Market report

ON CRYPTO WAVES

London Block Exchange

8th January 2017

Or how to surf the cycles that mark the crypto market.

ON CRYPTO WAVES

Or how to surf the cycles that mark the crypto market.

Last Friday, after our Daily Market Report went out, bitcoin jumped around 13% within ten hours and halted the altcoin rally. Altcoins (or ‘alts’) — a term that refers to all cryptoassets other than bitcoin — had been surging since mid-December.

This rally started shortly before Bitcoin dipped on Black Friday. In the week prior to this dip, the entire crypto market was booming and bitcoin cash started to grab everyone’s attention with its unexpected Coinbase integration.

Then came the (healthy) correction and, after Christmas, it seems almost everyone — or at least all those who managed to open an account at an exchange — started moving their funds into ICOs and whatever else they thought would be profitable.

After a weekend of sideways trading for bitcoin, which is now once again below £12,000 ($16,000), the question now is naturally: what to do? Will alts continue their rally as new money enters the market looking to benefit from so-called penny coins’ wild volatility? Or will 2018 be the year in which “aside from BTC and ETH, all of the other top 10 coins will disappear into oblivion”? No one knows. Like the weather, markets can be chaotic, but we can still try to forecast what will happen and prepare accordingly!

The simplest thing you can do to understand what might happen in the market is to keep following bitcoin’s price. If it starts moving considerably up, it might signal that people are moving profits from alts back into the mother of cryptoassets.

It can also signal that institutional money is bullish on bitcoin again. BlockTower Capital, a famous fund that recently bet millions that bitcoin will reach £36k ($50k) by the end of 2018, just hired a former VP of Goldman Sachs following their fund raise of £105 million.

Such price action will likely cause FOMO and, at the very least, will pause the alts rally — just like it did last Friday. We’re quite positive that this ‘BTC up, alts down’ relationship is getting weaker, but for the moment it’s still an easy and reliable indicator of the current trading sentiment.

ON THE PENNY COIN HYPE

No, we are not just talking about Ripple — it’s about Dentacoin!

The global stock markets have now been growing continuously for 105 months. The Dow Jones Industrial Average Index reached the historical level of 25,000 points last Thursday. In crypto, Dentacoin surged 175% in the past 24 hours.

“If there are any certainties, one will be that this party will eventually come to an end”, some market historians say. Other experts, such as those in the link above, argue that “the market can keep going up even when it’s overvalued.”

We generally agree that “overvaluation isn’t what causes bear markets — it never has and never will” — but the difference between traditional assets and cryptoassets is that there is still uncertainty as to how we can determine what a project is worth in the crypto space.

So we now come to share this tweet by Mike Novogratz, a famous Wall Street investor who bought ether when it was under £1. He compares the Japanese real estate bubble to crypto, raising how Japan’s Imperial Palace was at one time worth more than California.

Similar headlines are making the news over the past few days. We’ve reported on the fact Ripple’s founders are now as rich as Mark Zuckerberg — but did you know they have now surpassed Google’s and Oracle’s founders? It’s net wealth, not net cash, but still!

And what about “Tron, The $14 Billion Whitepaper With No Product”? Or “Bitcoin for Teeth Rises 270%”? In fact, Dentacoin rose 10x since last Friday and, despite it already being used in some UK dental clinics, it’s fair to say the rise is a bit absurd.

So what’s driving this mania for unproven projects? Last week we talked about the incentives crypto projects have to mint a large number of tokens and value them at penny prices during their ICOs.

Ethereum’s ICO valued ether at around £0.3 ($0.4) back in 2014. If one still held their tokens, with ether at £900 ($1,200), the ICO provided returns of 3000x! Investors today are looking into everything that looks cheap to achieve similar gains.

What many forget is that the price of a cryptoasset can’t always be compared to the price of another, as some projects issue larger amounts of tokens or coins than others. Be sure to also look at their market cap and ask whether your target value is reasonable!

WHAT TO LOOK OUT FOR TODAY

To prepare for tomorrow!

Have you bought a hardware wallet from a reseller? Is this image familiar to you? If so, transfer your assets out as soon as possible and report your case immediately!

The Dubai International Blockchain Summit starts today. A significant portion of the industry is attending, so follow the event on Twitter to get the latest updates!

NEO, a famous smart contracts platform that grew 500x in 2017, are hosting their first Developer Talks in London this Wednesday — details here!

ARTICLES OF THE DAY

An insight a day keeps the losses away

Are you a cryptocurrency newbie? Do you struggle in keeping up with traders on Twitter (which is essentially the Bloomberg Terminal of the cryptoworld)? Here’s what you need!

Are you the citizen of a cash-loving country that’s missing the cryptoassets boat? Here’s how Germany is moving its famous passion from paper to crypto!

Are you keen on conspiracy theories? Do you think the cryptoassets bubble is ripe for a short? Here’s how bears might be planning out the next trap!

  • Black Friday
  • Goldman Sachs
  • Oracle
  • Bitcoin
  • Hype