Market report

When rational(t) season?

London Block Exchange

9th August 2018

There’s no need to fight the trend nor to catch falling knives

Market Report: 9th August 2018 — Subscribe here

#REALCRYPTOHUNT

Clue 2 was exclusive to Daily Market Report subscribers for Thursday 9th August and will be released in full on Friday 10th August across all channels

CRYPTO NOTE

The daily view from our desk

Just a normal Thursday morning, sipping on some orange juice and munching on a handful of blueberries… unless you’re in Finland where apparently ‘normal’ means sleeping in supermarkets? As speculators, will this trend’s resistance break and take off in other promised lands? #ProofOfMarketCamp 🤓

WHEN RATIONAL(T) SEASON?

There’s no need to fight the trend nor to catch falling knives

Since the OKEX whale got trapped on the last day of July, bitcoin has fallen 25%, from £6.25k ($8.1k) to £4.7k ($6.1k), while the total market cap — excluding BTC — fell 24%. During this period, crypto markets ignored all good news — especially the announcement of the Bakkt exchange — and disproportionally sold all the mildly bearish events that occurred.

Nick Cote, a popular trader and analyst, jokingly remarked that “ETF delays are the new ‘China bans bitcoin’ in terms of knee jerk market reaction. Sad, but predictable”. However, Chris Burniske, a well-regarded crypto VC and author, claims in this interesting thread that “the market not reacting to good news is a telltale sign that we’re still in a bear market”.

BUY THE HUMMUS, SELL THE CASHEWS

There’s no need to feel happy with your profits nor angry with your losses

The above might sound obvious, but it’s often missed. In the end, it’s simply an extreme manifestation of the “buy the rumour and sell the news” phenomena, as Ari David Paulillustrates. Thus, how can you avoid being caught ‘red candled’? On the one hand, zoom out and consider that — outside bull runs — if bitcoin “rose 40% in 12 days” it is also reasonable for the original cryptoasset to drop to its previous level, as Hsaka points out in this chart.

On the other hand, to further dissociate yourself from any biases that might prevent objective feelings regarding your favourite cryptoasset try to build a system with a strong risk management basis to guide your trades and investments. However, note “there is no way to learn from listening to others”, as Crypto Cobain once said.

Still, while it’s better to learn from our own mistakes, it doesn’t harm to keep an eye out for what others did wrong. A great example is DonAlt’s new public trading journal, where he deeply dissects two failed trades he took last week. Additionally, remember Daniel Jeffries’ reflection — “if you’re looking for a trading system that wins all the time you’re insane”.

WHAT TO LOOK OUT FOR

Filter the noise and stay ahead of the pack

▪ While blockchain purists disregard the Bakkt news as they want cryptoassets to disrupt the status quo, it’s still relevant for all to understand why that new player is important.

▪ August’s Ethereum London meetup, which will take place next Wednesday, is taking applications for brief talks. You can submit your request to james@atlasneue.com

▪ Ethereum is facing another spam attack by an unknown account with near £78 ($100) million in ether. Transaction fees rose 50x and are still high.

WHAT TO READ TODAY

An insight a day could give you more profits to play

▪ A new paper from Yale researchers finds cryptoassets are a good diversification tool for traditional portfolios and suggests some tools for “meaningfully predicting” price behaviour

▪ A new article from @hasufly questions what we can “learn from religion” and apply it to crypto. From being compatible with different people to being a product of our collective beliefs

▪ A new pricing method is being popularised by Token Foundry. Learn more about “dynamic pricing”, a “simple and fair pricing structure” for token sales that benefits buyers.

FOUNDATIONAL TRIVIA

Because the building blocks of crypto needn’t be irrelevant

“Buy the rumour and sell the news” is a popular saying in financial markets. It implies that rumours make traders overvalue an asset and if the news don’t match up with the expectations then the natural reaction is to sell. Like comedy, it’s about timing.

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