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May 21, 2018Watch this video to see how to use this newsletter. Click the square in the lower right to expand the view.
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Crypto Market Commentary
Market Trends Slightly Downwards
Coins Fight Against Bearish Sentiments
The market trended slightly downwards today. The large caps attempted another rally as the weekend closed, but without enough momentum the rally faded and the majority of coins are slightly in the red today.
There were three major trends we observed coming out of this weekend.
First, we observed some perceived price instability for privacy focused coins. These are coins that attempt to mask the identity of the sender and / or recipient, allowing for truly anonymous transactions. This is a possible point of contention with many governments of the world because, as it stands, most cryptocurrencies are only pseudo-anonymous.
Exchanges are almost always forced to implement KYC / AML (Know your customer, Anti-money laundering) standards to keep operating legally in the country they are hosted in. So, for example, if you sign up with Coinbase you need to give them personal information, such as a picture of your Driver’s License or ID. That means your public address for your Coinbase account will be tied to your personal information, and given that the Blockchain is really just a long series of transactions, any transaction you perform with Bitcoin, for example, could easily be traced back to you.
This is important for ensuring that cryptocurrency is not used for illicit purposes, crime, or terrorist funding, which is often the criticism levied against it. However, privacy-focused coins mask the identities of the parties involved, allowing for such transactions to take place outside the purview of the law. Now, not all privacy coins are created equally, and some have had issues with breaches in anonymity, but for all intents and purposes privacy coins can currently provide the service they advertise.
One additional perceived benefit of privacy coins that is not often discussed is that it also protects against taxable events. Normally there is sales, income, or other taxes involved in most transactions involving large entities, but when the transaction is anonymous and no public record is kept, this allows businesses and individuals to operate outside the view of tax-hungry governments.
As the world’s reserve currency, the US dollar has always been the base value for most goods and services traded on this planet. Until recently there hasn’t been much reason to think about what the dollar symbolizes, and more importantly what gives it value.
After all, today’s currencies are fiat, Latin for “let it be”. There is no inherent asset backing the US Dollar ever since the Gold Reserve was abandoned in 1971.
If we strip away economic theories eventually we get down to an essential truth:
The value of the US dollar, and really any government issued currency, is based on government compulsion.
Government-issued currency is accepted for payment of taxes. If you don’t pay your taxes on their terms, they show up at your door with guns.
So we get to an absolute truth in today’s economies: the dollar is backed by the ability of the government to collect taxes.
Without this ability, the government loses power. Without power, governments cannot provide the public with adequate services nor maintain the status quo of society.
As such, the governments of the world must maintain that coercion, the duress of hardship and loss of society should taxes fail to be collected.
It will certainly become one of the most interesting debates internally and externally of crypto in the coming years, and we’re already starting to see it happen in Japan. Under the guise of fighting crime and terrorists, Japan is coercing exchanges into delisting or limiting privacy focused coins.
According to Japanese exchange, Coincheck, they will remove four privacy cryptocurrencies to comply with counter-terrorist financing (CFT) and anti-money laundering (AML) standards issued by Japan’s financial regulator, the Financial Services Agency (FSA).
Coincheck will end trading for Monero (XMR), Zcash (ZEC), Dash (DASH), and Augur (REP) will come into effect June 18.
Also revealed today was that another Japanese exchange, Korbit, will delist DASH, XMR, and ZEC.
It’s a little concerning to see, and it’s sure to become a trend with more countries, which is why we anticipate more exchanges to move to blockchain-friendly nations like Malta in the near future.
The second trend we saw today was thankfully positive for privacy coins, but also unsettling for world peace and the larger crypto space.
It was revealed that Iran and Russia could turn to cryptocurrency as a solution to evade Western financial sanctions and reduce their dependence on the US dollar.
Iran’s Parliamentary Commission of Economic Affairs has already “obliged the Central Bank of Iran to start developing proposals for the use of cryptocurrency”, said the authority’s chief Mohammad Reza Pourebrahimi.
Pourebrahimi confirmed that they held negotiations with the Russian Parliament’s Committee on Economic Policy, suggesting that Iran ‘has established cooperation with Russia’ in their cryptocurrency pact.
Pourebrahimi added:
“They share our opinion. We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods.”
“Over the past year or two, the use of cryptocurrency has become an important issue. This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system,” he said.
This is certainly an interesting revelation and one that will call into question the viability of trade wars, tariffs, and other measures that are simply obsolete in a world with cryptocurrency that fluidly moves between borders.
We are concerned that in the short-term this will raise suspicion of cryptocurrency and may even be a catalyst for anti-crypto sentiment.
This will be yet another catalyst that those pessimistic or outright adversarial to the larger goals of cryptocurrency will use. It’s important to distinguish that cryptocurrency is only a symptom of the larger move towards a more globalized society where individual borders mean less, but in this transition period it will certainly be painted unfairly.
This article from Coindesk nicely summates our thoughts on this:
“A confluence of technologies is poised to dramatically reshape the world of manufacturing and, in the process, render obsolete the existing international trade regime. A few get a lot attention: the rise of 3D printing, the application of internet-of-things (IoT) devices to shipping and logistics, the increasing prevalence of artificial intelligence and machine learning.
But it’s blockchain technology, with the capacity it gives to non-trusting parties to transact with each other by relying on a common source of digital truth, that will facilitate this disruption. It provides the enabling platform on which a new dynamic, highly fluid global system for exchanging value will emerge, one that’s far outside the purview of the World Trade Organization’s current “rules of origin” model.”
Last for today, we saw yet another Tether printing event this weekend.
The stablecoin generated $250 million worth of new USDT tokens. As Tether is pegged against the US dollar, it is meant to be backed at 1:1 ratio by US dollars in their reserve. That being said, Tether has been criticized for its lack of transparency.
It broke ties with its auditing firm Friedman LLP before the official audit could started.
This has led us to question Tether’s reserves are not 1:1 with every USDT that has been printed. If that is not the case, then Tether is using quantitative easing and is essentially acting as crypto’s central bank, which will have far reaching implications should they even prove to be insolvent.
Thankfully these printing events have slowed down in comparison to late 2017. During that time, every Tether event had an associated rise in the market. While there was a mild rally late Sunday, it seems the market simply does not react as strongly to these events as it used to.
Time will tell if the fate of Tether will truly end in catastrophe, or if they are really holding equivalent reserves, but regardless we will be using other stablecoins, such as Dai.
Talk to you tomorrow.
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Offense – Adding Trades
Offensive Actions for the next trading day:
- Please see Doc’s recent swing setups on ONT and ETH in the “Top Ten & Swings” section below.
Defense – Managing Risk
Defensive Actions for the next trading day:
- None.
Current Portfolio
Desired Holdings
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.
None.
None.
Tier 2
MOD
Tier 3
REQ
SUB
LINK
NANO
KNC
Tier 4
BNTY
TAU
WISH
PHR
LOCI
XBY
ELA
ECC
POE
HPB
BIX
EVE
XVG
NULS
DNA
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
EtherInc
For flipping Neutral.
For long-term holding Neutral.
What is it?
EtherInc is a fork of Ethereum to power the future of organizations – First live project to create digital organizations based on cryptographic proof instead of trust. eInc organisations can operate democratically and transparently with the consensus of its shareholders, without the need of a trusted third party and/or costly intermediaries.
What is our verdict?
What we like: Good to see MVP, team definitely has good dev experience, good niche
What we don’t like: Advisors are on many other projects, needs to do a better job of marketing and convincing businesses to join
Website: https://einc.io/
Whitepaper: https://einc.io/assets/files/einc_whitepaper.pdf
Tuesday 5/15
Norway-based registrar organization DNV GL has invested in blockchain startup VeChain. VeChain CEO Sunny Lu told CoinDesk that the companies would continue their partnership. 
“We are able to provide with VeChain a solution that balances safety and [speed],” Luca Crisciotti, chief executive of DNV, explained, adding: “Our mission is the ability to make sure that product is reaching the shelves, that it’s ultimately reaching the consumer … What we are providing to our customers is commitment.” Meanwhile, ICON also had a large partnership announcement today.
“Unchain will create a blockchain ecosystem fueled by a token economy, where the users are rewarded for their contributions to the network. DApp services discovered through ICON and Unblock, a subsidiary of LINE dedicated to blockchain research and to accelerate DApp projects, will be integrated with Unchain. This joint venture takes blockchain and decentralization another step closer to being a part of our everyday lives.” We found the following video to be a great summary of where we are with Blockchain today:
Monday 5/14
The Ontology Foundation and the NEO Foundation signed a memorandum of understanding on May 14th, 2018, concerning strategy and technology integration:
Whereas: Ontology is a distributed trust network that focuses on digital identity, data exchange and other trust collaboration scenarios. NEO is dedicated to realizing a distributed network that serves the smart economy. Both Ontology and NEO share a common technical understanding and vision, and both wish to promote blockchain technology and its applications.
Purpose: Ontology and NEO together provide compliance-ready, regulatable protocols to global developers. These protocols are supported by NeoVM with exceptional finality and a smart contract system with a robust and stable infrastructure-level network.
As such, the Ontology Foundation and the NEO Foundation have agreed to cooperate as follows:
Key Cooperation Areas
1. Ontology will provide digital identity, data exchange services and other customized services. NEO brings a mature and complete smart contract platform as well as distributed network infrastructure services to the table.
2. Smart Contracts: Ontology and NEO will work together to build a smart contract ecosystem, fully support the development and adoption of NeoVM and NeoContract, and collaborate on developing smart contract open standards.
3. Data Integration: Both parties will provide standardized technology interfaces (APIs, SDKs, etc.), and share and communicate development achievements and research results.
4. Cross-chain: Both parties will push forward with cross-chain research, with the eventual goal of producing integrable mainnets.
… We see this as an extremely promising step forward for both projects, and for the larger NEP5 ecosystem. The system of cooperation is one way this space moves forward, and we see NEO’s smart economy as a big part of that.
Technical Analysis Research
- WTC/BTC – Long @ .00155980BTC (4/23). My target exit is at .002BTC.
- ADA/BTC – Long @ .00003931BTC (5/1) My target exit is at .00005BTC.
- ONT/BTC – long @ .0008905 (5/20) My target is .0013BTC.
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:
Public Swing Portfolio Link
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.
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