April 19 – Cryptosphere Q1

Posted by admin at 5:42 PM on May 9, 2018

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After the Q1 across-the-board price decline, positive market sentiment is returning for multiple reasons, some pointing to a bullish summer (May to August). The timing is the most important part of all of these factors coming together:

 

  • Regulation
    • Binance moving to Malta for fiat to crypto pairings; exchanges leaving Japan and NY for more cryptofriendly states
    • Coinbase will finally be able to add new coins, likely an ERC20. The exchange is waiting for regulatory clarity on security vs. utility token before listing a new coin.
    • ICO regulation means more ICOs are done via traditional routes, with venture capitalists and accredited investor groups — more mainstream investment moving into blockchain startups and companies, BUT this does not mean the buying up of crypto tokens.
  • Lots of posturing from financial services institutions
    • Opening of crypto trading desks due to client demand, including at Goldman (slated for June/July) and Barclays (planning stages)
    • Anti-crypto sentiment has flipped 180 — maybe because of global economic uncertainty, stock market bubble, debt being double what it was in 2008, money printing through the roof
    • George Soros announces the family desk is trading crypto; Rockefellers’ Venrock looking into startups
  • Consolidation and acquisitions of “infrastructure”, including
    • Exchanges — Circle (associated with Goldman) acquires Poloniex; there were a number of Q1 Japanese acquisitions involving Coincheck, Monex Group, Yahoo Japan, etc.
    • Fiat to crypto entry points — Abra, in association with American Express
    • Coinbase acquisition wave of both executive talent (M&A executive from LinkedIn) and projects (Cipher Browser, Earn.com)

·       Wall Street brain drain continues

Top executives of Goldman, JP Morgan, and other financial services institutions are leaving to crypto-related positions, whether in startups or existing+profitable businesses (example: Hedge Fund Och-Ziff Exec Leaves Wall Street To Become Coinbase CFO)

 

Trading notes — not financial advice

  • Litecoin is USD 140–150 at the time of writing. It is the lowest barrier to entry coin for a person clueless about cryptocurrency. It’s fast and relatively cheap as well. When no-coin people start buying again out of hype and/or fear of missing out, they’ll likely buy Litecoin first if they are skeptical. There are solid fiat to Litecoin entry points for crypto newbies.
  • Bullish signals for ICX, VEN, OMG, LTC, XMR in satoshi price (as of April 19)
  • Volatility heaven: Traders extract value from the market – not from holding the asset and waiting for price uptrend.
  • Scale in and scale out of positions.

 

Bearish summer case:

  • BTC volume is low, liquidity is low = an open invitation for manipulation by bull and bear whales.
  • Mid-April BTC prices have pushed above USD 8000, possibly aiming for USD 9000, but there’s still been no confirmation we’ve fully exited the bear market. True confirmation test is at USD 11,800. There remains a chance of revisiting the 7500–7800 level again, and even sub 6000 if we dramatically reject at 9000. We’re not out of the woods yet.
  • Uncertainty of correlation between traditional equity market downturn and the USD price of BTC — that is, if people are losing money in the stock market, they have less capital to put into risky assets like crypto. Even though some people may look to crypto as a hedge, the effects may cancel each other out.

 

Thoughts on Q2 and beyond

  • Incentive

What are the top executives leaving high-paying jobs for crypto jobs seeing as incentives? It cannot only be because crypto has high growth potential — no, it’s because the cushy jobs in established firms (JPM, GS) are in some way or other “stifling” these people’s desires to innovate. So they go elsewhere: The impetus AWAY from business-as-usual firms seems to be just as strong as the lure of crypto growth potential.

  • Governance

Again and again, whether from $50 million exit scams to questions of “rolling back” hacked blockchains, we see the monumental importance of governance, a pillar of decentralization that has not yet been brought to the forefront. Loosely speaking, governance involves how are decisions made, who makes the decisions. Over the long term, think 10 years, the coins and projects that survive will be the ones that have clear, agreeable governance structures — not tokens that have been bought out by private whales, not centralized and permissioned blockchains (business-as-usual governance).

  • Decision-making

A gentle warning to not fall into the trap of idealizing blockchain and crypto growth: Technological development and roadmaps are extended far into the foggy future. The potential is there, but industry has noted a lack of blockchain engineers and developers. Investment decisions must be based on business-as-usual rationale: can it turn a profit now?

  • Sentiment

Sentiment range is wide and divided. There’s a pent-up desire to see prices explode, for Altcoin Season to return and for astronomical daily climbs of +40% like in past seasons. But veterans in the cryptospace know, now is the time to be putting money into projects that solve real problems and are not just fanciful ideas and vaporware. The darwinism of projects will brutally weed out shitcoins this year. Additionally, people who have little to no exposure to the crypto world need to see smaller day-to-day problems solved through blockchain in order to understand the utility and value of cryptocurrency; this is what will lead to price increase built on value, not only on financial speculation.