just a drop in the pond.
- Timeframe: The timeframe that you’re going to trade needs to match your temperament, your available time, and the opportunities available.
- Fees: minimizing net fees is important to achieve a net positive profit factor.
- Entries: you must define clear, non-negotiable entries with transparent, easy-to-follow rules.
- Exits: must be defined at or before your entry so that there is no guesswork.
- Tracking/Analysis: a huge part of any system, it must learn from errors/mistakes/losses to determine if there is a root cause behind the loss.
- Start small: My preference is that you start these trades with the minimum possible position size, and only through demonstrated performance should you start to lever up to even a fraction of a percent of your account size.
If you go to buy the course at our online “store” you can receive $10 off the $59 street price with your member’s “coupon code” of member18crypto..
I’m not placing too much emphasis on charting Altcoins right now while markets are still working out the eventual bottom. Most coins are in an awful consolidation pattern whose only point now is to encourage investors to give up and toss their “bags.”
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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