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Here is how to play the altcoin game - for newbies & champs
I have been here for many previous altcoin seasons (2013,2017 etc) and wanted to share knowedle. It's a LOOONG article. The evaluation of altcoins (i.e not Bitcoin) is one of the most difficult and profitable exercises. Here I will outline my methodology and thinking but we have to take some things as a given. The first is that the whole market is going up or down with forces that we can't predict or control. Bitcoin is correlated with economic environments, money supply increases, safe havens such as Gold, hype and country regulations. This is an impossible mix to analyze and almost everyone fails at it. That's why you see people valuing Bitcoin from $100 to $500k frequently. Although I am bullish on the prospects of Bitcoin and decentralization and smart contract platforms, this is not the game I will be describing. I am talking about a game where you try to maximize your BTC holdings by investing in altcoins. We win this game even if we are at a loss in fiat currency value. To put it another way:
If you are not bullish in general on cryptocurrencies you have no place in investing or trading cryptocurrencies since it's always a losing proposition to trade in bubbles, a scientifically proven fact. If on the other hand you are then your goal is to grow your portfolio more than you would if holding BTC/ETH for example.
Bitcoin is the big boy
How the market works is not easily identifiable if you haven't graduated from the 2017 crypto university. When there is a bull market everything seems amazingly profitable and things keep going up outgrowing Bitcoin by orders of magnitude and you are a genius. The problem with this is that it only works while Bitcoin is going up a little bit or trades sideways. When it decides to move big then altcoins lose value both on the way up and on the way down. The second part is obvious and proven since all altcoins from 2017 are at a fraction of their BTC value (usually in the range of 80% or more down). Also, when BTC is making a big move upwards everyone exits altcoins to ride the wave. It is possible that the altcoin market behaves as an inversed leveraged ETF with leakage where in a certain period while Bitcoin starts at 10k and ends at 10k for example, altcoins have lost a lot of value because of the above things happening.
We are doing it anyway champ!
OK so we understand the risks and just wanna gambol with our money right? I get it. Why do that? Because finding the ideal scenario and period can be extremely profitable. In 2017 several altcoins went up 40x more than BTC. But again, if you don't chose wisely many of them have gone back to zero (the author has first hand experience in this!), they have been delisted and nobody remembers them. The actual mentality to have is very important and resembles poker and other speculative games: A certain altcoin can go up in value indefinitely but can only lose it's starting investment. Think about it. You either lose 1 metric or gain many many more. Now that sounds amazing but firstly as we said we have the goal to outperform our benchmark (BTC) and secondly that going up in value a lot means that the probability is quite low. There is this notion of Expected Value (EV) that poker players apply in these kind of situations and it goes like that. If you think that a certain coin has a probability let's say 10% to go up 10X and 90% probability it goes to zero it's an even bet. If you think that probability is 11% then it's a good bet, a profitable bet and you should take it. You get the point right? It's not that it can only go 10X or 0X, there is a whole range of probability outcomes that are too mathematical to explain here and it doesn't help so much because nobody can do such analysis with altcoins. See below on how we can approximate it.
How to evaluate altcoins
A range of different things to take into account outlined below will form our decision making. Not a single one of them should dictate 100% of our strategy.
It's all about market cap. Repeat after me. The price of a coin doesn't mean anything. Say it 10 times until you believe it. I can't remember how many times I had conversations with people that were comparing coins using their coin price instead of their market cap. To make this easy to get.
If I decide because the sky is blue to make my coin supply 100 Trillion FoolCoins with a price of $0.001 and there is another WiseCoin with a supply of 100 Million and price of $1 then FoolCoins are more expensive. - Alex Fin's Cap Law
This is done usually in the stock world and it means that each company has some fundamental value that includes it's assets, customers, growth prospects, sector prospects and leadership competence but mostly centered in financial measures such as P/E ratios etc. Valuation is a proper economic discipline by itself taught in universities. OK, now throw everything out of the window!. This kind of analysis is impossible in vague concepts and innovations that are currently cryptocurrencies. Ethereum was frequently priced at the fictional price of gas when all financial systems on earth run on the platform after decades (a bit of exaggeration here). No project is currently profitable enough to justify a valuation multiple that is usually equal to P/E in the thousands or more. As such we need to take other things into account. What I do is included in the list below:
Check Github. You need to make sure there is active development for the platform and it's a very bad sign if the project is either keeping the code closed source or even worse there is simply no development. No projects are "complete".
Check Website. If the website is written in bad English the Chinese google translate type it means that they are not serious enough to produce an unbreakable decentralized project. If you can't write English you can't change the world, period. That's a deal breaker.
Check Team's Linkedin. Numerous projects have either fake Linkedin accounts or the team is comprised mainly by unexperienced employees that are even shown to be working in other companies currently.
Check backers. Projects that have Binance, Coinbase or Silicon Valley VC funds backing them are way more legit but way more overpriced too!
One of my favorite ways to value altcoins that is based on the same principle in the stock market is to look at peers and decide what is the maximum cap it can grow to. As an example you take a second layer Ethereum solution that has an ICO and you want to decide if you will enter or not. You can take a look at other coins that are in the same business and compare their market caps. Thinking that your coin will outperform by a lot the top coins currently is overly optimistic so I usually take a lower valuation as a target price. If the initial offering is directly implying a valuation that is more than that then there is no room to grow according to my analysis and I skip it. Many times this has proven me wrong because it's a game theory problem where if many people think irrationally in a market it becomes a self-fulfilling prophecy. But since there is opportunity cost involved, in the long run, getting in initial offerings that have a lot of room to grow will pay off as a strategy.
In 2017 the sexiest sector was platforms and then coins including privacy ones. Platforms are obviously still a highly rated sector because everything is being built on them, but privacy is not as hot as it used to be. In 2018 DEXes were all they hype but still people are massively using centralized exchanges. In 2020 Defi is the hottest sector and it includes platforms, oracles and Defi projects. What I am saying is that a project gets extra points if it's a Defi one in 2020 and minus points if it's a payment system that will conquer the world as it was in 2017 because that's old news. This is closely related to the next section.
Needless to say that the crypto market is a worse FOMO type of inexperienced trigger happy yolo investors , much worse than the Robinhood crowd that drove a bankrupt company's stock 1200% after they declared bankruptcy. The result is that there are numerous projects that are basically either vaporware or just so overhyped that their valuation has no connection to reality. Should we avoid those kind of projects? No and I will explain why. There are many very good technically projects that had zero hype potential due to incompetent marketing departments that made them tank. An example (without shilling because I sold out a while back) is Quantum Resistant Ledger. This project has amazing quantum resistant blockchain, the only one running now, has a platform that people can build tokens and messaging systems and other magnificent stuff. Just check how they fared up to now and you will get the point. A project *needs* to have a hype factor because you cannot judge it as normal stocks that you can do value investing like Warren Buffet does where a company will inevitable post sales and profitability numbers and investors will get dividends. Actually the last sentence is the most important: No dividends. Even projects that give you tokens or coins as dividends are not real dividends because if the coin tanks the value of the dividend tanks. This is NOT the case with company stocks where you get dollars even if the company stock tanks. All that being said, I would advice against betting on projects that have a lot of hype but little substance (but that should be obvious!).
How to construct your portfolio
My strategy and philosophy in investing is that risk should be proportional to investment capital. That means that if you are investing 100K in the crypto market your portfolio should be very different than someone investing 1K because 10% annual gains are nothing in the latter while they are very significant in the former. Starting from this principle each individual needs to construct a portfolio according to how much risk he wants to take. I will emphasize two important concepts that play well with what I said. In the first instance of a big portfolio you should concentrate on this mantra: "Diversification is the only free meal in finance". In the case of a small portfolio then this mantra is more important: "Concentrate to create wealth, diversify to maintain wealth". Usually in a big portfolio you would want to hold some big coins such as BTC and ETH to weather the ups and downs explained in previous paragraphs while generating profits and keep progressively smaller parts of your portfolio for riskier investments. Maybe 50% of this portfolio could be big caps and 10% very risky initial offerings. Adapting risk progressively to smaller portfolios makes sense but I think it would be irrational to keep more than 30% of a portfolio no matter what tied to one coin due to the very high risk of bankruptcy.
The altseason is supposedly coming every 3 months. Truth is that nobody can predict it but altcoins can be profitable no matter what. Forget about maximalists who are stuck in their dogmas. Altcoins deliver different value propositions and it makes sense because we are very far from a situation where some project offers everything like Amazon and we wouldn't even want that in the first place since we are talking about decentralization and not a winner takes all and becomes a monster kind of scenario! Some last minute advice:
Stay out of paid telegram/discord pump groups. They are deadly for your wallet.
Avoid jumping on overhyped coins that have pumped massively during the last days without any very important news.
Don't keep coins in obscure exchanges for too long or you will get burned with certainty.
Stop thinking that your coin will 1000x and overtake Bitcoin!
P.S If you find value in reading this and want more weekly consider subscribing to my newsletterhere
DDDD - The Rise of “Buy the Dip” Retail Investors and Why Another Crash Is Imminent
In this week's edition of DDDD (Data-driven DD), I'll be going over the real reason why we have been seeing a rally for the past few weeks, defying all logic and fundamentals - retail investors. We'll look into several data sets to see how retail interest in stock markets have reached record levels in the past few weeks, how this affected stock prices, and why we've most likely seen the top at this point, unless we see one of the "positive catalysts" that I mentioned in my previous post, which is unlikely (except for more news about Remdesivir). Disclaimer - This is not financial advice, and a lot of the content below is my personal opinion. In fact, the numbers, facts, or explanations presented below could be wrong and be made up. Don't buy random options because some person on the internet says so; look at what happened to all the SPY 220p 4/17 bag holders. Do your own research and come to your own conclusions on what you should do with your own money, and how levered you want to be based on your personal risk tolerance. Inspiration Most people who know me personally know that I spend an unhealthy amount of my free time in finance and trading as a hobby, even competing in paper options trading competitions when I was in high school. A few weeks ago, I had a friend ask if he could call me because he just installed Robinhood and wanted to buy SPY puts after seeing everyone on wallstreetbets post gains posts from all the tendies they’ve made from their SPY puts. The problem was, he actually didn’t understand how options worked at all, and needed a thorough explanation about how options are priced, what strike prices and expiration dates mean, and what the right strategy to buying options are. That’s how I knew we were at the euphoria stage of buying SPY puts - it’s when dumb money starts to pour in, and people start buying securities because they see everyone else making money and they want in, even if they have no idea what they’re buying, and price becomes dislocated from fundementals. Sure enough, less than a week later, we started the bull rally that we are currently in. Bubbles are formed when people buy something not because of logic or even gut feeling, but when people who previously weren’t involved see their dumb neighbors make tons of money from it, and they don’t want to miss out. A few days ago, I started getting questions from other friends about what stocks they should buy and if I thought something was a good investment. That inspired me to dig a bit deeper to see how many other people are thinking the same thing. Data Ever since March, we’ve seen an unprecedented amount of money pour into the stock market from retail investors. Google Search Trends \"what stock should I buy\" Google Trends 2004 - 2020 \"what stock should I buy\" Google Trends 12 months \"stocks\" Google Trends 2004 - 2020 \"stocks\" Google Trends 12 months Brokerage data Robinhood SPY holders \"Robinhood\" Google Trends 12 months wallstreetbets' favorite broker Google Trends 12 months Excerpt from E*Trade earnings statement Excerpt from Schwab earnings statement TD Ameritrade Excerpt Media cnbc.com Alexa rank CNBC viewership & rankings wallstreetbets comments / day investing comments / day Analysis What we can see from Reddit numbers, Google Trends, and CNBC stats is that in between the first week of March and first week of April, we see a massive inflow of retail interest in the stock market. Not only that, but this inflow of interest is coming from all age cohorts, from internet-using Zoomers to TV-watching Boomers. Robinhood SPY holdings and earnings reports from E*Trade, TD Ameritrade, and Schwab have also all confirmed record numbers of new clients, number of trades, and assets. There’s something interesting going on if you look closer at the numbers. The numbers growth in brokers for designed for “less sophisticated” investors (i.e. Robinhood and E*Trade) are much larger than for real brokers (i.e. Schwab and Ameritrade). This implies that the record number of new users and trade volume is coming from dumb money. The numbers shown here only really apply to the US and Canada, but there’s also data to suggest that there’s also record numbers of foreign investors pouring money into the US stock market as well. However, after the third week of March, we see the interest start to slowly decline and plateau, indicating that we probably have seen most of those new investors who wanted to have a long position in the market do so. SPX daily Rationale Pretty much everything past this point is purely speculation, and isn’t really backed up by any solid data so take whatever I say here with a cup of salt. We could see from the graph that new investor interest started with the first bull trap we saw in the initial decline from early March, and peaking right after the end of the crash in March. So it would be fair to guess that we’re seeing a record amount of interest in the stock market from a “buy the dip” mentality, especially from Robinhood-using Millennials. Here’s a few points on my rationalization of this behavior, based on very weak anecdotal evidence
They missed out of their chance of getting in the stock market at the start of the bull market that happened at the end of 2009
They’ve all seen the stock market make record gains throughout their adult lives, but believing that the market might be overheated, they were waiting for a crash
Most of them have gotten towards the stage of their lives where they actually have some savings and can finally put some money aside for investments
This stock market crash seems like their once-in-a-decade opportunity that they’ve been waiting for, so everyone jumped in
Everyone’s stuck at their homes with vast amounts of unexpected free time on their hands
Most of these new investors got their first taste in the market near the bottom, and probably made some nice returns. Of course, since they didn’t know what they were doing, they probably put a very small amount of money at first, but after seeing a 10% return over one week, validating that maybe they do know something, they decide to slowly pour in more and more of their life savings. That’s what’s been fueling this bull market. Sentiment & Magic Crayons As I mentioned previously, this bull rally will keep going until enough bears convert to bulls. Markets go up when the amount of new bullish positions outnumber the amount of new bearish positions, and vice versa. Record amounts of new investors, who previously never held a position in the market before, fueled the bullish side of this equation, despite all the negative data that has come out and dislocating the price from fundamentals. All the smart money that was shorting the markets saw this happening, and flipped to become bulls because you don’t fight the trend, even if the trend doesn’t reflect reality. From the data shown above, we can see new investor interest growth has started declining since mid March and started stagnating in early April. The declining volume in SPY since mid-March confirms this. That means, once the sentiment of the new retail investors starts to turn bearish, and everyone figures out how much the stocks they’re holding are really worth, another sell-off will begin. I’ve seen something very similar to this a few years ago with Bitcoin. Near the end of 2017, Bitcoin started to become mainstream and saw a flood of retail investors suddenly signing up for Coinbase (i.e. Robinhood) accounts and buying Bitcoin without actually understanding what it is and how it works. Suddenly everyone, from co-workers to grandparents, starts talking about Bitcoin and might have thrown a few thousand dollars into it. This appears to be a very similar parallel to what’s going on right now. Of course there’s differences here in that equities have an intrinsic value, although many of them have gone way above what they should be intrinsically worth, and the vast majority of retail investors don’t understand how to value companies. Then, during December, when people started thinking that the market was getting a bit overheated, some started taking their profits, and that’s when the prices crashed violently. This flip in sentiment now look like it has started with equities. SPY daily Technical Analysis, or magic crayons, is a discipline in finance that uses statistical analysis to predict market trends based on market sentiment. Of course, a lot of this is hand-wavy and is very subjective; two people doing TA on the same price history can end up getting opposite results, so TA should always be taken with a grain of salt and ideally be backed with underlying justification and not be blindly followed. In fact, I’ve since corrected the ascending wedge I had on SPY since my last post since this new wedge is a better fit for the new trading data. There’s a few things going on in this chart. The entire bull rally we’ve had since the lows can be modelled using a rising wedge. This is a pattern where there is a convergence of a rising support and resistance trendline, along with falling volume. This indicates a slow decline in net bullish sentiment with investors, with smaller and smaller upside after each bounce off the support until it hits a resistance. The smaller the bounces, the less bullish investors are. When the bearish sentiment takes over across investors, the price breaks below this wedge - a breakdown, and indicates a start of another downtrend. This happened when the wedge hit resistance at around 293, which is around the same price as the 200 day moving average, the 62% retracement (considered to be the upper bound of a bull trap), and a price level that acted as a support and resistance throughout 2019. The fact that it gapped down to break this wedge is also a strong signal, indicating a sudden swing in investor sentiment overnight. The volume of the break down also broke the downwards trend of volume we’ve had since the beginning of the bull rally, indicating a sudden surge of people selling their shares. This doesn’t necessarily mean that we will go straight from here, and I personally think that we will see the completion of a heads-and-shoulders pattern complete before SPY goes below 274, which in itself is a strong support level. In other words, SPY might go from 282 -> 274 -> 284 -> 274 before breaking the 274 support level. VIX Daily Doing TA is already sketchy, and doing TA on something like VIX is even more sketchy, but I found this interesting so I’ll mention it. Since the start of the bull rally, we’ve had VIX inside a descending channel. With the breakdown we had in SPY yesterday, VIX has also gapped up to have a breakout from this channel, indicating that we may see future volatility in the next week or so. Putting Everything Together Finally, we get to my thesis. This entire bull rally has been fueled by new retail investors buying the dip, bringing the stock price to euphoric levels. Over the past few weeks, we’ve been seeing the people waiting at the sidelines for years to get into the stock market slowly FOMO into the rally in smaller and smaller volumes, while the smart money have been locking in their profits at an even slower rate - hence an ascending wedge. As the amount of new retail interest in the stock market started slowed down, the amount of new bulls started to decline. It looks like Friday might have been the start of the bearish sentiment taking over, meaning it’s likely that 293 was the top, unless any significant bullish events happen in the next two weeks like a fourth round of stimulus, in which case we might see 300. This doesn’t mean we’ll instantly go back to circuit breakers on Monday, and we might see 282 -> 274 -> 284 -> 274 happen before panic, this time by the first-time investors, eventually bringing us down towards SPY 180. tldr; we've reached the top EDIT - I'll keep a my live thoughts here as we move throughout this week in case anyone's still reading this and interested. 5/4 8PM - /ES was red last night but steadily climbed, which was expected since 1h RSI was borderline oversold, leaving us to a slightly green day. /ES looks like it has momentum going up, but is approaching towards overbought territory now. Expecting it to go towards 284 (possibly where we'll open tomorrow) and bouncing back down from that price level 5/5 Market Open - Well there goes my price target. I guess at this point it might go up to 293 again, but will need a lot of momentum to push back there to 300. Seems like this is being driven by oil prices skyrocketing. 5/5 3:50PM - Volume for the upwards price action had very little volume behind it. Seeing a selloff EOD today, could go either way although I have a bearish bias. Going to hold cash until it goes towards one end of the 274-293 channel (see last week's thesis). Still believe that we will see it drop below 274 next week, but we might be moving sideways in the channel this week and a bit of next week before that happens. Plan for tomorrow is buy short dated puts if open < 285. Otherwise, wait till it goes to 293 before buying those puts 5/5 6PM - What we saw today could be a false breakout above 284. Need tomorrow to open below 285 for that to be confirmed. If so, my original thesis of it going back down to 274 before bouncing back up will still be in play. 5/6 EOD - Wasn't a false breakout. Looks like it's still forming the head-and-shoulders pattern mentioned before, but 288 instead of 284 as the level. Still not sure yet so I'm personally going to be holding cash and waiting this out for the next few days. Will enter into short positions if we either go near 293 again or drop below 270. Might look into VIX calls if VIX goes down near 30. 5/7 Market Open - Still waiting. If we break 289 we're probably heading to 293. I'll make my entry to short positions when we hit that a second time. There's very little bullish momentum left (see MACD 1D), so if we hit 293 and then drop back down, we'll have a MACD crossover event which many traders and algos use as a sell signal. Oil is doing some weird shit. 5/7 Noon - Looks like we're headed to 293. Picked up VIX 32.5c 5/27 since VIX is near 30. 5/7 11PM - /ES is hovering right above 2910, with 4h and 1h charts are bullish from MACD and 1h is almost overbought in RSI. Unless something dramatic happens we'll probably hit near 293 tomorrow, which is where I'll get some SPY puts. We might drop down before ever touching it, or go all the way to 295 (like last time) during the day, but expecting it to close at or below 293. After that I'm expecting a gap down Monday as we start the final leg down next week towards 274. Expecting 1D MACD to crossover in the final leg down, which will be a signal for bears to take over and institutions / day traders will start selling again 5/8 Market Open - Plan is to wait till a good entry today, either when technicals looks good or we hit 293, and then buy some SPY June 285p and July 275p 5/8 Noon - Everything still going according to plan. Most likely going to slowly inch towards 293 by EOD. Will probably pick up SPY puts and more VIX calls at power hour (3 - 4PM). Monday will probably gap down, although there's a small chance of one more green / sideways day before that happens if we have bullish catalysts on the weekend. 5/8 3:55PM - SPY at 292.60. This is probably going to be the closest we get to 293. Bought SPY 290-260 6/19 debit spreads and 292-272 5/15 debit spreads, as well as doubling down on VIX calls from yesterday, decreasing my cost basis. Still looks like there's room for one more green day on Monday, so I left some money on the side to double down if that's the case, although it's more likely than not we won't get there. 5/8 EOD - Looks like we barely touched 293 exactly AH before rebounding down. Too bad you can't buy options AH, but more convinced we'll see a gap down on Monday. Going to work on another post over the weekend and do my updates there. Have a great weekend everyone!
What the whales are doing with STA, spoiler alert, it's pretty damn bullish
So I've seen the rise, fall, and now stabilization of STA and decided to do some research. But why do I want to do research on a shitcoin? Because my hope is, it's not a shitcoin. What you are doing with statera is buying a "stake" in SNX, Link, BTC, ETH, and STA through an index fund (balancer pool), if BTC moons then the index fund buys more SNX, Link, ETH, BTC, and STA, if STA moons the pool buys more SNX, Link, BTC, and ETH. If Link, ETH, SNX, and BTC all go up then the pool buys more STA forcing STA's price to go up. It's basically a way to gain exposure to all 5 assets simultaneously while balancing your risk. The interesting part is that STA is deflationary, it destroys itself with each transaction (we've already seen supply dwindle by 7 million STA), this reduces supply, increasing demand, increasing price. It's basically a leveraged index fund on BTC, ETH, Link, and SNX all projects I invest directly in and support. If we have a bull cycle STA will moon. (Disclaimer, there is no free lunch, if there is an error in the code or a back door, or if something goes awry with the balancer, this could go down in flames, they are currently auditing the code with a third party which will give us more assurance. It is also decentralized so there is less counter-party risk, as long as that decentralization holds, which the audit will help us understand. Other than a black swan catastrophic failure, this is an incredible investment on paper, if you think the other 4 assets will go up, because them going up forces the buying of STA by the balancer pool, which is basically an altruistic whale that wants STA to be less volatile while trending up in price). There is a term in investing called accumulation phase, for us in crypto when someone like Grayscale buys 150% of all bitcoins being mined, or buys tens of millions in crypto every week, do you think they just put a market order into Coinbase Pro? No. They could do an Over The Counter (OTC) trade with an individual, they agree on a price, and a large purchase is made individual to individual (but I doubt they continue to find a bunch of bitcoin whales to give them the thousands of bitcoins they want). So what do you do? If you buy thousands of bitcoin the price will unnaturally go up as people spot your demand and inflate the order books to take your money then the price crashes once you, the biggest buyer, is out of the market, leaving you with a heavy bag. So you enter an accumulation phase, a simplified example: Your target to buy a stock is $5-$10, you are happy buying at any price in that range. The price is at $8, so you put in a few orders and a few more 10 shares at a time so no one sees you as a whale, the prices starts going up, you have now purchased 1,000 shares and the price is $9.99, so you sell 800 shares all in one big order, everyone freaks out seeing this "huge" (huge in our example) order from presumably a whale who is spooked by market sentiment, price crashes to $6. You start buying again $20 at a time, and build your stack back up to 1,500 shares, the price has hit $8.99 and just to throw the market off (doing it again at $9.99 would be too obvious) you sell 1,000 shares. Rinse repeat. You have now bought 500 shares at the price you want where as, if you had bought 500 shares all at once, the price would have sky rocketed to $20 and then fell back to earth (say back down to $10) and you'd be holding shares at a 100% premium. This is highly simplified but hopefully gives you an idea of how accumulation works and maybe even makes you wonder if bitcoin is not going through this exact thing as we speak. But on to Statera, so I decided to look at the whales in this space, you can check my work,go to the contract addressthen click on "holders" the list is constantly changing, addresses 10 and 11 leapfrogged address 9 and are now 9 and 10 respectively. I put the first four digits of the address so you can specifically check my work. I would say what I found is highly bullish (but make your own conjectures). First off the spread of addresses is HEALTHY, the biggest whales (top 50 address) all hold .5-2% of the supply each. The biggest holder (the developer) holds 4.6% of supply (the best I can tell you can mask your holdings and shuffle them all over so it's nearly impossible to really tell). Also there are only 1,700 people in the coin, we are still VERY early, this is more than a 50% increase in a week. Lastly the balancer pool (which balances the index) has over $350,000 in it up over 50% in the last week, this is arguably the most important metric, the liquidity here is what allows the balancing to happen and the STA price to be forced to go up, this is a huge amount of liquidity for something only held by 1,700 people, it's actually quadruple the liquidity of the trading pairs on Uniswap! Long story short the balancer pool is armed and ready to balance and support STA. So there is no one holding 90% of supply (that we can tell) who is waiting to dump on you, we're in the early stages and seeing a lot of health in the token, and there is a lot of liquidity here. Now, the top 13 addresses: 1 (0x43) Dev Account started with all 101,000,000 then started pushing out to exchanges and balancer pool, sent 50 million right off the bat to 0x0e (balancer pool or uniswap) fun account to look at you kind of get to see the genesis of the coin. 2 (0x28) "Bought" a ton to start, hodler (weirdly sold a VERY small amount, around 10,000 of his over two million). I put bought in quotes because this account got it's STA from 0x6a, which is also where account 11 got it's from, 0x6a seems like an exchange account that people are buying from, but I would love for someone to confirm what 06xa is, balancer pool related, exchange related, developer related?) 3 (0x92) Hodler straight up, not a move, though the dump on this account came from another account that is now zero, could be a similar situation to address 6 where it is a "cold storage" for someone trading with other accounts 4 (0x13) PLAYING the exact game I showed above sell buy sell buy repeat (buys are bigger than sells) 5 (0xC2) Bought big, trickle sold, bought big, currently trickle selling (possibly PLAYING the game) 6 (0xD7) interesting one, bought 1.9 million STA for 1,354 digital Rand (What a deal!) then transferred all their STA from one account (0x67 currently no STA) to this account, now semi holding, small sells, sold 40,000 in all of 1.7 million. Not sure why he transferred could be intentional to mask moves, could be moving to hardware wallet, could be moving to exchange, unknown. Seems like a HODLER. 7 (0x7c) PLAYING THE EXACT GAME... 8 (0x0e) Contract (looks like balancer pool related) 9 (0x59) Contract (looks like balancer pool related) 10 (0xd8) PLAYING THE GAME 11 (0xb0) got a large dump from 0xc69 and is now holding (which now has 0) and if you keep tracing it back and back you get to the first account in the chain (0x6a, which also funded 0x28, which now has 615,000, and is either interacting with the balancer or trading, again please someone explain I can't), this could be a whale splitting his buckets or two large individuals who did an OTC trade, but more likely it's one person who is doing a lot of trading and accumulating. I would put PLAYING THE GAME, as the other accounts it came from are accumulating, but not completely clear. It seems like she may be using this as a "cold address" to hodl and then trading with her other account 12 (0x18db) Hodl. Accumulated hard from Uniswap buy buy buy 15, 12, and 6 days ago, hasn't moved since. 13 (0x6c) PLAYING THE GAME So are we in a whale accumulation phase? Hard to tell, the top 10 addresses (minus 3 for the two contracts and dev) are definitely acting bullish even if they are not accumulating, it seems like 6 of the 10 are in some form of an accumulation phase and the other 4 are hodling. I do see STA as a long term hold, again it's an index fund on four of the biggest names in crypto. This will be a popular investment (if it remains legit, so far it has been highly legit). That being said, this is just 10 addresses, I don't want to spend my whole Saturday on this, if anyone wants to look at the top 50 addresses, please do! I will read and upvote your post. It was reassuring to me at least to see the top addresses are acting like bullish investors. Is the whole STA trader base in accumulation or is this an anomaly? I don't know, you can be the judge or dig deeper yourself. The best part of this sideways action and the buying and selling of STA in the 4-6 cent range is that every trade burns coin, deflating supply, and making any later bull run even bigger. That's the genius of the coin, with every trade, with everyday, it inherently becomes more valuable (unless Link, ETH, SNX, and BTC all shit the bed, then game over, but that would be game over no matter what game you're playing). DYOR, don't put in more than you are willing to lose, but as for me, I'm going to be following what the whales are doing and slowly accumulating in this band (4-6 cents seems like a strong buy point, 2-3 cents is an amazing buy point but it rarely dips down that low).
So I've seen the rise, fall, and now stabilization of STA and decided to do some research. But why do I want to do research on a shitcoin? Because my hope is, it's not a shitcoin. What you are doing with statera is buying a "stake" in SNX, Link, BTC, ETH, and STA through an index fund (balancer pool), if BTC moons then the index fund buys more SNX, Link, ETH, BTC, and STA, if STA moons the pool buys more SNX, Link, BTC, and ETH. If Link, ETH, SNX, and BTC all go up then the pool buys more STA forcing STA's price to go up. It's basically a way to gain exposure to all 5 assets simultaneously while balancing your risk. The interesting part is that STA is deflationary, it destroys itself with each transaction (we've already seen supply dwindle by 7 million STA), this reduces supply, increasing demand, increasing price. It's basically a leveraged index fund on BTC, ETH, Link, and SNX all projects I invest directly in and support. If we have a bull cycle STA will moon. (Disclaimer, there is no free lunch, if there is an error in the code or a back door, or if something goes awry with the balancer, this could go down in flames, they are currently auditing the code with a third party which will give us more assurance. It is also decentralized so there is less counter-party risk, as long as that decentralization holds, which the audit will help us understand. Other than a black swan catastrophic failure, this is an incredible investment on paper, if you think the other 4 assets will go up, because them going up forces the buying of STA by the balancer pool, which is basically an altruistic whale that wants STA to be less volatile while trending up in price). There is a term in investing called accumulation phase, for us in crypto when someone like Grayscale buys 150% of all bitcoins being mined, or buys tens of millions in crypto every week, do you think they just put a market order into Coinbase Pro? No. They could do an Over The Counter (OTC) trade with an individual, they agree on a price, and a large purchase is made individual to individual (but I doubt they continue to find a bunch of bitcoin whales to give them the thousands of bitcoins they want). So what do you do? If you buy thousands of bitcoin the price will unnaturally go up as people spot your demand and inflate the order books to take your money then the price crashes once you, the biggest buyer, is out of the market, leaving you with a heavy bag. So you enter an accumulation phase, a simplified example: Your target to buy a stock is $5-$10, you are happy buying at any price in that range. The price is at $8, so you put in a few orders and a few more 10 shares at a time so no one sees you as a whale, the prices starts going up, you have now purchased 1,000 shares and the price is $9.99, so you sell 800 shares all in one big order, everyone freaks out seeing this "huge" (huge in our example) order from presumably a whale who is spooked by market sentiment, price crashes to $6. You start buying again $20 at a time, and build your stack back up to 1,500 shares, the price has hit $8.99 and just to throw the market off (doing it again at $9.99 would be too obvious) you sell 1,000 shares. Rinse repeat. You have now bought 500 shares at the price you want where as, if you had bought 500 shares all at once, the price would have sky rocketed to $20 and then fell back to earth (say back down to $10) and you'd be holding shares at a 100% premium. This is highly simplified but hopefully gives you an idea of how accumulation works and maybe even makes you wonder if bitcoin is not going through this exact thing as we speak. But on to Statera, so I decided to look at the whales in this space, you can check my work, go to the contract address then click on "holders" the list is constantly changing, addresses 10 and 11 leapfrogged address 9 and are now 9 and 10 respectively. I put the first four digits of the address so you can specifically check my work. I would say what I found is highly bullish (but make your own conjectures). First off the spread of addresses is HEALTHY, the biggest whales (top 50 address) all hold .5-2% of the supply each. The biggest holder (the developer) holds 4.6% of supply (the best I can tell you can mask your holdings and shuffle them all over so it's nearly impossible to really tell). So there is no one holding 90% of supply (that we can tell) who is waiting to dump on you. Top 13 addresses: 1 (0x43) Dev Account started with all 101,000,000 then started pushing out to exchanges and balancer pool, sent 50 million right off the bat to 0x0e (balancer pool or uniswap) fun account to look at you kind of get to see the genesis of the coin. 2 (0x28) "Bought" a ton to start, hodler (weirdly sold a VERY small amount, around 10,000 of his over two million). I put bought in quotes because this account got it's STA from 0x6a, which is also where account 11 got it's from, 0x6a seems like an exchange account that people are buying from, but I would love for someone to confirm what 06xa is, balancer pool related, exchange related, developer related?) 3 (0x92) Hodler straight up, not a move 4 (0x13) PLAYING the exact game I showed above sell buy sell buy repeat (buys are bigger than sells) 5 (0xC2) Bought big, trickle sold, bought big, currently trickle selling (possibly PLAYING the game) 6 (0xD7) interesting one, bought 1.9 million STA for 1,354 digital Rand (What a deal!) then transferred all their STA from one account (0x67 currently no STA) to this account, now semi holding, small sells, sold 40,000 in all of 1.7 million. Not sure why he transferred could be intentional to mask moves, could be moving to hardware wallet, could be moving to exchange, unknown. Seems like a HODLER. 7 (0x7c) PLAYING THE EXAT GAME... 8 (0x0e) Contract (looks like balancer pool related) 9 (0x59) Contract (looks like balancer pool related) 10 (0xd8) PLAYING THE GAME 11 (0xb0) got a large dump from 0xc69 and is now holding (which now has 0) and if you keep tracing it back and back you get to the first account in the chain (0x6a, which also funded 0x28, which now has 615,000, and is either interacting with the balancer or trading, again please someone explain I can't), this could be a whale splitting his buckets or two large individuals who did an OTC trade, but more likely it's one person who is doing a lot of trading and accumulating. I would put PLAYING THE GAME, as the other accounts it came from are accumulating, but not completely clear. It seems like she may be using this as a "cold address" to hodl and then trading with her other account 12 (0x18db) Hodl. Accumulated hard from Uniswap buy buy buy 15, 12, and 6 days ago, hasn't moved since. 13 (0x6c) PLAYING THE GAME So are we in a whale accumulation phase? Hard to tell, the top 10 addresses (minus 3 for the two contracts and dev) are definitely acting bullish even if they are not accumulating, it seems like 6 of the 10 are in some form of an accumulation phase and the other 4 are hodling. I do see STA as a long term hold, again it's an index fund on four of the biggest names in crypto. This will be a popular investment (if it remains legit, so far it has been highly legit). That being said, this is just 10 addresses, I don't want to spend my whole Saturday on this, if anyone wants to look at the top 50 addresses, please do! I will read and upvote your post. It was reassuring to me at least to see the top addresses are acting like bullish investors. Is the whole STA trader base in accumulation or is this an anomaly? I don't know, you can be the judge or dig deeper yourself. The best part of this sideways action and the buying and selling of STA in the 4-6 cent range is that every trade burns coin, deflating supply, and making any later bull run even bigger. That's the genius of the coin, with every trade, with everyday, it inherently becomes more valuable (unless Link, ETH, SNX, and BTC all shit the bed, then game over, but that would be game over no matter what game you're playing). DYOR, don't put in more than you are willing to lose, but as for me, I'm going to be following what the whales are doing and slowly accumulating in this band (4-6 cents seems like a strong buy point, 2-3 cents is an amazing buy point but it rarely dips down that low).
Market maker: who is it and what function do they perform?
Market makers have become as a key link in the financial markets. There is a misconception that market makers can influence the price of assets. In fact, this statement is far from reality. The main task of a market maker (MM) is to provide liquidity of any asset. If an asset traded on an exchange is provided with sufficient liquidity, the price and spread will be at an adequate level. If there is no liquidity — it will not be profitable to trade an asset, the price will stop at one mark and the spread will expand. So, what exactly do market makers do? Let’s analyze in more detail in this article.
Definition and responsibilities of the market maker
A market maker (MM) is a firm or individual who actively quotes two-sided markets in a security, providing bids and offers (known as asks) along with the market size of each. The profits of the market maker is made up of several aspects:
Payments from the exchange as stipulated in the cooperation agreement.
Spread from the execution of orders.
Speculations and investments.
The SEC regulator explained the functions of the market maker — willingness to buy and to sell an asset on a permanent basis, at a public quote. In other words, maintaining an adequate level of supply and demand, as well as confrontation with the market, for example, selling bitcoin in case of its rapid growth or buying in case of a fall. In addition, the market maker may act as an intermediary seller or a buyer in case of absence of one of the parties. If you decide to buy or to sell an asset on the exchange and your transaction has passed within a second, the market maker is acting as an intermediary. In this way, the liquidity providers remove unnecessary delays and difficulties in exchanging assets.
Market maker trading process
For example, there is a buyer on the exchange who is ready to buy 100 ETH and there is a seller who is ready to sell 90 ETH. The task of the market maker is to add 10 ETHs and to provide a price to a buyer, for example $200 and for a seller, for example $199. The buyer will pay $20,000 and receive 100 ETH, and the seller will receive $17,910 and give back 90 ETH. The market maker will receive $2,000 for the 10 ETHs and $10 spread, for providing liquidity. The liquidity provider makes a lot of such a trades a day, and as a result has a good profit. However to do this, you need to have an impressive stock of assets to maintain a level between supply and demand. With such not complex machinations, the market maker ensures the efficiency of financial markets, maintaining an adequate price for the asset and the minimum price divergence between exchanges. Based on the above example, we can think that the activity of a market maker is not complicated and a stable way of earning, in the presence of impressive capital. However, this is not quite true. During time when the market is very volatile, liquidity providers can suffer losses. For example, there is a buyer on the exchange who is willing to buy 100 ETH and a seller who is willing to sell 10,000 ETH. A buyer buys 100 ETHs at $20,000 (price for 1 ETH $200) and a seller gets $19,990 (price for 1 ETH $199), the market maker gets $10 as a spread. At the same time, there are 9,900 ETHs left, which the seller wants to sell, and the market maker, respectively, must buy them back. Having paid $1,970,100 for the entire offer (price for 1 ETH is $199), the liquidity provider will not be able to sell them for the same price. Even if the price drops to $198.5, the total sale price of 9,900 ETH will be $1,965,150, with a loss of $4,950. Considering that the crypto market is famous for its volatility, the price difference may not be 50 cents. A market maker cannot simply sell the ETHs they receive at a reasonable price for the following reasons:
No one will buy the asset at an unfavorable price, and a sale of 9,900 ETH is likely to have impacted the market.
The exchange’s service agreement states that the market maker cannot simply take and sell the assets, otherwise its services may be refused.
This method can be considered as market manipulation.
Therefore, in a moment of strong volatility market makers simply leave the market, otherwise — it can lead to a serious loss. During high market volatility, it is often impossible to close a position at the right price, due to the lack of liquidity on the exchange. This indicates that the market makers have withdrawn from trading. It is also possible to track the presence of a market maker on the exchange in the following way: if the spread is narrow and the price of an asset is in a sideways trend, the liquidity provider participates in trading on the exchange. If the spread is wide and the price of an asset is subject to volatility — the market maker has withdrawn from trading. In the same way, you can find out whether there is a market maker at the exchange at all, i.e. whether they resort to its services. The Market Maker performs vertical market analysis, not horizontal market analysis as ordinary traders do. For the liquidity provider, in addition for buying or selling an asset, the order glass displays pending orders, Take Profit and Stop Loss. This allows you to correctly interpret the mood of the market participants and perform your direct duties as a market maker — to maintain liquidity levels and narrow spreads, as well as to provide large volumes of orders.
Market makers on the crypto market
Market makers in the crypto market are much more in demand than the traditional market and that’s why. If we talk about crypto currencies from the top 10 list — their liquidity is enough to buy or sell a coin almost instantly. However, there are about 3,000 crypto currencies for 2020 and not all of them are liquid.
The process goes like this:
Startup is going to be carried out by IEO (Primary Exchange Offer), a modern analogue of ICO. The stock exchange considers the token and leaves it. After a week, a month, six months the amount of investment in a token is minimal. There are two reasons for this:
A skilled trader, when investing in a new coin, will rely on the order book. As the token is new, even if it is promising, but there are no records of selling and buying, so the trader will refuse to invest.
A significant player has learned about the listing of a new token and its future prospects. It was decided to open a large, long term position, but there is no liquidity, that is, if the position is opened, it will be time consuming.
To avoid such a development, the crypto market should resort to the services of market makers. Liquidity providers may buy a token and artificially “fill” the order book. In fact, this will be a twisted indicator of liquidity and is suitable only for speculative purposes. But 90% of cryptotraders came to this market because of its high volatility, i.e. to earn on price hikes. For this reason, crypto currencies need the services of market makers for the systematic establishment of the market and attraction of new, professional traders.
As a rule, market makers always resort to ATS (Automated Trading Systems) and HTF-trading (High Frequency Trading). Both systems require very advanced programming skills. In addition, it will require economy knowledge, preferably not minimal, in order to make right assessment of work and potential risks. Sell-Side strategy — automatic trading systems are used to constantly maintain optimal prices and profit from spreads. It is not rare to have a strategy of placing Buy and Sell orders simultaneously. In fact — a common risk hedging. HFT or high-frequency trading- is a type of algorithmic trading characterized by a high speed and turnover of capital, as well as short asset holding periods. To become an HFT trader you will need specialized robots and powerful computers as the main task of high-frequency trading is to conclude a lot of transactions in the shortest possible time. With the help of HFT trading market makers must set a quote or the last price and constantly update it.
Market makers are a necessary part of the economy. They do not earn on price movements, but create comfortable and loyal conditions for trading. In the end I would like to tell you about some myths that exist in the network in relation to market makers.
Market makers can affect market quotes
That’s true, however in a slightly different understanding. The task of a market maker is to create the market mood and push its participants to open orders in the right direction. Market makers cannot influence the quotes price for two reasons:
The exchange where the market maker trades, monitors all its operations. In case of intentional influence on the price of the asset, the reaction will be immediate.
This kind of activities are trade manipulations, i.e. they are prosecuted by state regulators, up to including deprivation of license to operate such activities.
Market makers cooperate with each other
At the beginning, I would like to mention that all market makers are competitors, and to disclose their plans to competitors is not a good idea. In addition, it is also punishable by law, up to deprivation of a license to conduct activities.
Most transactions on the platform are initiated by market makers
It’s not a very clear statement. The main profits of a market maker is spreads. How in this case should the liquidity provider earn, if all transactions on the site belong to him? These are the most popular myths in the network regarding market makers. In the end I would like to add that the work of the market maker — is a complex and time-consuming process, the result of which is a balanced financial market. Please don’t forget to follow us on Telegram and stay updated!YOUR CRYPTO BOSS
LOEx Market Research Report on August 6: BTC tries to resume its uptrend today
[Today's Hot Tips] 1.[Vitalik Buterin: DPoS systems such as EOS are the ruling group of the rich] A Twitter user, Patrick McCorry, said that in fact, delegated proof-of-stake systems (DPoS) such as EOS are more like democracies. For example, users pledge tokens online to elect validators. But BTC and ETH avoid this. In response to this, Vitalik Buterin just replied that they are a ruling group of rich people, and do not destroy the concept of democracy with a system where the formal power of the giant whale is thousands of times higher than that of everyone else. 2.[Monero will undergo a network upgrade on October 17 to introduce the CLSAG signature scheme] On the evening of August 5, Monero officially released its weekly progress report and announced that the next Monero network upgrade will take place on October 17. At the same time, Monero will officially release the software version required for the upgrade on September 17. In addition, this network upgrade will introduce the CLSAG signature scheme. The CLSAG signature scheme can reduce the transaction size by about 25% and improve the verification performance by 20%. The CLSAG signature scheme has been reviewed. 3.[Vitalik Buterin: Hard fork is more conducive to protecting people's rights] Vitalik Buterin just tweeted that in a soft fork, the default is inaction, and new rules will be imposed on you without even active confirmation. In a hard fork, either you get the positive approval of the majority of participants, or everything is messed up. The latter seems to be more conducive to protecting people's rights. Of course, soft forks better protect the freedom of individuals not to update code, but I just don’t understand why this is important. Obviously, what matters is not what code you are running, but the rules of the network you are on. [Today's market analysis] Bitcoin (BTC)BTC traded sideways around 11650 in the early morning, and quickly rose around 5 o'clock, breaking through 11700 USDT in the short-term, and rising to 11780.50 USDT. Then BTC fell rapidly again, fell below 11,600 USDT for a short time, and rebounded after falling to 11,512 USDT. At present, BTC is finishing within a narrow range around 11650 USDT. Most mainstream currencies have risen in the morning and then fell rapidly, with short-term fluctuations. BTC is currently reported at 11678.2 USDT on OKEx, an increase of 0.32% in 24h. Gold has risen very well recently, and the currency circle represented by Bitcoin is certainly not bad, so all aspects are accumulating power. After forming an intraday candlestick pattern from August 3 to 4, Bitcoin today tried to resume its upward trend, which shows that the bulls have overwhelmed the bears. The rising moving average and the relative strength and weakness of the overbought zone indicate that the bulls are in a dominant position. If buyers can push the BTC/USD currency pair above $12,113.50, the uptrend may resume. The next target for the rise is $13,000, and then $14,000. The bears may actively defend the $14,000 level, so a meaningful correction may be made at these levels. Contrary to assumptions, if the currency pair retreats from the resistance level of $12,113.50, it may enter a consolidation of $10,400–$12,113.50 within a few days. A break below $10,400 would be a huge negative impact because it is likely to catch the bulls by surprise and lead to the liquidation of long positions. Operation suggestions: Support level: the first support level is 11000 points, the second support level is 10800 integers; Resistance level: the first resistance level is 11800 points, the second resistance level is 12000 points. LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 2 million community members in 24 hours. https://preview.redd.it/z2arjmu0acf51.png?width=614&format=png&auto=webp&s=d41ee75d425f17abe871f2389298413d7b864b6c
LOEx Market Research Report on August 6: BTC tries to resume its uptrend today
[Today's Hot Tips] 1.[Vitalik Buterin: DPoS systems such as EOS are the ruling group of the rich] A Twitter user, Patrick McCorry, said that in fact, delegated proof-of-stake systems (DPoS) such as EOS are more like democracies. For example, users pledge tokens online to elect validators. But BTC and ETH avoid this. In response to this, Vitalik Buterin just replied that they are a ruling group of rich people, and do not destroy the concept of democracy with a system where the formal power of the giant whale is thousands of times higher than that of everyone else. 2.[Monero will undergo a network upgrade on October 17 to introduce the CLSAG signature scheme] On the evening of August 5, Monero officially released its weekly progress report and announced that the next Monero network upgrade will take place on October 17. At the same time, Monero will officially release the software version required for the upgrade on September 17. In addition, this network upgrade will introduce the CLSAG signature scheme. The CLSAG signature scheme can reduce the transaction size by about 25% and improve the verification performance by 20%. The CLSAG signature scheme has been reviewed. 3.[Vitalik Buterin: Hard fork is more conducive to protecting people's rights] Vitalik Buterin just tweeted that in a soft fork, the default is inaction, and new rules will be imposed on you without even active confirmation. In a hard fork, either you get the positive approval of the majority of participants, or everything is messed up. The latter seems to be more conducive to protecting people's rights. Of course, soft forks better protect the freedom of individuals not to update code, but I just don’t understand why this is important. Obviously, what matters is not what code you are running, but the rules of the network you are on. [Today's market analysis] Bitcoin (BTC)BTC traded sideways around 11650 in the early morning, and quickly rose around 5 o'clock, breaking through 11700 USDT in the short-term, and rising to 11780.50 USDT. Then BTC fell rapidly again, fell below 11,600 USDT for a short time, and rebounded after falling to 11,512 USDT. At present, BTC is finishing within a narrow range around 11650 USDT. Most mainstream currencies have risen in the morning and then fell rapidly, with short-term fluctuations. BTC is currently reported at 11678.2 USDT on OKEx, an increase of 0.32% in 24h. Gold has risen very well recently, and the currency circle represented by Bitcoin is certainly not bad, so all aspects are accumulating power. After forming an intraday candlestick pattern from August 3 to 4, Bitcoin today tried to resume its upward trend, which shows that the bulls have overwhelmed the bears. The rising moving average and the relative strength and weakness of the overbought zone indicate that the bulls are in a dominant position. If buyers can push the BTC/USD currency pair above $12,113.50, the uptrend may resume. The next target for the rise is $13,000, and then $14,000. The bears may actively defend the $14,000 level, so a meaningful correction may be made at these levels. Contrary to assumptions, if the currency pair retreats from the resistance level of $12,113.50, it may enter a consolidation of $10,400–$12,113.50 within a few days. A break below $10,400 would be a huge negative impact because it is likely to catch the bulls by surprise and lead to the liquidation of long positions. Operation suggestions: Support level: the first support level is 11000 points, the second support level is 10800 integers; Resistance level: the first resistance level is 11800 points, the second resistance level is 12000 points. LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 2 million community members in 24 hours. https://preview.redd.it/7nn7e6y8acf51.png?width=614&format=png&auto=webp&s=07b57933c2d839b439c616e3fafa0803f56391ac
Financial markets move in trends. It’s important to understand the differences between these trends to be able to make better investment decisions. How come? Well, different market trends can lead to wildly different market conditions. If you don’t know what the underlying trend is, how are you going to adapt to changing conditions? A market trend is the overall direction that the market is going. In a bear market, prices are generally declining. Bear markets can be a challenging time to trade or invest in, especially for beginners. Most crypto traders and technical analysts agree that Bitcoin has been in a macro bull trend throughout its existence. Even so, there have been several relentless cryptocurrency bear markets. These generally bring more than an 80% decline in the price of Bitcoin, while altcoins can easily experience more than 90% declines. What can you do during these times? In this article, we’ll discuss what a bear market is, how you should prepare for it, and how you may be able to profit in it. If you’d like to read about bull markets first, check out What Is a Bull Market?（https://medium.com/@Citex/what-is-a-bull-market-2aac528c25f0）
What is a bear market?
A bear market can be described as a period of declining prices in a financial market. Bear markets can be extremely risky and difficult to trade for inexperienced traders. They can easily lead to great losses and scare investors from ever returning to the financial markets. How come? There’s this saying among traders: “Stairs up, elevators down.” This means that moves to the upside may be slow and steady, while moves to the downside tend to be more sharp and violent. Why is that? When the price starts crashing, many traders rush to exit the markets. They do that to either stay in cash or lock in profits from their long positions. This can quickly result in a domino effect where sellers rushing to the exit leads to even more sellers exiting their positions, and so on. The drop can be amplified even more if the market is highly leveraged. Mass liquidations will have an even more pronounced cascading effect, resulting in a violent sell-off. With that said, bull markets can also have phases of euphoria. During these times, prices are increasing at an extreme rate, correlations are higher than usual, and a majority of assets are going up in tandem. Typically, investors are “bearish” in a bear market, meaning that they expect prices to decline. This also means that market sentiment is generally quite low. However, this may not mean that all market participants are in active short positions. This just means that they expect prices to decline and may be looking to position themselves accordingly if the opportunity presents itself.
Bear market examples
As we’ve discussed, many investors think that Bitcoin has been in a macro bull trend since it started trading. Does that mean there aren’t bear markets contained in that bull run? No. After Bitcoin’s move to around $20,000 in December 2017, it’s had quite a brutal bear market. And before the 2018 bear market, Bitcoin experienced an 86% drop in 2014. As of July 2020, the range of the previous bear market low around $3,000 have been retested but never broken. If that low would have been breached, a stronger argument could be made that a multi-year Bitcoin bear market is still underway. Since that level has not been broken, the argument can be made that the crash following COVID-19 fears was merely a retest of the range. Still, there are no certainties when it comes to technical analysis, only probabilities. Other notable bear market examples come from the stock market. The Great Depression, the 2008 Financial Crisis, or the 2020 stock market crash due to the coronavirus pandemic are all noteworthy examples. These events have all caused great damage on Wall Street and impacted stock prices across the board. Market indexes such as the Nasdaq 100, the Dow Jones Industrial Average (DJIA), or the S&P 500 index can experience significant price declines during times like these.
Bear market vs. bull market — what’s the difference?
The difference is fairly straightforward. In a bull market, prices are going up, while in a bear market, prices fall. One notable difference may be that bear markets can have long periods of consolidation, i.e., sideways or ranging price action. These are times when market volatility is quite low, and there’s little trading activity happening. While the same may be true in bull markets, this kind of behavior tends to be more prevalent in bear markets. After all, prices going down for an extended period isn’t very attractive for most investors. Something else to consider is whether it’s possible to enter a short position on an asset in the first place. If there’s no ability to short an asset on margin or using derivatives, traders can only express a bearish view on the market by selling for cash or stablecoins. This can lead to a longer, drawn-out downtrend with little buying interest, resulting in a slow and uneventful sideways price action.
How to trade in a bear market
One of the simplest strategies traders can use in a bear market is to stay in cash (or stablecoins). If you’re not comfortable with prices declining, it may be better to simply wait until the market gets out of bear market territory. If there’s an expectation that a new bull market may come at some point in the future, you can take advantage of it when it does. At the same time, if you’re long-term HODLing with an investment time horizon of many years or decades, a bear market isn’t necessarily a direct signal to sell. When it comes to trading and investing, it’s generally a better idea to trade with the direction of the market trend. This is why another lucrative strategy in bear markets could be to open short positions. This way, when asset prices are going down, traders can profit off the decline. These can be day trades, swing trades, position trades — the main intention is simply to trade in the direction of the trend. With that said, many contrarian traders will look for “counter-trend” trades, meaning trades that are against the direction of the major trend. Let’s see how that works. In the case of a bear market, this would be entering a long position on a bounce. This move is sometimes called a “bear market rally” or a “dead cat bounce”. These counter-trend price moves can be notoriously volatile, as many traders may jump on the opportunity to long a short-term bounce. However, until the overall bear market is confirmed to be over, the assumption is that the downtrend will resume right after the bounce. This is why successful traders will take profits (around the recent highs) and exit before the bear trend resumes. Otherwise, they could be stuck in their long position while the bear market continues. As such, it’s important to note that this is a highly risky strategy. Even the most advanced traders can incur significant losses when trying to catch a falling knife.
We’ve discussed what a bear market is, how traders may protect themselves and profit off bear markets. In summary, the most straightforward strategy is to stay in cash in a bear market — and wait for a safer opportunity to trade. Alternatively, many traders will look for opportunities to build short positions. As we know, it’s wise to follow the direction of the market trend when it comes to trading.
Bitcoin started a rally last Tuesday and is up 20% since, at the time of writing. This week, we’ll be looking at the daily chart to make some sense of the recent parabolic run and where we could end up. I have connected the highs of 2017 and 2019 with a purple resistance trendline and, as we can see, this trendline has already been breached. We had a successful retest of the purple trendline yesterday as the price came down to the line and was bought back up Meaning, this is the first support level where the buyers will try to protect the price from falling. The fact that it was breached and had a successful retest of support are both, potentially, extremely bullish signals as a multi-year overhead resistance has been cleared and has flipped to support. The price has also formed a bull flag above a second strong support level at $10.4K. It is critical for the buyers to maintain the price above this level if we are to see a continued rise. The next strong resistance coming from the weekly chart is at $11.5K. As we already had a 20% rally, the chances to have another one immediately are rather slim. It is likely that we’ll traverse sideways between $10.4K and $11.5K. If the buyers are able to keep the price above $10.4K and close a week above $11.5K, we may see another strong push higher. The possible price impulse targets for the next rally are $12K, $12.6K and $13K. P.S. - For all traders who are trading Bitcoin on euro pairs - the dollar has weakened and the euro has gained a lot of strength, creating some confusion as to why dollar traders are enjoying higher profits on BTC. While the percentage gain is higher, their dollars now have less buying power. I would advise to keep an eye on the EURUSD currency pair to set reasonable targets based on the trend of Bitcoin and the currency of choice. https://preview.redd.it/c32ntpp4nzd51.png?width=2427&format=png&auto=webp&s=02c87f2cccdfe0ccb0d89fe0fe7d3f27486a4bfc
LOEx Market Research Report on July 25: Disputes escalate, stock fall and gold rises. How can BTC remain calm?
[Today's Hot Tips] 1.[U.S. Federal Court defines BTC as "currency"] The U.S. Federal Court stated on Friday that Bitcoin is defined as “currency”under the Money Transmitter Act in Washington, DC. 2.[Liu Jun, President of Bank of Communications: The internationalization of RMB needs to take into account the development and changes of digital currency] According to Sina Finance, the 2020 International Monetary Forum opened online today. Liu Jun, deputy secretary and president of the Bank of Communications, delivered a keynote speech. He believes that the internationalization of the RMB needs to take into account the development and changes of digital currency. In Liu Jun's view, in view of the development of the digital economy, the breadth, depth, and degree of RMB internationalization need to be further strengthened, and digital thinking must be integrated. The digital economy is a brand new paradigm faced by global economies. The digital economy not only shapes the environment for digital currency issuance, but also provides a new direction for the development of the international monetary system. 3.[U.S. Department of Health officials claim that they are using blockchain technology to track hospitalization data for the new coronavirus] According to Forbes on July 25, the Coronavirus Data Hub, a new platform of the US Department of Health and Human Services (HHS), is adjusting hospitals to report important information about the new coronavirus. [Today's market analysis] Bitcoin (BTC)BTC has been sideways near 9540 USDT in the morning, rebounded around 9:30 and pulled up. It just broke through 9600 USDT in a short-term and rose to 9619 USDT at the highest level, followed by a slight correction. At present, the overall BTC is adjusted within a narrow range around 9580 USDT. In the morning, the trend of mainstream currencies was similar to that of the broader market, and both rose to varying degrees. BTC is currently reported 9587.7 USDT on LOEx Global, a 24h increase of 0.43%. From the perspective of the concentration of the 5/10/30 moving average system on the daily line, the market already has the conditions to rise, but why did the Sino-US dispute escalate into this, the stock plummeted, gold skyrocketed, but BTC remained calm? https://preview.redd.it/7upgyt18xyc51.png?width=554&format=png&auto=webp&s=1d9bd74d934a6c17e4f83bbe7e7c3f93f2e9c8ba My personal judgment is that BTC has latency. How did this latency occur? It is determined by the main emotion of the market. We saw the comparison of the above two boxes. We analyzed the pressure area above 9700 the day before yesterday. In the previous period, the transaction volume was too large, and the pressure on the entire market was very high in this range. If it is directly pulled up, it will require very high capital for the main force. This is a cost they are unwilling to pay. Because it has been fluctuating at a low level of around 9,000, so that the chips above 9,700 are very tight, so the main force can not rashly pull up. The shape of the market already has a signal to rise. The reason for the lack of movement is that the subsequent trading volume is too small and the number of participants is too small. It is difficult for the accumulated volume of the market to break through the pressure zone of 9700-10000 in one fell swoop, otherwise the subsequent selling will be very serious, unless the news of the entire market cooperates and emergencies occur. The current strategy is to hold positions firmly, and there is no position to wait and see for opportunities. The safety zone remains around 9300-9400 as previously judged. Operation suggestions: Support level: the first support level is 9300 points, the second support level is 9400 integers; Resistance level: the first resistance level is 9600 points, the second resistance level is 9800 points. LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 2 million community members in 24 hours.
LOEx Market Research Report on July 23: What signal does Ethereum's skyrocket send? The market style is facing a change?
[Today's Hot Tips] 1.[Gu Yanxi: The OCC encryption policy statement helps commercial banks to enter the field of cryptocurrency] In response to "OCC stated that the National Savings Bank and the Federal Reserve Bank of China can provide customers with cryptocurrency custody services", Gu Yanxi, a long-term practitioner in the Chinese and American securities markets and a researcher on blockchain and encrypted digital assets, said in an interview with CoinWorld, retail customers in the United States have more choices in storing their encrypted digital currency assets, and the cost of custody will therefore be reduced. This also helps commercial banks enter the field of encrypted digital currency. So this is a good thing for commercial banks and retail customers. 2.[The US House of Representatives adds two blockchain amendments to the annual defense expenditure bill] According to news from The Block on July 23, the U.S. House of Representatives added two blockchain-related amendments to the National Defense Authorization Act (NDAA), the Congress’s annual defense spending bill passed on Tuesday. One of them adds distributed ledger technology (DLT) to the definition of so-called emerging technologies, which means that blockchain will be included in the future evaluation of the newly formed steering committee for emerging technologies and security requirements. Another amendment requires the Deputy Minister of Defense Research and Engineering to complete a study of the potential of DLT for defense purposes, and adds a requirement to report the results to Congress. Both amendments were proposed by the representative of Florida, Darren Soto. Soto is an advocate of blockchain technology and the co-chair of the congressional blockchain core group. [Today's market analysis] Bitcoin (BTC)BTC showed a sideways oscillating pattern in the early morning, rapidly rising around 6:15, breaking through 9500 USDT, and rising to a maximum of 9530.56 USDT. At present, BTC continues to be consolidated around 9530 USDT. ETH led the rise of mainstream currencies. BTC is currently reported at 9490.90 USDT on LOEx Global, with an increase of 1.70% in 24h. https://preview.redd.it/l11sxxoe0kc51.png?width=554&format=png&auto=webp&s=04b35367cc1fbc0eb634759468bf73be8bbc046e Why does ETH 2.0 make Ethereum better, and why does it make ETH prices rise? What impact does 2.0 have on the supply and demand of ETH, such as reducing inflation, enhancing scalability, bringing the Starking economy, and reducing the circulation of ETH because of the lock-up verification mechanism. You also need to understand that ETH2.0 is already a bright card, similar to halving. The continuity of the rise driven by the positive is to be considered. As mentioned earlier, the rise of the main version depends on the continued increase in volume. The rise of Ethereum also drove the rise of Bitcoin. See if BTC can stand firm at 9,400 points. If it does not stand firm, compared with other money-making effects, the hype around which is prominent, indicating that Bitcoin's bullish expectations are reduced and the possibility of later shocks will be faced; But the local market can adapt to sell high and buy low. Operation suggestions: Support level: the first support level is 9300 points, the second support level is 9400 integers; Resistance level: the first resistance level is 9500 points, the second resistance level is 9600 points. LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 2 million community members in 24 hours.
The stock market has traded sideways for past 2 weeks. That has market analysts suggesting the rally has run its course & looking for a reversal to the downside. Rather, I think it is the pause that refreshes. S&P likely headed for 3100 next and ultimately headed for 4000+ this summer. I'm calling for an 80% bear market to follow this final leg of a 38 year secular bull market. A lot of damage has been done but there is a historic amount of liquidity being pumped into the system with much more to come. The consensus has it 180 degrees wrong. They said the bear market rally had run its course and bad earnings season would send market sharply lower. Instead the S&P is heading for 3100 in short order. Semis, FAANG, Miners will continue to lead & laggards will see some catch-up. We are beginning to see some of the hardest hit areas of the market begin to outperform as they experience catch-up rallies. Some of those groups starting catch-up rallies include oil, industrials, housing & financials. I expect the dollar to fall to 85-86 but the move to S&P 4000+ does not depend on it at all. It's all about sentiment & liquidity right now. After the secular top, we're heading for a deep deflationary bust. We won't see sustainable inflation for at least a couple of years. But then we will see the first inflation-led recovery since the 1970's. After a short pullback, gold & silver & the miners are now poised for another nice run. Gold to $2000+, silver to $26, GDX to $45, GDXJ to $70 and SIL to $60. Bitcoin will ride along quite aggressively. I think you are going to be very surprised when the S&P is soaring past 4000 this summer. Pullbacks will occur on its way there but no retest of the lows. Why? Very simple. Trillions of dollars being pumped into the system. That plus high bearish sentiment provides the backdrop for a parabolic run to new highs. Buybacks are not necessary. Once the secular top is reached, we will enter an 80% bear market (bust) down to S&P 800. We won't see 4000 again for decades because interest rates will move up with inflation. P/E multiples will be compressed. TLDR: S&P 4000+ this summer. S&P 800 end of next year. Don't fight the Fed.
Should you be buying MCO or CRO? Here is my 2 cents
Well, simple answer, it's totally up to you. 2020 seems to be the year where crypto starts to shine. And CDC is and will play an important role in the future of bitcoin. (i said bitcoin and not cryptocurrency) There are so many coins out there and hundreds of them being backed by a project. Few of them survived and will survive. But how many of those projects are really sustainable in the long run? I won't get into the different coins (DYOR). Imo CDC has a very solid foundation and the goals that are set are definitely sustainable in the long term. Both MCO and CRO have their own utility within the CDC niche. CRO CRO is definitely going to the top 10 within the next month and at this point every holders of CRO should know why. (yeah cause of syndicate) How long will that last? it can go forever if CDC decides so. Using 1 token to buy another token at a discount can go on for a long time up to the limit where all the coins are locked in stakes. Probability of that happening is very low though. MCO MCO has been called a stablecoin recently (around this forum) because of the fact that it has been going sideways. But so did 100 other coins. MCO has a real utility that's also viable in the long run. Maybe at this moment there isn't a big demand for the Cards, but slowly people will want to spend their crypto. And to me CDC is the easiest way to do it. The demand will come for sure, probably once the bullrun starts we might notice a growth. BTC You probably noticed that most of the crypto out there are coupled with bitcoin moves and follow the same trend. BTC has the advantage of market pairs, which makes it the easiest entry and exit point for traders. When BTC go on bull mode, a vast majority of altcoin holders will drive to BTC and cause altcoins to dump. And this might affect both CRO and MCO. And when BTC dumps, almost all other altcoins dumps as well because traders want to exit their positions and take profits by switching to stable coins. But what if MCO was the coin that they fall back because it "could" be easier to spend their crypto assets by having the CDC cards? Imagine the pump that MCO would be getting given the limited supply. So from my point of view, BTC remains the best out there. I really hope that MCO will moon at some point and as for CRO, it's a good token for traders. If you know when to buy and sell CRO (which is easier than almost all other coins out there), you can make a lot profit. BTC - good to HODL MCO - good o HODL CRO - trade trade trade P.s. Not a financial advisor
BitOffer Institute: After halving, Bitcoin likely hitting above 100k
https://preview.redd.it/f9f8sdabmm851.png?width=1200&format=png&auto=webp&s=c035a14edf1bffeceee3db7dba24e28bb6cdc653 The currency founding block was born on January 3, 2009. Satoshi Nakamoto designs that the miners can obtain 50 BTC rewards with the packaging of one block. The number of bitcoins created about every 10 minutes which has halved every four years from 2012. Since the maximum supply of bitcoins is 21 million, halving means it will take longer for all bitcoins to circulation. But it also means there will be limited bitcoins over time. Historically, halving bitcoin has proven to be an important catalyst for a new bull market in the currency. On November 28, 2012, bitcoin been halved for the first time, alongside with block awards reduced from 50 BTCS per 10 minutes to 25. The total issued amount of BTC is 21 million, with the improvement of people’s cognition and consensus on Bitcoin, the scarcity of Bitcoin shows obvious after halved. While other factors in the market remain stable, the relationship between supply and demand will determine the price of goods. In 2012, before the halving, the price of Bitcoin was around $12. After November 28, the price rose to the peak of $1,175. On December 4, 2013, the price doubled by 100 times and set an all-time high for Bitcoin at that time. This has helped the earlier bitcoin owners to achieve wealth freedom and increased the public awareness of the value of bitcoin. On July 9, 2016, the 420,000th bitcoin block was completed, and the block reward was halved for the second time, which reduced from 25 BTC in 10 minutes to 12.5. This halving increased the scarcity of Bitcoin and alongside with the bull market of Bitcoin again. At the second halving, the price of bitcoin was around $660, after the halving, the price firstly experienced more than three months of backtracking, then suffered over seven months of sideways trading, eventually skyrocketed. By December 16, 2017, the price of Bitcoin reached $19,991 at its peak, a new record with an increase of nearly 30 times. After twice time of bull markets in which bitcoin was halved, many institutions stepped into the market, countless investors saw the infinite possibilities of its future. Image how long would it take a traditional industry to multiply its capital 30 times? But in the currency circle, it only takes one year, which is why institutions and retail investors are unanimously bullish on Bitcoin, and many even use it as a tool to avoid risks. This year marks the third time that bitcoin has halved. On May 12, the number of bitcoin block awards was reduced from 12.5 to 6.25. According to the results of the previous halving, where does the price will go? https://preview.redd.it/9hgnln2emm851.png?width=900&format=png&auto=webp&s=ce37be510e643d9aa2daa690ec4a2b569b771508 Through the halving, numerous investors have seen the huge business opportunity behind Bitcoin. In earlier 2020, many large organization institutions started to lay out BTC. According to a recent report released by Glassnode, the number of whales that holding more than 1,000 bitcoins has increased sharply since 2016. This data reflects a strong bullish signal after Bitcoin halved for the third time. After the first time of halving, the price of Bitcoin increased more than 100 times, and after the first time of halving, the price of Bitcoin increased more than 30 times. History doesn’t repeat itself — but it often rhymes. According to Lucian, the chief analyst at BitOffer Exchange, said that the bitcoin will have a bull market within a few months after the halving, with the increase of at least 10 times, that is, it is expected to break the $100,000 price. Therefore, it is the best time to buy Bitcoin. However, rather than buying Bitcoin, it is better to trade Bitcoin ETF at BitOffer, which starts with a minimum yield of 3 times. Besides, it also includes the intelligent dynamic warehousing mechanism and the calculation of fund compound interest, with a maximum yield of 17 times. If the price of bitcoin goes up more than 10 times, the ETF will go up as much as 170 times. Without a doubt, the Bitcoin ETF is the best investment choice.
Market Analysis on April 24, 2020: The Halving Market of BTC Will Come, And the Number of New Transaction Addresses Has Reached A Peak in 2 Years
[Today's Hot Tips] 1.[The halving market of BTC will comes, and the number of new transaction addresses has reached a peak in 2 years] During the short-term change in BTC prices, trading volume returned to a high of $ 42 billion. Judging from the current market performance, performance of BTC is good, and it is a currency with a slightly higher increase in mainstream currencies. In other words, the short-term lead effect of BTC is prominent, and investors actively participate in BTC transactions, which is why the market has begun to ferment. The data show that not only the market investors trading activity is high, but also the number of new OTC trading users is increasing. That is to say, the market fermentation is the result of investors on the market and OTC simultaneously seeing more. Combined with the fact that BTC is getting closer and closer to the time of reducing production, the current activity has prompted more signals of market fermentation. 2.[Tether added 360 million USDT pre-additional issuance transactions to the additional issuance transaction pool last night] The chainsmap monitoring system of Chainsguard found that at 21:04 on April 23, Beijing time, Tether added three 120 million USDT pre-additional transactions to the ERC20 USDT additional issuance transaction pool, totaling 360 million USDT. [Today's market analysis] BTC continued to sideways above 7500 USDT in the early hours of this morning. It rose slightly at about 6 o'clock and briefly touched 7600 USDT. It is now oscillating above 7500 USDT. Mainstream currency follow the sideways, with small fluctuations. BTC is currently reported at 7520.2 USDT on LOEx Global, with an increase of 0.02% in 24h. Late last night, the pie BTC finally pulled up 5.87% at the last moment when it ran out of the runway, decisively breaking through the shock space and choosing the direction upward. The overall trend of Bitcoin's daily k-line cycle is upward, and the lower support line is still the upward support line formed by the connection of support levels 7200 and 7500. If this support line is intact, after the technical side breaks through the recent convergence pattern, the overall trend of the daily K-line cycle is upward, and the currency price may form a larger consolidation upward channel with the upward support line formed by the connection of7500 and 8000. All this stems from the fact that with the end of April, the halving effect in May increased the incremental capital for admission, and the number of account openings reached a new high. The halving of Bitcoin will definitely have a positive effect on the price in the long run, but this advantage will not be reflected in the price so quickly. From last year's Litecoin halving, it started a bad start. This year, BCH halved, BSV halved, and the price fell after halving. This will give a bad psychological hint to short-term investors who really use funds to buy Bitcoin. When the good is realized, there may be a short-term bearish, but the long-term will be good. Operation suggestions: Support level: the first support level is 7400 points, the second support level is 7200 integers; Resistance level: the first resistance level is 7800 points, the second resistance level is 8000 points. LOEx is registered in Seychelles. It is a global one-stop digital asset service platform with business distribution nodes in 20 regions around the world. It has been exempted from Seychelles and Singapore Monetary Authority (MAS) digital currency trading services. Provide services and secure encrypted digital currency trading environment for 1 million community members in 24 hours.
Strong rebound! Bitcoin is up over 20%. How to make this volatility your best ally?
During the day on Wednesday, the decline in the three major stock indexes have triggered trading restrictions, and US stocks will definitely open again in the evening. Unexpectedly, it came a little later than predicted. At 12:56 pm on March 18, the S & P 500 index fell 7%, triggering the fusing mechanism. This is the fifth time in the history of US stocks and the fourth time in 10 days. All the gains since President Trump took office have been cleaned up. Trump takes office: January 20, 2017—present However, it is weird that at 9:30 on the evening of the US stock market opened, BTC did not follow the downtrend, but was suddenly pulled up at the opening time point. It seems that someone has reversed the operation according to the rule of "US stock melted, BTC fell". The motivation for doing this seems clear: when the market thinks that BTC will fall, many people will be short, and pulling up BTC against the trend can pull short orders. Who is the main trader? Then it naturally depends on who's interest to do this, press the table. In short, it may be because of this operation that the price of BTC and the MACD technical indicators have slightly deviated. It may be that the US stock market has passed through, letting everyone realize that the external environment is even worse, so the overall market has slowly pulled back since yesterday, led by the two halving currencies DASH and ZEC, and the entire halving sector has begun to rise. . This law is actually quite obvious. It is simpler to pull the entire market than imagined. There is no need to pull up all currencies, not even BTC, halving the plate or platform currency / public chain / model currency, etc., as long as one of the coins increases The coins in the same sector will soon rise as well. There is no shortage of speculators in the market. They start to gather like wolves smelling blood. Why is BTC repaired before US stocks? Judging from the current price performance, if there is a market bubble, the bubbles in US stocks are obviously more than BTC. Although the Federal Reserve and Trump have continuously released big moves, U.S. stocks have no meaning to stop falling. Trump has been rushed and even directed his attention to anti-China sentiment ... Pulling away, U.S. stocks are falling. While bitcoin is currently stabilizing near $ 5,000, US stocks have fallen the previous two days, and bitcoin has not fallen further. It is believed that before the inflection point of the new cases of the epidemic emerges, the US stock market is unlikely to improve. Even if the crisis is not about to go into a financial crisis, as the saying goes, "the ship is hard to turn around", the repair time of U.S. stocks will be longer than the repair time of Bitcoin. If there is indeed an "invisible hand" on Wednesday, it will lead the trend of BTC and U.S. stocks. If the trend breaks out, it has already been more than half successful. However, although BTC is supported by existing support, if it falls below the 5000-4500 point again, it may follow a new low in US stocks, which means that BTC still cannot escape the epidemic and bring it to the global capital market. Panic. Storytelling and listening Trump's intention to describe "foreign virus" as "Chinese virus" / "China virus" has caused great controversy in the media of the two countries, but the story he wants to tell is actually how the American people are innocent and exposed to exotic viruses Infringement, as a president who strongly protects the American people, not supporting him is equal to not wanting asylum, and will lose his safety and health and well-being ... Many Americans who understand the story will naturally support special features in this round of elections. Lampe's re-election. The ability to tell stories is a kind of "brainwashing" ability, which was absurd at first, but listen to you and believe it. Top investors are good at telling stories, intermediate investors are good at taking advantage of the trend, and ordinary investors can only listen to stories. If there is also a person in the currency circle who is good at telling stories and makes you believe that BTC will definitely rise, how will he tell his story? Story 1. Bitcoin rises for no reason, someone is doing "market value management" Assume that Bitcoin also has an organization similar to an "industry association", consisting of miners and large households. When Bitcoin suddenly falls sharply due to selling pressure or serial explosion, it cannot fall to the floor like some small currencies, and then lie down Can't move. Industry associations must intervene, as this is in the interest of all large households. We know that the market value of Bitcoin is more than 100 billion U.S. dollars, which is only equivalent to the market value of a listed company. There is no market as large as everyone thinks, such as US stocks or A shares. At present, there are only 4 million bitcoins in the market. About 20 billion U.S. dollars. If a story is told that everyone can participate in investing in BTC, everyone only needs to give out 1w RMB. Those who invest in the world, that is, 2 million people who listen to the story are enough to increase BTC. Top 10 BTC mobile address changes The "BTC Industry Association" leaders behind them sat down and talked, giving everyone a reason and sign of buying. Whether it is foreign exchange, bitcoin will rise, or halving the currency will definitely skyrocket. It is now the best for the bottom. Timing ... As long as the average person understands the story and feels that the logic is credible, that's it. BTC's fall may be an emergency, but BTC's soaring, and think carefully, no matter what seems to be the cause, in fact, it seems that someone is using the market to tell you a good story. Even the ten-year-old cow of the US stock market is nothing more than issuing corporate bonds-corporate executives repurchasing stock-stock prices are rising, physical companies have "market value management", not to mention BTC, which has no business? Story 2. Maximizing the benefits of miners The biggest impact of the BTC plunge is that apart from retail quilts and miners shutting down, some miners have been panic for sale. In order to pay for electricity to maintain the operation of mining machines, this wave of decline has also shuffled the mining industry. If the sideways price is around 5000 If the time is long enough, some miners with no coins available for sale will be eliminated, and those old miners who have the latest machines and experienced countless plunges will survive. What will they do to maximize the benefits? Take advantage of the low-cost crazy acquisition of mining machines, two months before the halving, seize the opportunity to dig out coins within the maximum capacity, hoarding. Because once in mid-May, due to halving and difficulty adjustment, the mining cost of the latest mining machine will exceed 6,000 US dollars. Then all the miners called the "Bitcoin Belief", covering up not selling a coin, and waiting until the sellers in the market dried up, the price of the coin started to build a bottom. This process could take up to a month, and the price of the coin would rise steadily (if it does not rise, it must rise ). When everyone starts to believe that the halving myth comes into play, the currency price will also be pulled to a new height, and the miners will ship at a high level, will the benefits be maximized? Is the fund sufficient in the second half of the year? How many more shocks and fluctuations? Retailers cannot play the invisible hand in the market. The only thing that can compete with the power of miners is the exchange. But what is the benefit of the exchange? It is everyone like a hamster who has entered the running wheel, buying and selling constantly, short and long, so the shock of the market is no different than creating huge performance for the exchange ... What do you think of the current market? After panic selling last week, the market began to gradually rationalize. At present, the stock prices of many high-quality companies are already very cheap, and the stock index has hit new lows in recent years. Therefore, it is normal for the market to usher in a wave of rebound after an oversold. However, the global epidemic will continue to deteriorate next week, and the rebound will not be able to bear it. The U.S. stocks continue to fall and squeeze the bubble. Maybe it was analyzed before. Before BTC stands firm at 6000, there is still a high probability that the U.S. stocks will be affected. Then wait again. The mysterious power of "market value management" is shot at 9:30 every night. The main power in these markets determines when the bull market will come.
Want to start fresh after the crypto crash? Here is a comprehensive guide on how to invest and prosper over the long term.
Well its happened, the crypto market just experienced the worst crash since 2014, the bubble has burst. The idiocy of newbies FOMO-ing into anything with low nominal value lead to endless twitter timelines like this, and now nobody has any idea where the market settles. What do you do now? In the following weeks it will be a good time to rethink your investment approach and how you arrive at your decisions. Just buying whatever is shilled on Twitter or Reddit and jumping from one crypto to another isn't going to work like it did these last two months. The good news is that we're finally back closer and closer to our long term moving average which is much more healthy for entrants, the bad news is that the fear might continue compounding if outstanding issues are not dealt with. Tether is the big concern for me personally for reasons I've stated many times, but some relief in the short term may come if the SEC and CFTC meeting on February 6th goes well. Nobody really knows where the bottom is but I think we're now past the "irrational exhuberance" stage and we're entering a period of more serious inspection where cryptos will actually have to prove themselves as useful. I suspect hype artists like CryptoNick and John McAfee will fall out of favor. But perhaps most importantly use this as a learning experience, don't try to point fingers now. The type of dumb behavior that people were engaging in that was rewarded in a bull market (chasing pumps, going all in on a shillcoin, following hype..etc) could only ever lead to what we are experiencing now. Just like so many people jumped on the crypto bandwagon during the bull run, they will just as quickly jump on whatever bandwagon is to be used to blame for the deflation of the bubble. Nobody who pumped money into garbage without any use case will accept that they themselves with their own investing behavior were the real reason for the gross overvaluation of most cryptocurrencies, and the inevitable crash. So if you're looking for a fresh start after the massacre (or just want to get in now), here is a guide:
Part A: Making a Investment Strategy
This is your money, put some effort into investing it with an actual strategy. Some simple yet essential advice that should apply to everyone, regardless of individual strategy:
Slow down and research each crypto that you're buying for at least a week.
Don't buy something just because it has risen.
Don't exit a position just because it has declined.
Invest only as much as you can afford to lose.
Prepare enter and exit strategies in advance.
First take some time to think about your ROI target, set your hold periods for each position and how much you are actually ready to risk losing. ROI targets A lot of young investors who are in crypto have unrealistic expectations about returns and risk. A lot of them have never invested in any other type of financial asset, and hence many seem to consider a 5-10% ROI in a month to be unexciting. But its important to temper your hype and realize why we had this exponential growth in the last year and how unlikely it is that we see 10x returns in the next year. What we saw recently was Greater Fool Theory in action. Those unexciting returns of 5-10% a month are much more of the norm, and much more healthy for an alternative investment class. You can think about setting a target in terms of the market ROI over a relevant holding period and then add or decrease based on your own risk profile. Example: Calculating a 2 year ROI target Lets say you want to hold for 2 years now, how could you set a realistic target to strive for? You could look at a historical 2 year return as a base, preferably during a period similar to what we're facing now. Now that we had a major correction, I think we can look at the two year period starting in 2015 after we had the 2014 crash. To calculate a 2 year CAGR starting in 2015:
Total Crypto Market Cap
Jan 1, 2015:
Jan 1, 2017:
Compounded annual growth return (CAGR): [(18/5.5)1/2]-1 = 81% This annual return rate of 81% comes out to about 4.9% compounded monthly. This may not sound exciting to the lambo moon crowd, but it will keep you grounded in reality. You can aim for a higher return (say 2x of that 81% rate) if you choose to take on more risky propositions. I can't tell you what return target you should set for yourself, but just make sure its not depended on you needing to achieve continual near vertical parabolic price action in small cap shillcoins because that isn't sustainable. Once you have a target you can construct your risk profile (low risk vs. high risk category coins) in your portfolio based on your target. Risk Management Everything you buy in crypto is risky, but it still helps to think of these 3 risk categories:
Core holdings - This is the exchange pairing cryptos and those that are well established. These are almost sure to be around in 5 years, and will recover after any bear market. The Coinbase pairs (Bitcoin, Litecoin and Ethereum) are in this class of risk, and I would also argue Monero.
Medium Risk Speculative - These would be cryptos which generally have a working product and niche, but higher risk than Core. Things like ZCash and Ripple, relatively established history but still uncertainty over long term viability.
High Risk Speculative - This is anything created within the last few months, ICOs, low caps, shillcoins...etc. Most cryptos are in this category.
How much risk should you take on? That depends on your own life situation for one, but also it should be proportional to how much expertise you have in both financial analysis and technology. The general starting point I would recommend is:
50-70% for newbies in Low Risk Core, then you can go down to 30% as you gains confidence and experience
Always try to keep at least a 1/3rd in safe core positions
Don't go all in on speculative picks.
Some more core principles on risk management to consider:
Diversify across sectors and rebalance your allocations periodically.
Consider using dollar cost averaging to enter a position. This generally means investing a X amount over several periods, instead of at once. You can also use downward biased dollar cost averaging to mitigate against downward risk. For example instead of investing $1000 at once in a position at market price, you can buy $500 at the market price today then set several limit orders at slightly lower intervals (for example $250 at 5% lower than market price, $250 at 10% lower than market price). This way your average cost of acquisition will be lower if the crypto happens to decline over the short term.
Don't have more than 5-10% of your net worth in crypto.
Have the majority of your holdings in things you feel good holding for at least 2 years. Don't use the majority of your investment for day trading or short term investing.
Remember you didn't actually make any money until you take some profits, so take do some profits when everyone else is at peak FOMO-ing mode.
Have some fiat in reserve at a FDIC-insured exchange (ex. Gemini), and be ready to add to your winning positions on a pullback. This should be part of your entry strategy.
Consider what level of loss you can't accept in a position with a high risk factor, and use stop-limit orders to hedge against sudden crashes. Set you stop price at about 5-10% above your lowest limit. Stop-limit orders aren't perfect but they're better than having no hedging strategy for a risky microcap in case of some meltdown. Only you can determine what bags you are unwilling to hold.
You can think of each crypto having a risk factor that is the summation of the general crypto market risk (Rm), but also its own inherent risk specific to its own goals (Ri). Rt = Rm +Ri The market risk is something you cannot avoid, it is essentially the risk that is carried by the entire market over things like regulations. What you can minimize though the Ri, the specific risks with your crypto. That will depend on the team composition, geographic risks (for example Chinese coins like NEO carry regulatory risks specific to China), competition within the space and likelihood of adoption and other factors, which I'll describe in Part 2: Crypto Picking Methodology. Portfolio Allocation Along with thinking about your portfolio in terms of risk categories described above, I really find it helpful to think about the segments you are in. OnChainFX has some segment categorization but I generally like to bring it down to:
Think about your "Circle of Competence", your body of knowledge that allows you to evaluate an investment. Your ability to properly judge risk and potential is going to largely correlated to your understanding of the subject matter. If you don't know anything about how supply chains functions, how can you competently judge whether VeChain or WaltonChain will achieve adoption? If you don't understand anything about the tech when you read the Cardano paper, are you really able to determine how likely it is to be adopted? Consider the historic correlations between your holdings. Generally when Bitcoin pumps, altcoins dump but at what rate depends on the coin. When Bitcoin goes sideways we tend to see pumping in altcoins, while when Bitcoin goes down, everything goes down. You should diversify but really shouldn't be in much more than around 12 cryptos, because you simply don't have enough competency to accurately access the risk across every segment and for every type of crypto you come across. If you have over 20 different cryptos in your portfolio you should probably think about consolidating to a few sectors you understand well.
Part B: Crypto Picking Methodology (Due Dilligence)
Do you struggle on how to fundamentally analyze cryptocurrencies? Here is a 3-step methodology to follow to perform your due dilligence:
Step 1: Filtering and Research
There is so much out there that you can get overwhelmed. The best way to start is to think back to your own portfolio allocation strategy and what you would like to get more off. For example in my view enterprise-focused blockchain solutions will be important in the next few years, and so I look to create a list of various cryptos that are in that segment. Upfolio has brief descriptions of the top 100 cryptos and is filterable by categories, for example you can click the "Enterprise" category and you have a neat list of VEN, FCT, WTC...etc. Once you have a list of potential candidates, its time to read about them:
Critically evaluate the website. If it's a cocktail of nonsensical buzzwords, if its unprofessional and poorly made, stay away. Always look for a roadmap, compare to what was actually delivered so far. Always check the team, try to find them on LinkedIn and what they did in the past.
Read the whitepaper or business development plan. You should fully understand how this crypto functions and how its trying to create value. If there is no use case or if the use case does not require or benefit from a blockchain, move on.
Check the blockchain explorer. How is the token distribution across accounts? Are the big accounts selling? Try to figure out who the whales are (not always easy!) and what the foundation/founder account is based on the initial allocation.
Look at the Github repos, does it look empty or is there plenty of activity?
Search out the subreddit and look at a few Medium or Steem blogs about the coin. How "shilly" is the community, and how much engagement is there between developer and the community?
I would also go through the BitcoinTalk thread and Twitter mentions, judge both the length and quality of the discussion.
You can actually filter out a lot of scams and bad investments by simply keeping your eye out on the following red flags:
allocations that give way too much to the founder
guaranteed promises of returns (Bitcooonnneeeect!)
vague whitepapers filled with buzzwords
vague timelines and no clear use case
Github with no useful code and sparse activity
a team that is difficult to find information on
Step 2: Passing a potential pick through a checklist
Once you feel fairly confident that a pick is worth analyzing further, run them through a standardized checklist of questions. This is one I use, you can add other questions yourself:
Crypto Analysis Checklist
What is the problem or transactional inefficiency the coin is trying to solve?
What is the Dev Team like? What is their track record? How are they funded, organized?
How big is the market they're targeting?
Who is their competition and what does it do better?
What is the roadmap they created and how well have they kept to it?
What current product exists?
How does the token/coin actually derive value for the holder? Is there a staking mechanism or is it transactional?
Is there any new tech, and is it informational or governance based?
Can it be easily copied?
What are the weaknesses or problems with this crypto?
The last question is the most important. This is where the riskiness of your crypto is evaluated, the Ri I talked about above. Here you should be able to accurate place the crypto into one of the three risk categories. I also like to run through this checklist of blockchain benefits and consider which specific properties of the blockchain are being used by the specific crypto to provide some increased utility over the current transactional method:
Benefits of Cryptocurrency
Decentralization - no need for a third party to agree or validate transactions.
Transparency and trust - As blockchain are shared, everyone can see what transactions occur. Useful for something like an online casino.
Immutability - It is extremely difficult to change a transaction once its been put onto a blockchain
Distributed availability - The system is spread on thousands of nodes on a P2P network, so its difficult to take the system down.
Security - cryptographically secured transactions provide integrity
Simplification and consolidation - a blockchain can serve as a shared ledger in industries where multiple entities previously kept their own data sources
Quicker Settlement - In the financial industry when we're dealing with post-trade settlement, a blockchain can drastically increase the speed of verification
Cost - in some cases avoiding a third party verification would drastically reduce costs.
Step 3: Create a valuation model
You don't need to get into full modeling or have a financial background. Even a simple model that just tries to derive a valuation through relative terms will put you above most crypto investors. Some simple valuation methods that anyone can do: Probablistic Scenario Valuation This is all about thinking of scenarios and probability, a helpful exercise in itself. For example: Bill Miller, a prominent value investor, wrote a probabilistic valuation case for Bitcoin in 2015. He looked at two possible scenarios for probabalistic valuation:
becoming a store-of-value equal to gold (a $6.4 trillion value), with a .25% probability of occurring
replacing payment processors like VISA, MasterCard, etc. (a $350 million dollar value) with a 2.5% probability
Combining those scenarios would give you the total expected market cap: (0.25% x 6.4 trillion) + (2.5% x 350 million). Divide this by the outstanding supply and you have your valuation. Metcalfe's Law Metcalfe's Law which states that the value of a network is proportional to the square of the number of connected users of the system (n2). So you can compare various currencies based on their market cap and square of active users or traffic. We can alter this to crypto by thinking about it in terms of both users and transactions: For example, compare the Coinbase pairs:
Daily Transactions (last 24hrs)
Active Addresses (Peak 1Yr)
Metcalfe Ratio (Transactions Based)
Metcalfe Ratio (Address Based)
Generally the higher the ratio, the higher the valuation given for each address/transaction. Market Cap to Industry comparisons Another easy one is simply looking at the total market for the industry that the coin is supposedly targeting and comparing it to the market cap of the coin. Think of the market cap not only with circulating supply like its shown on CMC but including total supply. For example the total supply for Dentacoin is 1,841,395,638,392, and when multiplied by its price in early January we get a market cap that is actually higher than the entire industry it aims to disrupt: Dentistry. More complex valuation models If you would like to get into more fleshed out models with Excel, I highly recommend Chris Burniske's blog about using Quantity Theory of Money to build an equivalent of a DCF analysis for crypto. Here is an Excel file example of OMG done by Nodar Janashia using Chris' model . You should create multiple scenarios with multiple assumptions, both positive and negative. Have a base scenario and then moderately optimistic/pessimistic and highly optimistic/pessimistic scenario. Personally I like to see at least a 50% upward potential before investing from my moderately pessimistic scenario, but you can set your own safety margin. The real beneficial thing about modelling isn't even the price or valuation comparisons it spits out, but that it forces you to think about why the coin has value and what your own assumption about the future are. For example the discount rate you apply to the net present utility formula drastically affects the valuation, and it reflects your own assumptions of how risky the crypto is. What exactly would be a reasonable discount rate? What about the digital economy you are assuming for the coin, what levers affects its size and adoption and how likely are your assumptions to come true? You'll be a drastically more intelligent investor if you think about the fundamental variables that give your coin the market cap you think it should hold.
Summing it up
The time for lambo psychosis is over. But that's no reason to feel down, this is a new day and what many were waiting for. I've put together in one place here how to construct a portfolio allocation (taking into consideration risk and return targets), and how to go through a systematic crypto picking method. I'm won't tell you what to buy, you should always decide that for yourself and DYOR. But as long as you follow a rational and thorough methodology (feel free to modify anything I said above to suit your own needs) you will feel pretty good about your investments, even in times like these. Edit: Also get a crypto prediction ferret. You won't regret it.
A HODLer's dilemma - There are likely much fewer Bitcoin millionaires than you think
I first learned about bitcoin through a newsletter reporting a Mt Gox hack in 2011. After reading about its potential to be seriously disruptive, I still avoided making any purchases due to the limited (and shady) means of acquiring any. But I kept my eye on it. I saw the small pattern of boom-bust cycles but there were too few at the time to consider this pattern to be normal. I bought my first bitcoins in April 2013. I'd FOMO'ed the runup from $15 to $100 and finally bought in at $138. One of the only ways to buy bitcoin at the time was to deposit cash into some rando's bank account and cross your fingers that they'd actually send you bitcoin in return. I was lucky. They did. Bitcoin continued to rally to $230. I'd nearly doubled my money in a few days. I finally applied for a Mt Gox account and was hooked. It only took 3 more months to watch my initial investment be cut in half after the retrace to $66. My point here is it took balls to invest in the chaotic sphere of crypto from a total bystander who's not a cypherpunk. I had a spare $500, my career was built on the industry Bitcoin was poised to disrupt, so I bought a few as a "hedge" in my mind. So I hedl. The price eventually stabilized and slowly crept up to my initial buy in. I learned about coinbase and registered an account right before the second bull run of the year. Bitcoin ran up to $1,100. I was amped. Bought in a ton more on the way up. Convinced buddies to buy in at over $1,000. Then it tanked again. I praised friends who "called the top" and got out while I hedl. But at that time I was a lot more convinced that long term growth was inevitable. I explained to my buddies that this is normal and that they should think of their money spent as a shitty night at the casino. They can pull it out now or just forget about it and see where it goes. They listened. And I kept buying randomly. I set a DCA calendar event but rarely listened to it. I bought here and there with spare funds over the next few years as it traded sideways. Overall, I spent about $15,000 over the course of 4 years. Who spends $15,000 on an unproven volatile asset with naysayers around every corner? Anyone with any financial sense would think I was insane to put that much money into the space. Now I own 25 bitcoin and a decent number of the other top coins. I'm in a great position. But I want you all to heed this story as a means to prepare yourselves for strong hands over the next boom/bust cycle. I watched my $15k investment balloon to over $600k during the 2017 bull run. Then I watched my portfolio shrink $350k in like 6 weeks. Then another $150k over the following months. It was painful. But I'm still hodling. I often wonder about how strong my hands can be when I finally see my crypto portfolio in the 8-figure range. I truly believe that Bitcoin stands to insanely disruptive and coexist on a massive level with the fiat powerhouses of today. But how am I going to react when that valuation means I can retire at age 35? How am I going to react if it grows to unfathomable levels and the next bust sees me losing millions of dollars over a few short months? I can't tell you. I don't know myself. I know I'll not be happy to sell out at 1MM if it climbs to 10MM in a few years. But I'll have reached a FIRE benchmark at an age that a very rare few can even dream of. It's an insane concept to be able to say you turned $15k into a million dollars. Even more so if it's multi-millions. That's why I think a lot fewer bitcoin millionaires exist than you think. When reflecting on how much is made over such a little investment, the idea that it could go even higher simply escapes logic. Even if you truly believe that Bitcoin will cement itself as an alternative or replacement to currency/payments/store-of-value, there's still a huge risk it can all collapse at some point. So. What would you do? How much will you be willing to put on the table once it's real? Once you literally have hundreds of thousands of dollars on the line?
[BTC&Alts: Short and Medium Term] Based on History and Recession-Driven Institutional Adoption
Bitcoin Taking a Break
We have had a large surge from $8k to almost $14k, followed by a 30% retrace - the largest we have had during this bull market and the first in the retracement range we saw during the 2015-2017 run. Keep in mind that Bitcoins run since April 1st has been massive, with 300% gains in 3 months. This is an unusual high return for the beginning of a bull run. We usually see growth of this magnitude at the parabolic stage during the end phase. Based on these two factors, I think we will have no more upside action for some time. I don't see us going far below $8k either because we haven't seen corrections of that size during the last run either. Consequently, I believe it's finally time for Bitcoin to get some rest and sideways movement, which I see absolutely necessary after the recent run.
If this turns out to be the case, it will be highly interesting to see what impact that would have on the altmarket. Historically, Bitcoin going sideways in a bull market resulted in alt seasons. Considering that Bitcoin dominance sits above 62%, a level Bitcoin could not sustain for more than a week since the surge of altcoins in May 2017, altcoins are quite low compared to Bitcoin. Alts could easily surge massively, if some capital flows back into these markets. Those who still have a significant part of their portfolio in alts are, aside from day-traders, are mostly HODLers holding on to their bags from late 2017 or early 2018. But many people have shorted their alt positions to ride the Bitcoin run. Expectations for Bitcoin are high while currently nobody is expecting high returns from their alts in the near future. If Bitcoin fails to meet these high expectations and shows no growth for as short as a period of only two months, many people would lose their euphoria and get flashbacks to the very recent bear market of 2018, which is still in everybody's mind. People will try to realize profits, either by cashing out to fiat or to alts. It doesn't need many doing the latter to cause massive alt surges. In a market where Bitcoin is stagnant but massive returns are seen on the alt-side, an alt-season would be a self-fulfilling prophecy. This would be further supported by our low expectations for alts where even 10% gains trigger dopamine rushes. If this is truly about to unfold, it would be the first real alt season since the beginning of 2018 and beshadow the previous surges which would be better refered to as "corrections". But please let me also outline an alternative model where we won't see an alt season any time soon even if Bitcoin goes sideways...
The Global Recession has Begun
What many people are not aware of yet, we are already knee-deep into a recession caused by global trade slowing down. Trump's "America first" policy, manifesting in a trade war with China and Europe (import restrictions, blacklisted companies, tariffs and other sanctions) has destroyed global trade infrastructure. German car manufacturers are already cutting jobs. Additionally, Brexit is triggering migration of banks, insurers, asset managers and other companies from Europe's center of finance, London, to the continent, shaking up the markets. Tensions between the US, China, the EU and Russia are growing. In the EU parliament election, it became apparent that the right and green parties are emerging, pushing out the industry-lobbied center parties. Right parties try to isolate their nations from global markets by leaving the EU and its trade zone and replacing the EURO with a national currency. Green parties are heavily pushing for sustainability - a necessary yet very costly step.
Bitcoin in a Recession
The current surge has been driven to major parts by institutional interest. Institutions have had their eyes on it since 2017 but were waiting for the bubble to burst to chop up cheaply. An emerging asset class having an accumulated market cap of $100B at the bottom of the bear market was a wet dream coming true for these financial giants who are used operating in highly liquid, traditional and well adopted markets where market caps are usually denoted in trillions. And that at a time where real estate and stocks are highly oversold and the bubble about to burst. While in these markets performance is measured in base points (0.01%), Bitcoin has historically delivered on the promise of gains in the multiple thousands of percentages within a time frames as short as 3 years. Looking for safe markets to park their investments for the recession, Bitcoin - although highly speculative - is still an attractive opportunity. Putting 1-5% of a portfolio into Bitcoin "just in case", is becoming increasingly trendy among professional investors. Now this certainly explains why we have been going up so fast since April 1st - where Bitcoin's downward trend has been broken, signalling institutions to FOMO onto the train as quickly as possible.
Institutions and Alts
So what about alts? In this scenario, there is a strong divide between Bitcoin and alts. Institutions care little about the tech. Those making the investing decisions do not have any technical skills but rely on the estimate of professionals. These professionals point out that Bitcoin is the most liquid, safest and well-proven crypto asset while other projects are still in the development phase, many likely to fail, some sketchy and intransparent, some vaporware, almost all centralized - at least by a developing team. That Bitcoin has fees in the dollar range matters little when you are transfering in the multiple millions. The slowness of even waiting a day for settlement is a joke for those seeking a longterm store of value, those used to transfer physical assets, those day-trading and those trading in certificates of ownership. Having a long history, a recognizable brand, high liquidity and the first mover advantage, Bitcoin turns out to be the preferable crypto bag for institutions. Alts are too premature and not yet on the menu. They might be bought by highly speculative risk-seeking investors. But Bitcoin is already providing more than necessary volatility for almost anyone, including those being used to trading medium- to small-cap tech-stocks. Ignoring the tech, it makes sense to buy alts low and sell them high to the masses. But these masses are still far away from jumping onto Bitcoin. Alts will surely appreciate from this bull cycle, but likely at its later stage - just like during the last bull market.
Like many of you, I really enjoyed u/ethical-trade's thoughtful "Before the flood" post. I have actually been thinking about writing a short summary of my experience here, or a "thank you," so inspired by his example, here goes. I came to this space about two years ago. I remember buying my first ETH at about $250 or so. I had bought my first Bitcoin a few weeks earlier, together with some Litecoin. Over the summer, I studied the Ethereum ecosystem and increasingly became interested in the possibilities this new technology would enable. I started asking (dumb) questions on this sub, figuring out how to secure my coins, what a fork means (how the politics of the Bitcoin fork played out), what scaling problems needed to be solved, et cetera. I kept on DCA'ing, more or less, and went from 2:2:1 BTC/ETH/LTC to 1:4 BTC/ETH. I picked up some ERC20 tokens, too. The market was going up, and I remember reading u/DCinvestor's long but thoughtful posts on the state of Ethereum. I joined a local monthly crypto meetup. I was making "easy" money in the fall of 2017, thinking I was "a genius" for making the right call, as cryptocurrency marched on to all-time highs. I kept on buying more ETH, and even gave some younger cousins $5 worth of ETH at Christmas. I probably talked about my newfound interest with too many people, or at least I wasn't cautious enough. A friend of many had unexpectedly received a few hundred euro's and we talked about cryptocurrency. I helped her set up a Coinbase account to buy some ETH. Looking back, I think I was quite cautious in my approach, stressing the volatile nature, but an order was placed at $1200 or so, which still makes me feel bad. Anyway. I didn't take profits. I thought that we might as well see $3000 ETH soon, partly because of the Ether futures, partly because of the Bitcoin ETF rumors, and I just needed to hodl. As the market started going down, I kept DCA'ing. This was just a temporary break, right? And I want to be rich like ETH whales! In April/May, there was reason to believe we had recovered, as ETH jumped from $500 to $750 (iirc), but that didn't turn out to be right. Time passed on and I kept on buying. Somewhere in the summer, I sold my motorcycle for €7000. I thought it was a good idea to take that money and buy 1 Bitcoin, thinking that "soon, I'll be able to buy a car with that money!" Wishful thinking, for sure. Just like selling $1000/AMZN (after a nice runup) for $1000/ETH a few months earlier. Probably the worst trade I ever made. Maybe I should've bought a crypto station instead, or put more thought into How to Survive Crypto Investing. In any case, if the saying's right, namely "hodlers make their money during the green candles, but they earn it during the red ones," I had definitely earned it by now. The market was going sideways, and even uncle Mike called a bottom. And Bakkt! But the worst was yet to come. The bear continued and Bitcoin broke from $6000 to $3000, and we went down all the way to $85. I had opened a CDP a few weeks earlier (playing around), thinking we had seen the worst around $200. Boy was I wrong, and boy did I lose sleep for a few weeks, when we went from $200 to $150, $120 (Lubin mentioned that "two digit $ETH would be bad" iirc on a podcast, and started letting people go around that period), $99 and down. I kept on adding ETH to my CDP, which was good, because I would not get liquidated (yet), but it was bad too, because now my CDP grew much bigger than I wanted it to be (% wise compared to total holdings). Postponing liquidation meant adding to the size of the collateral lost. Around this period, other people shared their stories. It was horrifying. A guy here went from low 8 figures to losing half his stack in a few months. In the end, I didn't get liquidated. I did make two videos around that time, which are private for now, just to remind myself how emotionally difficult that period was (and the daily's were quite amazing, Dec 14th and Dec 15th). Other people were very thoughtful, and iirc, it was around this period where u/shouldbdan started experimenting with the donut bridge, and putting up hilarious banners. u/oldskool47 had some great relationship advice, too (Of course, such cheap $ETH was a reason for some to go all-in, which I call the Justin Drake strategy. Come back with your shield or on it.) Which brings me to my final point, and the reason why I'm writing this in the first place. I want to extend a big thank you to some of the people here who genuinely tried to turn this place into something positive, worth following and inclusive towards all. First and foremost, the moderators. Second, all the great community members here, especially YOU, if you made it all the way through this wall of text. I'm looking forward to this next cycle that we seem to have entered.
Analyst: Bitcoin’s Sideways Trading to End in Explosive Downside Movement Bitcoin has seen some intense weakness today after trading within the upper-$9,000 region yesterday. Its latest rally higher led it all the way up to highs of $9,800, which is the level at which it found some significant selling pressure that subsequently caused its ... While last week’s headlines were largely focused on Ethereum and its ongoing sell-off, little attention was paid to the price action of Bitcoin (). Bitcoin ended the week up 2.5% with significant stability over the period. In fact, the price of Bitcoin has been so stable that it is rapidly approaching the lowest period of volatility in nearly 16 months. The bitcoin price suddenly rallied over the last couple of days after trading sideways since early ... [+] May. Coinbase. Others have also warned the bitcoin price could be heading lower in the ... The asset’s current sideways movement coupled with dropping volume is a sign of tiring bulls and this could offer the best opportunity for the bears to swoop in and drag prices further below. At the time of press, Bitcoin is exchanging for around $7,830 marking a marginal change of less than 1% in the last 24 hours. Bitcoin has seen some slight downside today, marking a bearish resolution to the bout of sideways trading that it has been caught within throughout the past few days Yesterday, bulls... Cole Petersen 11 hours ago
Why Bitcoin Is Trading Sideways - Is This Market Manipulation?
Bitcoin's Sideways Trading Is About To End In A Big Way! ... and elaborate on why I believe Bitcoin's stagnancy is about to come to a dramatic ending. - - - If you enjoyed the video, please leave ... BITCOIN SIDEWAYS ACTION ABOUT TO END!!? - Will It Break 10k? ... I've been full time trading bitcoin for over a year now and I've decided to share some of my analysis on YouTube. ... Here’s Why ... Today we discuss a couple of ideas that I've been thinking about, as to why the Bitcoin price has been so stagnant. Many people are claiming that it has everything to do with the S&P 500 and it might. Bitcoin trading sideways and Alts are pumping!!! ... Bitcoin Ledger hack!!! 90mill per day in Bitcoin sales to reach $180K Bitcoin - Duration: ... Options Trading for Beginners ... Is the Bitcoin (BTC) price potentially going to continue to trade sideways until this happens in the chart, in my opinion?! ... Trading and/or investing in Bitcoin (BTC), Ethereum (ETH) or any ...