Market report

THE ILLUSION OF KNOWLEDGE

London Block Exchange

14th March 2018

Let’s play devil’s advocate — because the greatest enemy is not ignorance

THE ILLUSION OF KNOWLEDGE

Let’s play devil’s advocate — because the greatest enemy is not ignorance

Today is a difficult day for the world, so we’ll take this opportunity to utilise their advice about the perils of believing in what we know, compared to simply not knowing something, and will consider a difficult scenario — what if we are still experiencing a dead cat bounce?

Although we have been arguing against this hypothesis, it’s important to at least play devil’s advocate and consider it as a possibility. No matter how solid the fundamentals may be, crypto traders often let their emotions run wild — even in the absence of a black swan event.

While it’s common to believe that it’s a good idea to buy into others’ fear, it’s always difficult to time such buys; especially amid such small shifts in sentiment. What is particularly scary now is that Bitcoin’s NVT ratio — which compares price to actual network usage — is “implying (an) overvaluation unseen since 2014”.

ADAPTING TO CHANGE

Are we really in a dead cat bounce? Is the NVT ratio still relevant?

As the crypto markets had another day where the top 100 projects moved about 1% on average, it’s important to note that trading too much will likely lead to losses, as some have found that “big money was never made in the buying or the selling, [it] was made in the waiting”.

So should you ‘hodl’, or should you exit the markets? We can’t tell you that — but we can share with you the advice that it’s good to be “always thinking about losing money as opposed to making money” so that you focus on protecting what you have.

Keep an eye out for potential disruptive events — such as the outcome of the latest KuCoin bankruptcy rumours — and use your critical thinking. In light of some of the valuation articles shared below, does it even matter that bitcoin’s network has a low transaction count if it’s used as a store of value or as a hedge against inflation?

WHAT TO LOOK OUT FOR

Filter the noise and stay ahead of the pack

Today’s there is another SEC hearing at 17:00 GMT — this time ‘examining Cryptocurrencies and ICO markets’ for educational purposes. Here’s the first public testimony.

Former influential figures in the Indian government have accepted that it’s not possible to regulate cryptoassets effectively. IMF’s MD Christine Lagarde disagrees — promising to fight fire with fire — at a time where the Winklevoss twins propose self-regulation.

Watch out what happens to bitcoin at 15:00 GMT. It seems that on some of the past few days there has been a coordinated dump at that time. The latest one was on Monday!

WHAT TO READ TODAY

An insight a day could give you more profits to play

This paper from MIT’s Sloan School of Management and Rotman’s School of Management exploring ‘Initial Coin Offerings and the value of crypto tokens’.

This analysis from a hedge fund manager trying to “make sense of cryptoasset valuation insanity” — they are bearish on ether and on ‘non reserve store of value’ cryptoassets!

This deck from a VC manager explaining that “cryptonetworks and why tokens are fundamental” for their operation — they are bullish on decentralised innovation.

  • bitcoin
  • NVT Ratio
  • Kucoin
  • ICO