CryptoAM: An ok Tuesday, Ethereum(Classic!), and Tron

Good morning bitlets. Bottom support at 6.6k seems to have held, and we’ve rebounded slightly from bloody Sunday. It’s funny how a little green makes you feel so good. Just don’t zoom out to far!

….so continues the CryptoAM love affair with BNB

3 things you need to know:

One: Coinbase planning on adding ETC support. Coinbase has announced that they will be adding Ethereum Classic trading pairs to Coinbase, Coinbase Pro, Coinbase Custody, Coinbase Markets, and Coinbase Prime. Coinbase plans to list ETC on these services in the coming months. The announcement of the listing well in advance of being listed on markets is part of Coinbase’s new effort to be transparent and clear with their process of listing new assets. As you may recall, when Bitcoin Cash was listed on Coinbase it was done without advanced warning and there was strong suspicion of insider trading.

  • Pump: The announcement was followed by an immediate and pronounced increase in ETC price. As of writing, Ethereum Classic is trading at a 25% premium from it’s sub $13 price before the announcement.

  • Unexpected: I can’t say I, or any of my colleagues expected Coinbase to list Ethereum Classic. You may be thinking, why not? The more the merrier right? Wrong. Because Ethereum Classic uses the exact same hashing algorithm as Ethereum, and because Ethereum has a much higher cumulative hashing rate than Ethereum Classic, a miner that controls just 2.5% of the Ethereum network could switch to mining Ethereum classic and control over 51% of the Ethereum Classic network. Note: I am not stating this as an absolute, and I would love a counter-argument to this claim.

  • Read More…

Brian Armstrong@brian_armstrong

Yes - I'm thinking now that may have been a mistake. I'm not opposed to adding ETC if there is interest.

January 2, 2017
And also apparently if there is no interest

Two: Wells Fargo decides to ban cryptocurrency purchase via credit card. Wells announced yesterday that it would be banning credit card cryptocurrency purchases citing market volatility and default risk. They claim to be monitoring the issue, and will “re-evaluate” the decision as market conditions change.

  • Let’s be fair: Some people know that I used to work at Capital One before losing my mind and deciding to trade crypto full time. As I learned, there were many, many precautions when it came to monitoring credit card card usage. A default will often wipe out the value of 10x the value the consumer generated. If companies are finding that a purchase of crypto on credit increases default risk even by 1%, it’s worth it to shut down their cards.

  • Some perspective: A study conducted by LendEDU last year found that roughly 18 percent of Bitcoin investors used a credit card to fund the purchases. Of those, 22 percent couldn’t pay off their balance after buying the digital coin.

  • My take: General advice is to not spend money you don’t have on speculation. Investing in cryptocurrencies is incredibly high risk, and you should only be investing what you’re willing to use.

Three: Tron buys Bittorrent. The actual details of the deal are yet to be disclosed, but according to Variety a deal was reached to sell Bittorrent to Justin Sun. What’s interesting, is that it seems Justin Sun bought Bittorent — not the Tron foundation.

  • “The deal is just the latest in a long and tumultuous corporate history for BitTorrent. The company raised millions a decade ago to build an entertainment business on top of its P2P. Those plans failed and BitTorrent was forced to lay off much of its staff, and recapitalize, in 2008. In the following years, BitTorrent proceeded to grow its business through ads and bundled software, at one point reaching 150 million monthly active users.”

  • My take: It’s unclear how exactly Justin/Tron aims to utilize Bittorrent. Tron’s end goal is to “decentralize the word” and Bittorrent was one of the most well known peer-to-peer platforms. It’s entirely possible Justin is doing this hype, as he’s well known for trying to drum up press. He and the Tron foundation have deep pockets, making a purchase like this for promotional reasons not out of the realm of possibility.



Also in the news:


What I’m reading today:

There’s a great twitter thread looking at correlations across coins by CryptoRae I suggest you go through.

cryptorae@cryptorae

Let's discuss cross-coin price correlation. It is an overlooked market indicator so it's worth a thread.

June 3, 2018

Cross coin correlation is a number from 0 to 1 measuring a set of coins across a certain time period, and how their daily returns compare. 0 means there they move randomly with respect to one another, and 1 means they move uniformly. CryptoRae took the top 25 coins and looked at their correlations over time, to try and see if any patterns were found.

We see that correlations have gone up dramatically since the bull run in December, reaching historically high correlation levels. This makes intuitive sense, as we know that coins are generally more correlated in a downtrend than in an uptrend. In a market like this, having a concentrated portfolio is better.

Why? Because if everything is highly correlated, by diversifying you are not diversifying returns. Diversification in this case does the opposite of mitigating risk and actually opens you to risks such as illiquidity, exchange hacks, event risk, price manipulation, etc.


Around the corner:


Market Outlook:

We’re slightly less fearful than we were yesterday. We’re saw an uptick in F&G today because of the bounce off 6.6k. Unfortunately, as it doesn’t look like like a strong bounce, as we’ve already retraced quite a bit. The high fear is giving me indicating we will likely bounce off 6.6k again, and if that bounce is also rejected at the 6.85k level we’re likely to go down below.

Here’s a reminder of what these criteria mean

The news: What we see on the 1D chart is a strong rejection with decent volume of the 6.85k level.

Some good news: Chaikin Money Flow (an indicator of buy/sell pressure) is telling us that sell pressure is abating. This is in line with out “breadth” metric. This may mean that bears are losing steam.

What I’m watching: Looking at the 6.85k level and 6.6k level closely. I’m not making any trades, as the environment is too uncertain. Yesterday, when I recommended a long at 6.7k, we were primed for a bounce. Right now it’s anyones ballgame.


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