Premium Daily Crypto NewsletterMay 7, 2018
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Crypto Market Commentary
Market starts the week with series of drops
Temporary pullback or start of the end for the bulls?
Today the market went through another sharp 5.5% correction before slowly regaining composure over the course of the day to be only 2.7% down.
What largely drove this was the combination of a CNBC interview with Bill Gates, Warren Buffett, and Charlie Munger who were all extremely bearish against cryptocurrency, and claims that the SEC hearing today on Ethereum was simply “orchestrated FUD”.
As we had mentioned several times, the Wall Street Journal had reported that the SEC was looking into whether Ethereum was a security. Today it was implicated that there was no official hearing scheduled and that any discussions held would likely not pertain to solely Ethereum.
The author of the WSJ article, Paul Vigna, was quick to defend his reporting, saying that they had “unnamed sources” that confirmed it was about Ethereum.
According to him, “It’s nothing that major. A “working group” meeting, not a public meeting. How’d we find out about it? The way we find out about everything. We, like, talk to people.”
Regardless of the implications of this meeting, it should serve as an example of how market manipulation is both internal as well as external. The crypto market took a single paragraph and blew it out of proportions. Needless to say, an immature market is going to invent its own demons.
At the end of the day, we don’t believe this is orchestrated FUD. What the WSJ and Paul Vigna reported was that a working group was meeting today to discuss the topic, and an internal working group meeting is going to be purely internal. As such, it isn’t something that would be expected to appear on the public calendar for either the SEC or CFTC. Furthermore, is it not a topic that should be expected to result in any public announcement or especially a final decision. Essentially, people who don’t know how these things work were guilty of reading far too much into what was said in the article and sent the market into an unnecessary panic.
The second event that rattled the market today was an interview with the “FUD dream team”. Three billionaires together in a room can certainly move a lot of money with their words alone, and they were very quick to make their opinions on Bitcoin and cryptocurrency known.
“Bitcoin is worthless artificial gold which if it succeeded would facilitate a lot of illicit activity.”
Cash, guns, and cars are used by criminals too. Should we ban those as well?
“That is not something that the world needs.”
So should people be OK with the system that caused the 2008 financial crisis by pushing people into mortgages they had no hope of paying for? That continually loses people’s personal information in massive hacks? That defrauds customers by opening accounts without their consent? That prohibits the amount of their own money they can withdraw?
“The fact that is clever computer science does not mean it should be widely used and that respectable people should encourage other people to speculate on it.”
You could have said the exact same thing about the Internet back in the 90’s, and you’d be just as wrong.
Said Bill Gates, “There’s some really good technology such as sharing databases and verifying transactions, but Bitcoin and ICOs, I agree [with Munger] completely – it’s one of the crazier speculative things… because as an asset class you’re not producing anything… you shouldn’t expect it to go up…
It’s a pure greater fool theory type investment and I would short it if there was an easy way to do it.”
You can easily short Bitcoin Futures, Bill. Once again you disappoint us with how little you know for someone who should understand this better.
“Suppose you could make a lot of money trading freshly harvested baby brains. Would you do it?” Munger asked.
We’re speechless at this. Obviously, it’s meant to be a soundbite, but the sheer callowness on display here is astonishing.
“I regard the whole thing as a combination of dementia and immorality. I think the people pushing it are a disgrace. There ought to be some things that are beneath you, that you just don’t do, and this is one.”
Not to appear pedantic, but Mr. Munger, you’re also on the record for saying, “Philanthropy should not come at the expense of your lifestyle.”
It should definitely be noted that Buffett and Munger, who are chairman and vice-chairman of Berkshire Hathaway respectfully, are heavily invested in legacy financial services companies. In fact, 6 of the top 10 investments that Berkshire holds are of this category. It’s no wonder they’re constantly sharing their opinions on the space.
Meanwhile, Warren admitted recently that “I made the wrong decisions” when he passed up investments in Amazon and Google. This comes right after he bought 75 Million more Apple shares last week. Clearly, he finds value in new technology only decades after it has been introduced.
In other news, the new head of Korea’s primary financial regulator (FSS) has confirmed that they will look to ease regulations on domestic cryptocurrency trading.
“Regarding cryptocurrencies, there are some positive aspects…The FSS will collaborate with the FSC when an inspection on policies and financial institutions has different configurations associated with different scopes. FSC inspects policies, while the FSS examines and supervises financial institutions but with the oversight of the FSC.”
As we learned in September the FSS issued the ban on ICOs in South Korea. This sentiment, combined with the recent bill that was introduced that will legalize ICOs in South Korea after last year’s ban, makes us very positive for the future of cryptocurrency on the Korean peninsula.
Talk to you tomorrow.
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Offense – Adding Trades
Offensive Actions for the next trading day:
Defense – Managing Risk
Defensive Actions for the next trading day:
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 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.
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.
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
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:
For flipping Neutral.
For long-term holding Good.
What is it?
FTEC is an an ecosystem of intelligent services and neural networks for conducting effective trading activities on cryptocurrency markets.
What is our verdict?
What we like: The ability to have AI trading done from a smartphone is extremely interesting.
What we don’t like: Neither the Desktop App nor the Mobile App will be ready in time for the ICO.
A pair of Congressional subcommittees will update their continuing mission on blockchain technology during a hearing tomorrow.
Tomorrow’s session will be more narrowly focused compared to a similar hearing held in February.
While the February event covered blockchain applications beyond the realm of cryptocurrencies – tomorrow’s hearing will focus on blockchain’s use in supply chain management.
A representative for Lamar Smith, the chairman of the House Science Committee, said they will host “experts in intellectual property, cybersecurity, as well as shipping and logistics.”
Rep. Roger Marshall, referred back to their past work and said tomorrow’s meeting builds on that:
“This hearing will build upon the previous one, which explored the science behind blockchain technology. I know the intent of the hearing is to be informative but look forward to seeing where the discussion will go and the questions my colleagues ask,” he said
“The committee has an interest in supply chain risk management (SCRM) through our jurisdiction over the National Institute of Standards and Technology, or NIST, which has worked extensively on SCRM,” press secretary Brandon VerVelde said, adding
“This hearing is intended for information-gathering for the committee members. We look forward to learning a lot from the witnesses.”
Meanwhile, we just saw EOS move a huge amount of Ethereum, the currency they hosted their ICO with, from their wallets into Bitfinex.
This could signal that they intend to dump over 200,000 ETH, or over $150M worth. This could be in response to their upcoming mainnet release, or it could be in response to the SEC hearing on Ethereum today.
Whatever the case, such a large dump would certainly have huge implications on the larger market.
On Sunday, HBO’s popular comedy “Silicon Valley” had an episode which dealt with cryptocurrencies.
While cryptocurrencies, and more specifically ICOs, weren’t portrayed in the best light, we think this is a great way to get people talking about crypto.
Check out this humorous scene from the show:
WATCH: Pied Piper's Bertram Gilfoyle talks (rants) to @EmilyChangTV about the company's recent ICO and his opinion of banks, paper money and VCs (he's not a fan).
— Tech At Bloomberg (@TechAtBloomberg) May 7, 2018
Technical Analysis Research
- WTC/BTC – Long @ .00155980BTC (4/23). My target exit is at .002BTC. Doing just fine.
- ADA/BTC – Long @ .00003931BTC (5/1) My target exit is at .00005BTC.
Please keep in mind that if you want to follow these trades, I am using FIXED RISK POSITION SIZING. This means that I am using a fixed amount of risk capital that is based on my account size, like 2%. I am assuming that the trade will burn to the ground and that I will lose that entire capital position! Only in this manner can one effectively manage a position the way that you have to. If you’ve every checked your blockfolio nervously every 5 minutes when you’re underwater, this will prevent that. I will track these positions in this area and not in the main portfolio section. I will use a public portfolio tool to do so, which you can access by clicking below:
If you missed my earlier webinar, “More Profits in 2018; Ten Ways to Chart Like a Pro.” then you can catch the replay here. My new class “Introduction to Technical Analysis” is now available via our online store.
If you go to buy any of our courses at our online “store” you can receive $10 off the $59 street price with your member’s “coupon code” of member18crypto..
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.
I am also trialing the Profit Trailer and CryptoHopper trading apps which are working well in this choppy market.