CryptoAM: A Fertile Oasis, See Yuan Later, and Rancor for Bancor

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3 things you need to know:

One: The Yuan now represents less than 1% of the global trading volume. Since China’s crackdown on crypto, the Yuan-crypto trading volume has fallen from over 90% of the global trading volume to below 1%. ICOs and cryptocurrency exchanges were both made illegal in China in 2017.

  • Choo Choo: In retrospect, the Chinese bans did not do much to hinder the momentum behind DLT. Instead, Korea and the United States filled the gap that China left.

  • Banned: Both China and India, countries that together represent 2.7 billion people, have been extremely strict on cryptocurrencies. It will be exciting to watch how it all unfolds, and see how much capital could flow into crypto from those countries if regulations soften up.

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Two: Amazon AWS competitor, Oasis Labs, raises $45 million, led by A16z. Oasis Labs has completed its first private raise. In total, $45 million was contributed from 75 different investors including A16z, Binance Labs, Polychain, Pantera, and XRP Capital.

  • Fun Fact: This is the first investment from A16z, Andreessen Horowitz’s crypto focused venture fund.

  • Bang: Oasis Labs’ killer feature is its ability to execute smart contracts containing private data without revealing the data publicly. Not much else has been published about Oasis Labs’ abilities, but they also claim to have solved scalability issues by separating execution from consensus.

  • Heavy Hitters: The CEO of Oasis Labs is Dawn Song, a Professor of Computer Science at Berkley, and the, “most cited scholar in computer security.” The rest of the team consists of, “top talent from UC Berkeley, MIT, Stanford, University of Washington, Cornell, Google and other premier institutions.” It’s safe to say that they aren’t playing in the minor league.

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Three: Bancor gets hacked for $12M worth of Ethereum, Pundi X and Bancors native token (BNT). Another day, another hack. This hack however, had the crypto-sphere up in arms due to the fact that Bancor is a decentralized exchange, and is theoretically immune from hacks. Bancor also took the initiative to freeze the BNT tokens, ensuring they cannot be moved unless returned to their original owners, showing a little more centralization of power than some would like.

  • The reality: No one using the Bancor platform was affected. Bancor is a decentralized exchange, and wallets are managed by individual users. The hacked funds were the ICO funds raised by Bancor, and were exposed during an upgrade of one of Bancors smart contracts. Freezing tokens is actually a common feature shared by many ethereum projects, and it suggested to be best practice by ConsenSys. If you’re a crypto-anarchist, you may find this unappealing. If you had your funds stolen, you might be pretty happy about it.

  • The issues: It’s not a good look for a cryptocurrency project to get hacked. It undermines faith in the product substantially, especially when the product is an exchange puts user funds at risk. Hacks like these remind that cryptocurrency is a high-risk industry and that there is still a lot of work to be done before we see wide adoption.

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Also in the news:

What I’m reading today:

A Piece of DNA Contained the Key to 1 Bitcoin and This Guy Cracked the Code

In 2015, researcher Nick Goldman gave a presentation on how to store data in DNA at the World Economic Forum. At the end of his presentation, he distributed tubes of DNA in which he had encoded a Bitcoin private key.

The challenge went largely unnoticed as the Bitcoin was only worth $200 at the time the tubes were distributed. It regained attention when Goldman tweeted a reminder last December when the Bitcoin was worth about $10,000.

This caught the eye of Sander Wuyts, who was studying computational microbiology at the University of Antwerp. Much to his benefit, he had access to genome sequencing tools which allowed him to crack the code.

If you enjoy technical puzzles, you’ll find the way he cracked the code pretty fascinating!

Around the corner:

Market Outlook:

Quick Take

I mentioned yesterday that we were looking at 6.85k and 6.65k as the support and resistance, and a break of either way would likely cause either a trend continuation or reversal. Unfortunately, it looks like that panned out. We broke down past 6.65k and now find ourselves sitting around 6.4k. Next support is around 6.3k. I expect to test that level. A break of 6.3k and I’m shorting to 6k.

I probably should have been more explicit yesterday about how important that 6.85k resistance level was. I hinted by saying we had tested it 6 times (now 7), but should have been clear in saying a strong rejection would likely lead to a trend reversal.

I’m showing you two charts today. First the daily chart, and second the 15m chart for the crucial moments yesterday.

Daily Chart:

We are likely heading for a test of the 6.3k level from here. Watch it closely, as a break would have us going down to 6k and below.

15m Chart:

I’ve highlighted in the yellow circle something called a bearish rally. We saw a candle on high volume test resistance and get swatted down hard. Candles like these show that the resistance level is incredibly high, and often shake out bulls from the market.

Next we saw a clean drop straight into the support level, showing that a trend reversal was in progress. The combination of breaking the bottom of the resistance level with the bearish rally showed that further downside was expected.

Fear & Greed:

The one good sign is that we got very fearful, very quickly. Though unlikely, this may be a market overreaction. Look for a push above 6.5k, which would confirm that and likely send us back to test 6.85k.

Here’s a reminder of what these criteria mean

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