Market report

Bears with guns. Economists with puns

London Block Exchange

1st August 2018

They got something to say no to. And they turn into monster bears

Market Report: 1st August 2018 — Subscribe here


The daily view from our desk

What a beautiful place Crypto Twitter is. On some days, cryptocurrency news aren’t actually news, but rather a misty haze of cow dung. After Ripple’s announcement of Bill Clinton attending ‘Swell’ — their world leaders connecting conference — the edit shambles have commenced as apparently we have Kim J. Un, Einstein, Satoshi, and Jesus Christ attending too. Status: #ProjectXParty


They got something to say no to. And they turn into monster bears

The highly anticipated first of August is here. It wasn’t a long-awaited one because it would mark the first anniversary of Bitcoin Cash, born out of the contentious hard-forkthat marked 2017’s Bitcoin civil war. Some say, the controversial BCH “has been an irredeemable failure” due to poor adoption of its large blocks scaling strategy.

Bitcoin bulls turned sour during the last moments of what was rather a bullish July. The original cryptoasset fell 7%, whilst the top 100 projects depreciated by 9.2% on average. Is this the crypto markets’ traditional “seasonal affective disorder” or is there more to it?

The winds of sentiment shift fast, with calls for a new bearish trend around the block as many have lost hope in the last week’s price action, though neutral for now. Check out bitcoin’s inverted chart to remove your feelings from the equation. If bitcoin keeps ranging like this in August, “switching bias fast” will be a crucial skill to master.


Nobel Prize winning economists taking over. But it won’t be long

Antithetically, Paul Krugman emphasised why he is a “crypto skeptic” in his NYT’s column. The Nobel Laureate has been short since 2011, as he resorted to rather simplistic comparisons with past bubbles in the past, which are easily refuted regardless of 2018’s crash, his arguments have improved. Though, he fails to understand how cryptography brings value to cryptoassetsand how money first becomes a store of value and only after a means of exchange.

Similarly, he failed to understand the internet in 1998. His thesis for the demise of cryptoassets rests on matters that they are either being solved or are not deemed a problem by supporters. Firstly, high transaction costs are currently addressed by the Lightning network and new cryptoassets. Secondly, some illicit uses are already minimal and have no impact these days, one being “criminals are less likely to use cryptocurrency”.

Lastly, and for the delight of certain traditional British blogs, the infamous economist claims “fiat currencies have underlying value because men with guns say they do”. Partially true, yet short-sighted in the sense that governments have been losing credibility due to the growing financial fragility, which resulted from a poorly managed money supply. On the bright side, “if he were a Bitcoin enthusiast, he’d undoubtedly ruin it”!


Filter the noise and stay ahead of the pack

▪ If you felt compelled buying alts recently just because they are at historical support levels, then consider inverting their charts to check if your perspective is prejudiced.

▪ If you felt compelled to take a cryptocurrency bank public, consider checking Michael Novogratz’s saga, whose new bank starts trading today on the Toronto’s Stock Exchange.

▪ If you felt compelled going leverage long on bitcoin with over £300 ($400) million, try not to create an elephant in the room for the rest of the market. Learn more about it here.


An insight a day could give you more profits to play

▪ The centralisation of Lightning network’s nodes is becoming a matter of distress. This analysis from StopAndDecrypt, a popular Ethereum critic, nicely debunks that concern.

▪ The fight for new crypto valuation models is becoming farfetched but still interesting. Richard Burton considers ‘discounted hashflow analysis’ as the metric of the future.

▪ The ‘Hippie King of Cryptocurrency’ is back. Rolling Stone decided to extensively cover how the polemic and famous Brock Pierce “went from child actor to Bitcoin billionaire”.


Because the building blocks of crypto needn’t be irrelevant

Michael Novogratz is a former Goldman Sachs partner who bought £380k ($500k) of ether at £0.8 ($1) and made over £190 ($250) million in profits. Those were the days.

  • Ripple
  • Swell
  • Bitcoin
  • BTC
  • Rolling Stone
  • Crypto