CryptoAM: Almonds on the Blockchain, Telegram Passport & Crypto Losses

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Kim Kardashian tweeted about Bitcoin yesterday. Real. World. Adoption.

I also tweeted about CryptoAM yesterday. Real. World. Adoption.

3 things you need to know:

One: The Commonwealth Bank of Australia completed a blockchain trade experiment. Seventeen tonnes of almonds were shipped from Victoria, Australia to Hamburg, Germany. The shipment was tracked using a combination of IoT and blockchain to record data and key documents at every step of the journey.

  • “Partners were able to view and track the location of the shipment as well as view the conditions, such as temperature and humidity inside the container, via four IoT devices. This level of data provided partners in the supply chain with a greater level of transparency and efficiency regarding the location, condition and authentication of the goods being transported.”

  • Importance: Blockchain being used to manage supply chain is quickly becoming one of the most widely used “real world” applications of DLT. I will be watching closely to see whether public chains like VeChain beat out the entirely private chain supply chain solutions.

  • Read more…

Two: Telegram announces Telegram Passport. Telegram Passport is an authorization method for services that require your personal information. Currently, data stored in Telegram Passport is encrypted, but stored on centralized servers. Telegram has stated that it is planned to move the data over to a “decentralized cloud,” which may, or may not, be a blockchain.

  • Use: Virtually every ICO now has some form of KYC and AML protection. Telegram Passport would give much greater peace of mind when in investing in ICOs because investors would not have to trust a different third party every time to properly handle their sensitive data like passport information.

  • Read more…

Three: Only 5% of all U.K investors have actually profited from crypto. According to this wild report by IW Capital, the vast majority of U.K crypto investors have not profited. Of those that invested, 38 percent claimed not to understand cryptocurrency. One third of the UK believe that the bubble is set to burst. In total, the report estimates that 3 million Brits have invested in cryptocurrency…

  • Losses abound: For those around in December, it was a wild time for cryptocurrency. The media was constantly writing about Bitcoin & friends, driving speculators into a frenzy. Unique wallet addresses doubled from August 2017 to December 2017, with the a sizable amount of gains coming in the latter half of December.

  • Be smart: This means the majority of people who entered cryptocurrency have eaten a loss on their investment. Most have entered around 10k - 20k which means they’ve experienced anywhere from a 20% - 60% loss on an investment that they don’t know much about. It’s easy to be uninformed, and difficult to be informed — especially in the crypto space. It’s hard to deal with a loss on an investment you don’t believe in — but much easier if you understand the risks involved. You’re less likely to panic sell if you understand the risks and drawdowns.

  • What this means: A lot of the sell pressure we’ve seen since the drawdown in January has been panic selling by retail investors, who made up the majority of volume during the run up. Cryptocurrency is a reflexive market (which means selling leads to more selling, buying leads to more buying). We’ve seemingly bottomed around 5.8k, which was the price BTC held before the insane winter run.

  • Read more…

Also in the news:

What I’m reading today:

What is Bitcoin, really?

One of the most enduring questions in the crypto-space concerns the role of Bitcoin in the world. Since it’s creation in 2008, people have argued over what exactly bitcoin is. Is it for cheap payments? Is it a a store of value? Is is for privacy?

Over time, our definitions of what Bitcoin should be used for have changed. I’ve included an excerpt here from Nic Carters recent article, where he goes over what the 7 main definitions of Bitcoin are, and how they have changed over time.

  1. E-cash proof of concept: the first major narrative, this was the general view of Bitcoin in its earliest days. Back then, cypherpunks and cryptographers were still appraising the nascent project and determining whether it worked, if at all. Since all prior e-cash schemes had failed, it took a while for people to be convinced of its technical and economic viability and move on to more expansive conceptions of the protocol.

  2. Cheap p2p payments network: an extremely popular and pervasive narrative. Some believe this is what Satoshi had in mind — a straightforward currency for peer to peer internet transactions. A decentralized Paypal or Venmo, if you will. Since microtransactions are a key component of internet commerce, proponents of this view generally believe that low fees and convenience are an essential characteristic of such a currency.

  3. Censorship-resistant digital gold: the counterpoint to the p2p payments narrative, this is the view that Bitcoin primarily represents an untamperable, uninflatable, largely unseizable, intergenerational wealth store which cannot be interfered with by banks or the State. Proponents of this view de-emphasize Bitcoin’s use for everyday transactions, arguing that security, predictability, and conservatism in development are more important. We’re callously lumping in sound money believers into this camp.

  4. Private and anonymous darknet currency: the view that Bitcoin is useful for anonymous online transactions, in particular to facilitate black market online commerce. This is not necessarily mutually exclusive with the e-gold position, as many proponents of the digital gold view believe that fungibility and privacy are important attributes. This was a popular narrative before the chain analysis companies had success de-anonymizing Bitcoin users.

  5. Reserve currency for the cryptocurrency industry: this is the view that Bitcoin serves an essential purpose as the native currency for the cryptocurrency/cryptoasset industry more generally. This is a view espoused by traders for whom BTC is the numeraire — the currency in which the prices of other assets are quoted. Additionally, traders, businesses, and distributed networks that hold reserves in BTC de-facto endorse this view.

  6. Programmable shared database: this is a slightly more niche view, and generally involves the understanding that Bitcoin can embed arbitrary data, not just currency transactions. Individuals holding this view tend to see Bitcoin as a programmable, expressive protocol, which can facilitate broader use-cases. In 2015–16, it was popular to express the notion that Bitcoin would eventually absorb a diverse set of functionalities through sidechains. Projects like Namecoin, Blockstack, DeOS, Rootstock, and some of the timestamping services rely on this view of the protocol.

  7. Uncorrelated financial asset: this is a view of Bitcoin that treats it strictly like a financial asset and finds its most important feature to be its return distribution. In particular, its tendency to have a low or nonexistent correlation to all manner of indexes, currencies, or commodities makes it an attractive portfolio diversifier. Proponents of the view are generally not too concerned about owning spot Bitcoin; they are interested in exposure to the asset. Put another way, they want to buy Bitcoin-flavored risk, not necessarily Bitcoin itself. As Bitcoin has become more financialized, this conception has gained steam.

Around the corner:

Market Outlook:

Quick Take

Over the weekend we saw a quick rebound from the 7.8k level through 8k, and have settled between 8.15k and 8.3k as expected. If you remember, we were looking for a bounce at 7.8k to confirm bullish market structure.

Right now we’re looking at period of incredibly low volatility, which is usually followed (in bitcoin) by a period of incredibly high volatility. This, combined with tight support and resistance levels make it a good times to trade, as you can set up opportunities with great R/R. All you do is pick a direction and set tight stop losses where the trades breaks resistances. Position sizing based on risk management as always (losses should maxed at ~2% of portfolio).

The trend has been bullish, and I have a bias here towards bull. I’m looking to long anywhere in the region of 8.1-8.2k with 8.5k as a target to reach. If we close a 1hr below 8.1k, or reject 8.3k hard I will close out positions as the thesis of 8.5k.

One thing to keep in mind the August 9th deadline date for a decision on the CBOE ETF. The past two weeks of price action have been in no small part thanks to the markets pricing in the ETF. If the application is denied by the SEC (which is likely) we will see

From sentiment it seems as though the market is overestimating the likelihood that the CBOE’s application is approved, and that we should see some decline in price close to that date.

If you’re interested in figuring out crowd sentiment, feel free to vote in this poll!

Avi Felman@AviFelman

On August 9th, the CBOE Bitcoin application will be:

July 30, 2018

Daily Chart

You can see how often there have been long wicks on both sides. The uncertainty here is strong, so trading with the trend is usually advisable.

Bitcoin volatility has bottomed out at a multi-month low, indicating that we’re likely to see expansion soon.

Fear & Greed

Although we’ve had a strong week of price action, we still are almost overly fearful. This is good for the bullish hypothesis.

Here’s a reminder of what these criteria mean

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