Are We Close to the Bottom yet? - Major Strategy Update
On the 14th November 2018 Bitcoin broke its key support at 6000 USD. At this moment the most famous cryptocurrency has been trading slightly above 3000 USD for almost 3 months. Decreasing volatility has created a very wide consolidation range between support at 3200 USD, and resistance at 4500 USD. However, more and more indicators show that the BTC price has found its bottom.History repeats itselfWhile a lot of investors fear further dumps, Bitcoin is gallantly fighting to keep support at the key 3200 USD, and a bullish scenario is backed by the MACD oscillator.Observing the weekly chart, you can also notice the bearish trend slowly fading away. When BTC plummeted in the past December to the level of 3200 USD, MACD had a very high value, causing divergency. Such discrepancy is usually a sign of bear exhaustion and often can mean a near trend reversal.It’s worth noting that this pattern has happened to Bitcoin before – during the 1100 USD bull run. What happened after was the harsh correction down to 150 USD, when MACD also indicated divergency. It is then quite likely that the history will repeat itself, and BTC will start a slow bull run within the next few months. Watch for the EMA21 Average, because crossing it would mean a more long term trend reversal.In H4 the closest resistance was 3735 USD (which has just been broken), where the inverted head and shoulders patters has been formed. Breaking it means that we will now test the psychological 4000 USD. If we break above 4k, then we will likely test 4.5-4.7 and finally 5k. In case of a fail attempt at 4k, the last year’s lows at 3200 USD will be within reach again.One thing is for sure - with the increase of volume my 35% we have immense buying pressure at 3k levels that could very well lead to short term bullishness. But… is it over yet?Hold your horses just yet. TA is the game of probabilities and nothing more. Keep also in mind that we haven’t really witnessed real desperation yet (at least not in our opinion, even though we were very close). Despite the highest volume since May 2018, there are still a few facts that look very bearish for the overall price of Bitcoin:- Bitcoin tweets are still very low, very bearish for the price.- all those people who are supposed to get in, have been either burnt or have been here. It will take a lot of time to suck new money into crypto, and we need the Fomo money for that bull run to start.- volatility is still low. Speculation and greed must awake again in those people.- majority of people, (poor or rich), don't care about decentralization, blockchain, self-sovereignty, privacy, or libertarian ideas. Money is all they care about.- we need a complete price exhaustion from everyone except the absolute true believers. More people will sell when they realize that this winter will last for even longer than they thought, or that they can potentially buy back in later & lower. Transfer the coins from the weak hands to the strong hands who don't sell no matter what.- add to all this the overall weakness in the global macroeconomy & bitcoin still being perceived as a risk/speculative asset.- this bear market will last probably for longer. Those that are building, learning, studying right now will be handsomely rewarded in the following years.Therefore, we are afraid we may see one final pulldown. That would also mean the whole Market Cap to go below that psychological 100 bln USD. Only after that we will see a long period of consolidation and finally, a new bull run. We will be ready for both scenarios.Strategy should be: As we left the market near the 7k mark, it’s safe to enter BTC everywhere below that mark. Wait for 4K break and if it happens make your first re-entry.Other buy target will stay lower for now with the flexibility to adjust at any time.n order to catch potential short term bullishness you might want to go back to crypto with the majority of your portfolio but WATCH CLOSELY disregarding lower buy target in the current moment.By doing this we have already beat the bear as we own more BTC than we did before.If the strategy is unclear ask @mcjonny on Telegram.
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Bitcoins sideways serenade - the Bitcoin Update 12th February 2019
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Fundamental Analysis vs Technical Analysis
Today someone asked us about the difference between FA and TA and what is better? - here is the answer.Technical Analysis (TA) is a methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Therefore it does not really include fundamental aspects of a company (e.g. team, financials, partnerships, technology etc.) However some traders include some fudamental aspects into their analysis like news and upcoming events about a company/project. Technical analysis only works for a very few succesfull traders who have master the art of trading. Its a wondeful tool to predict short term price action on different timeframes and can help you become financial independent as you can trade the market in both directions by "betting" on an increase or decrease of the price of an asset. Basically, you can make profit any time of the day. Limits of TA:It mostly excludes fundamental aspects of a company. It cannot define the quality of a company/project for long term success and therefore growth of its stock, token or coin. TA needs active work (trading).--------------------------------------Fundamental Analysis is an attempt to assess intrinsic value of a company/project by analysing related economic & financial fundamentals. Check our Zilliqa report for example. You go through several aspects of the company (ideally you had access to the financials but thats dreaming in crypto) and then you come to a conclusion based on your findings. The goal of such an analysis is to define how likely it is that the company will succeed long term and therefore its stocks, coins or tokens. Obviously, securities (stocks, bonds, shares) and crypto coins are totally different as most coins do not mean that you "posses" a part of the crypto company while that is a different story with securities (As well as upcoming security tokens). However thats an own topic and I dont want to follow that part here. Our main point is that fundamental analysis tries to define the likelihood of the long term success of a company.However, failure of business is ALWAYS as a risk. You research to reduce risk and make an educated investment decision but you will never exstinguish risk of losing your money. A recent example is Aphelion- Even though the project looked very promising (Great team, working product, strong vision) we cannot predict their mismanagment of funds. Its just impossible. We can rate the team based on former ventures of single team members, we can rate the balance of the team from an outside perspective, we can talk to the people behind it and rate the technology. What we can't do is manage their financials. See my point?A positve example would be Facebook. No technical analysis could have ever predicted its steep rise to the top. It went from $10 to more than $200 and is now trading at about $160. The underlaying fundamentals as well as the social media market itself has lead to such a tremendous rise in value. However, while technical analysist might make money daily, investors need patience to see their fundamental analysis come to fruition. However, the just need to watch the project and redo the anaylsis from time to time, no active daily work is needed so that the income is mostly passive.Limits of FA:FA won't allow you to make money daily. Investors need patience. FA can't predict short term price actions and money making opportunities.
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Is this the start of BTC recovery? - BTC Update 8th February 2018
In the past 24h BTC has gone up 3% and ETH has risen 7% all the way up to 111.Over the board alts are rising, we suspect LTC was the catalyst to this move as it has gone up 16% in the past few hoursNow everyone is asking the crucial question:Have we potentially found a bottom or is this just a deadcat bounce? As of now we can't call this a definitive bottom. For that we'd need to see a higher low establised and then a additional new high. At that point entering longs would be something we'd look to do.What do you think?
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What is contrarian investing?
“Buy when there is blood on the street” You’ve properly heard this line for countless times in internet. Basically, it recommends you to buy when you see an asset take a nosedive, you buy it and wait for recovery then make a killing. The line can be considered as the earliest reference describing the art of contrarian investing. The context In June, 1815, when the battle of Waterloo was being fought, investors watched the market betting who would win, the French or the British. As soon as the battle ended, Rothschild’s courier, Rothworth was able to deliver the news ahead of Wellington’s courier, thus creating the chance for Nathan Rothschild to massively sell British Government Bonds. Indeed, he did that to create panic selling action. As soon as the wave kicked in, investors followed him and fell into the trap. When the market crashed further, Rothschild took action and bought back the stocks with help from his agents. Later on, he made a fortune from it. Many sources say that the profit was estimated around a million pounds at that time. However, the exact number is unknown as they didn’t disclose the real figure. “Nathan clearly knew the cause of the plunge and the truth, thus creating a chance for him to buy low and sell high.” The strategy is considered to be both successful and manipulative at the same time as Nathan was able to create a panic sell wave thanks to his insider information. However, the original quote was believed to have been said by Victor Roths, his descendant in 1871 rather than Nathan Rothschild himself. The art of contrarian investing What is contrarian investing? Contrarian investing is a strategy when an investor does the opposite to what crowd does. When an asset dives down, the contrarian investors believe that this is the perfect time to buy as it is a justified correction. Additionally, having done their research properly, the contrarian investors know the intrinsic value of an asset creating a strong belief for them to hold through the correction phase. Furthermore, contrarian investors believe that optimism of the crowd is a good sign showing that the asset is not undervalued but overvalued. Therefore, they will properly take action based on the sentiment. Basically, to become a contrarian investor, you must go against the crowd. Only believe in yourself and nobody else. Notable contrarian investors During 1973-1974 bear market, Warren Buffet took the chance of buying a stake of Washington Post Company. The investment gave him 100 times ROI. In 2013, the company was sold to Jeff Bezos for $250 million in cash. In 1992, George Soros shorted the British Pound creating $1 billion profit in a single day. He was then given the nickname “Man who broke the bank of England”. The move forced the reformation of British banking system. In 1939, John Templeton went into his boss’s office and begged for a loan of $10,000. After receiving the money, he bought every small-cap stocks which was worth $1 or less. At that time, stocks were hated. The total number of the stocks were estimated to be 100. After the Great Depression, all of his holding increased significantly, thus introducing him into the Investing Hall of Fame. In 2002, Marty Whitman, the manager of Third Avenue Value Fund bought K-Mart bonds both before and after it filled bankruptcy protection. During this time, each K-Mart bonds worthed only 20 cents. Having done his research thoroughly, Marty believed the bonds will jump again some days. A few years later, K-Mart bonds skyrocketed. Marty then sold his bonds making a fortune from it. The downside At first, contrarian investing seems to be a simple strategy to apply. Buy the dip, sell the rip and then enjoy the profit. But how does one know the asset will recover after the dip? Or maybe it will sink forever and you have to sell with a massive loss? It’s not an easy question to answer. Warren Buffet, Marty Whiteman, John Templeton all did their research properly and carefully. They understood the reason why an asset had taken a nosedive, why it was undervalued, they realised the value while others didn’t. Additionally, they also diversified their portfolio to reduce the risk. Then, they took a bet and made a killing. It’s not that easy for a typical retail investor to have the same brain like Warren Buffet or George Soros. Therefore, due diligence is a must for retail investors. Below is an example when the market sentiment is right. In 2007, when the stock market was booming, many market letters claimed that it couldn’t go any lower. However, the sentiment was negative as many investors believed that sooner or later, the bear would come. Guess what? They were right! In October, 2007, the stock market reached it top and started declining the following month. If one were to bet against the 2007 sentiment, the individual would have suffered from the heavy loss. Should you become a contrarian investors? For retail investors, it’s not impossible to make a killing but you will have to make serious research before buying an asset. Understanding the intrinsic, core value is a must but how can you know that this value will help the asset skyrocket in the future? How can you use a past analysis to predict the outcome of the future? Those are tough questions but if one was able to achieve the answers to those questions then he must be one of the greatest investors all time. To become a contrarian investors, one should consider doing their own due diligence. By doing due diligence, he/she are putting a lot of effort to minimise the risk, thus increasing the chance of making a profit. On a side side, there are a few questions one should consider buying the dip: - What is the intrinsic value of the asset? - Is it undervalued or overvalued? - How many times it will sink before taking a recovery? What should you do if the asset has taken too many plunges? - Is this correction justifiable? Or is there something you should know? - How much should I put into this asset? Applying to BitcoinAs you may know, Bitcoin is an extremely volatile asset. Within 10 days, Bitcoin can jump up and down 10% causing massive loss to many people. However, those who can survive the feeling of losing can get a nice return in the future. Again, how can you know a past analysis can decide the future? The answer is you can’t. You look at the fundamental of your crypto asset and hope it will go up in the future. Bitcoin is the father of all crypto, the first of its kind. However, when you take a look at Bitcoin, you may get mind blown. 1. What is the intrinsic value of Bitcoin? - Bitcoin uses blockchain which means it does not have any central party to control it. No one can touch your Bitcoin unless they get their hands on your private key. Additionally, Bitcoin offers anonymity which means transaction is untraceable (almost, as most wallets on exchanges for example are verified now). Moreover, Bitcoin only has limited supply, thus causing the incentive to hold Bitcoin instead of using. Furthermore, Bitcoin also utilizes DLT in its infrastructure which means one can send Bitcoin to anyone in this world as long as they have internet access. In addition, Bitcoin also implemented the triple entry accounting into the network which means all the double entry accounting entries is now enhanced and protected by cryptography. 2. Is it overvalued or undervalued? - To say Bitcoin is overvalued is not an understatement as most of the current crypto market are is full of speculators trying to make a quick buck rather than understanding the fundamental of Bitcoin. Additionally, Bitcoin also has the lowest TPS which makes it extremely hard to get mass-adopted. However, Bitcoin is also not undervalued at the same time. Why? Bitcoin offers a real product of blockchain technology. Bitcoin network run flawlessly and is protected by thousands of computers. Plus, Bitcoin is borderless, immutable and decentralised. Bitcoin users don’t have to worry about their coins as no one can steal, freeze and take away their funds without consensus. 3. What should you do if the asset took too many plunges? - Perhaps, the most suitable answer to this question is to ladder your buys. Never buy in bulk but divide it into several times. A suitable strategy for buying in ladder is dollar-cost averaging (DCA). DCA means buying a fixed dollar amount of the asset monthly. Assuming that you have $1200 and put $100 each month to buy Bitcoin at the highest price since Jan, 2018 The total amount of Bitcoin you have after 12 months of accumulating is 0.144808 BTC which is worth around~$516 at the time of this writing. The current loss you have is around $684 equals to 57% of $1200. If you have bought it during the highest in January then the current Bitcoin you hold would be 0.057964 BTC which equals to ~$178. That’s is 86% down from the initial buy! By using DCA strategy, you would be able to mitigate the risk of losing another 29%. However, there is a downside of DCA. From our point of view, DCA is more effective during bear market than bull market. In bull market, you won’t know when the market drops. Therefore, you should also set your desired profit and not be greedy.4. Is this correction justified? Or is there something we should know?- Bitcoin is a new emerging asset which is not suppressed by any forces beside demand and supply. (or manipulators). As demand rises, price jumps and vice versa. In 2017, Bitcoin received a wide range of coverage on social media causing the massive FOMO, thus pushing the price to its ATH. In December 2017, when CBOE and CME introduced the BTC futures, the direction changed. The sentiment have been slowing shifting from positivity to negativity since then. Back to the question, is this correction justified? Before December, 2017, there were no traditional financial institutions interested in Bitcoin. However, things changed after that. Bakkt was introduced, ETFs are t be applied, etc. Several crypto exchanges are expanding their business despite the bear market. On a side note, there are rumours that whales are buying through OTC then sell on the exchange to suppress the price. Looking at the current volume on OTC exchanges such as LocalBitcoin, Bisq and Pax, one can see that the volume has been very sustainable over the last few months despite the bear market. This means that the trading activity is still very busy behind the curtain. 5. How much should I put into Bitcoin?- A wise investor will try to make his portfolio as diversified as he can, so it means you should not buy everything. As we have analysed above, the fundamentals of Bitcoin are strong which means there are chances that it will bounce back sooner or later. However, strong fundamentals don’t mean Bitcoin won’t drop further. Therefore, buying altcoins and stablecoins is a must during the bear market. Why altcoins? Some altcoins defy the gravity of Bitcoin. Take a look at Holochain in the last 7 days, it did a fantastic gain of ~100% despite the bear market. Loopring also doesn’t care about Bitcoin and jumped 50.53% in the last 7 days. If you have already bought into those projects, you can recover some of the loss. For that reason, a balanced portfolio is a must for every investor if one doesn’t want to suffer from heavy losses.What should a contrarian investor do with the current market?As you have seen in the last few months, the market sentiment has been negative but is it really? It seems like no one wants to sell yet. So far, we haven’t seen anyone calling Bitcoin a scam, Bitcoin with not a future, that they will sell everything, etc. The majority still believes that Bitcoin is a new technology, the savior from the centralised figures and the bull will come back sooner or later. This leaves the contrarian investor to question about the current sentiment. Is it really negative? Or maybe people are being brainwashed by Bitcoin believers?FinaleA contrarian investor is an independent thinker which means their thinking is not affected by anything but their own analysis and belief. However, the downside of this investing strategy is that one can become too ignorant and skip every piece of advice, thus causing losses. Therefore, to become a contrarian investors, one must be able to make serious research, understanding their decisions, their analysis, their biases and must be able to withstand the pressure of the mass. Sources: https://www.mindcontagion.org/banking/hb1815.htmlhttps://en.wikiquote.org/wiki/Victor_Rothschild,_3rd_Baron_Rothschildhttps://www.rothschildarchive.org/contact/faqs/nathan_mayer_rothschild_and_waterloohttps://www.investmentu.com/content/detail/contrarianinvestor https://www.investopedia.com/articles/trading/11/problems-with-contrarian-investing.asp
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Will Ethereum Remain the Big Thing in Blockchain Post-Constantinople?
If you are abreast with the latest developments in the cryptocurrency world, you should know that blockchain is still a pretty young industry constantly undergoing incremental updates. Ethereum, being the third largest blockchain system by total value, is focused on building trust and maintaining its value. It is therefore expected that the next hard fork will include core tech improvements that will go a long way to improve the system’s smart contract design, and boost the stability of the platform among other enhancements.What happens in a fork?A hard fork occurs on the blockchain when a backward-incompatible upgrade is implemented on the system. Since it is a comprehensive upgrade, all the full-node operators or transaction validators must upgrade their clients with the Constantinople software update.The upgrade is considered a ‘fork’ because it is essentially a divergence in the life of the platform. Much like a fork on a road, a single chain is separated into two at some point, in this case block 7,080,000, and the transaction validators will be free to choose which to go with.Doesn’t this mean there will be a split in the system, just like it happened in the last fork that gave birth to Ethereum and Ethereum Classic?Not necessarily. Users who prefer the old rules are separated from those who prefer the new rules. In most cases, users may choose to completely stop the running of the older software and switch completely to the new upgrade. This would mean the death of one fork since no new blocks will be added to the chain.There have been multiple hard forks in the history of Ethereum, where upgrades were implemented in the system without the currency being split. Byzantium and Homestead are the most notable. In both these cases, the forks were a success because the community at large supported them for the good of the platform.Ethereum is already enjoying the support of the major exchanges including Kraken, Binance, OKEx, Huobi and Coinbase according to cointelegraph.com. Ethereum is not just a platform to generate cryptocurrency (Ether); it is also a platform that developers can use to run their decentralized apps, more like car owners can drive on a road. To reach where it is, Ethereum has had to undergo a number of growth stages, each incorporating more and more features that made the system more seamless, robust, and compatible with newer technologies.There are a total of four stages in Ethereum’s growth plan. The first two, Frontier and Homestead have already been implemented. The current phase, the Metropolis, has been further split into Byzantium and Constantinople. The final stage will be Serenity.The current Constantinople upgrade is expected to introduce five major improvements detailed in the Ethereum Improvement Proposal (EIP). They are:EIP 145: This update brings a new native ‘bitwise shifting’ feature in the Ethereum Virtual Machine (EVM). It adds native bitwise functionality to the platform’s protocol to make it easier and cheaper to execute various transactions on the blockchain.EIP 1014: To boost the scalability of the system, the EIP was created so that the system can leverage state channels to communicate with addresses off the chain. EIP 1283: This update is based on another one, EIP 1087, and is designed to help reduce the amount of gas a developer needs to pay to run a smart contract on the system. This update aims to cut the costs of execution by eliminating unnecessary and excessive gas usage.The latest delayDays away from the Constantinople upgrade, excitement regarding the upgrade was at an all-time high, largely because the development represented a major turning point in the evolution of Ethereum platform. As a matter of fact, Ether was the biggest gainer in the cryptocurrency market just a day away from the scheduled upgrade. This is a good sign that the masses have faith in the upcoming changes and are willing to bet their money on it improving the Ethereum platform in general.A critical vulnerability detected in the EIP 1283 update has caused a further delay of the implementation of the Constantinople. Smart contract auditing firm ChainSecurity discovered a loophole in EIP 1283 proposal that attackers could have used to steal users’ funds.The postponement of the Constantinople hard fork less than 48 hours before its implementation was a decision reached after consultation among the top Ethereum brass. Vitalik Buterin, Hudson Jameson, and Afri Schoedon among other core developers of the platform appeared during the announcement of the postponement, a good sign that the key players are on the same page regarding the delay.According to the report published by ChainSecurity, the vulnerability, which could have left the system vulnerable to a reentrancy form of attack, is considered a side effect of the introduction of the PoS consensus that makes it cheaper to execute transactions on the Ethereum network. Apparently, the reentrancy attack could have been possible when anattacker repeatedly requests funds from a contact while feeding it with fake destination Ether balance. The Constantinople hard fork has been in trial since October of 2018 on Ethereum’s testnet Ropsten and was supposed to be implemented before the end of the year. Technical hurdles forced the delay of the implementation as the folks focused on rectifying the technical issues that hindered the roll out of the software update.How will the changes will affect you?Afri Schoedon, the coordinator of the hard fork at Ethereum, confirmed on Reddit that the core developers at Ethereum were made aware of the vulnerability and that meeting for all core devs would be held on 18th January to decide on the action steps to take in light of the new development. According to Afri, the implementation of the hard fork will be held off for at least a week until a lasting solution to the loophole has been found and tested.When the hard fork will be finally implemented, Ethereum users should expect:Improved system efficacyThe most obvious benefits of the Constantinople hard fork on the Ethereum platform is that PoS uses a lot less computing power compared to the current PoW the platform uses. In a layman’s language, it will cost a lot less, in electricity costs, to produce 1 Ether with the new system compared to the current one. Another obvious change you should expect is improved compatibility with third-party smart contract applications created by developers, easier integration of existing programs on the decentralized platform, and ultimately more applications on the ERC20.ScalabilityWe have already established that divergence occur on a blockchain system such as Ethereum more often than the public realizes. Most, however, are just small incremental improvements that are oftentimes abandoned using what is called ‘an uncle’, or a way to add a block created faster than the current block. With the Constantinople upgrade, if you are a miner, you should expect a higher mining hashrate and greater participation by new miners, hence more ‘uncles’ on the chain.EfficacyThe reduction in the amount of Ether a miner gets from 3 to 2, also called ‘thirdening’, will be happening the second time in the life of Ethereum, the first having been implemented with the Byzantium hard fork. This will reduce the inflation of Ether by curbing basic supply to drive up demand. This is essential to ensure Ether scarcity and boost its value.securityEthereum has had its share of breaches and losses resulting from those breaches. Some experts say that this is the most inspiring reason for the switch to a new consensus. The most important part of securing a crypto asset is by protecting the blockchain platform it runs on. Since a PoW is measured by computing power used, it is less secure compared to PoS which values the coin ownership.The difficulty bomb questionA difficulty bomb is an algorithm that increases the difficulty required to mine a new block on the chain consistently until mining a new block becomes impossible. The EIP 1234 proposal seeks to delay the implementation of the Difficulty Bomb included in the system in September 2015 by 12 months despite the platform switching to the new PoS consensus.The main reason for the delay is to allow miners to adopt the new consensus and make it difficult for the two major players in the system – stakers and miners – to adopt the new protocols. This will prevent a split in the community during the fork as the stakers and miners will completely transition to the new fork before the Difficulty Bomb is implemented.ConclusionThe postponement of Ethereum’s much anticipated Constantinople hard fork may leave many people with questions with no straight answers, but it is a consolation that a critical issue that could have been costly was discovered just hours prior to the fork. We expect that this issue will be resolved and the hard fork will be set at a latter block. Whatever role you play in the Ethereum ecosystem, expect that when the upgrade goes live, the platform will be more efficient, faster, more affordable, and most importantly, one more step closer to the platform’s full potential.
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