CryptoAM: An Update
CryptoAM team — it’s been a whirlwind of a time. Thank all 1000+ of you for sticking with me and reading CryptoAM all these months.
Some good news, and some bad news.
The good news: I’ve officially accepted a position working full time with Wave Financial, and will be helping them build crypto focused structured products as well as managing their books. Incredibly excited to join this team, as I think they’re one of the best (and well financed) under the radar firms in crypto.
The bad news: For now, Ledger Group will have to have to put aside, and with it CryptoAM. I will be changing the format of the newsletter a bit, and begin delivering it 2 days a week, Tuesday and Thursday. The goal is to bring on some additional people who enjoy the work and ramp up from there. If you’ve been a reader and would like to help out, let me know!
CryptoAM is a labor of love, and generates no revenue. It’s a way for me to share my thoughts on the market, and hopefully provide some value. Maybe in the future, someone crazy will fund the newsletter :)
As always I’m open to questions, comments or if you just want to talk crypto. Find me @delta_neutral on telegram, or at avi@ledgercapital.io
Now onto the good stuff.
3 things you need to know:
One: Coinbase finally listed Ripple (XRP)
If you’ve been in the cryptocurrency markets for any time, you know that one favorite question is ‘wen XRP on Coinbase!?’. Well, your answer is “yesterday at 10am PST”.
Why this matters for: Ever since XRP (Ripple/XRP/#thestandard….whatever) launched, there have been questions about the legality of the offering and the status of the token. We’ve had multiple armchair lawyers (smart ones!) claim that it is most definitely a security.
This has lead people to criticize Coinbase, claiming that they are flouting the law and setting bad precedent for the industry. I tend to take the other approach. Instead of assuming Coinbase is playing hard and fast, it’s more prudent to assume that Coinbase knows exactly what they’re doing and believe the risks are low compared to potential benefits. It’s likely that they have non-public information about the investigations into XRP, and that they have concluded those investigations are not serious enough to warrant real concern.
The other important thing to note is that Coinbase is going down the path of becoming a regulated securities broker through their targeted acquisitions, so this entire conversation may be moot even if XRP is deemed a security.
The other big issue — Coinbase abandoning standards. People are up in arms about Coinbase flagrantly ignoring their own standards in order to list XRP. According to their digital asset guidelines (published in Nov 2017), Coinbase claimed they would only add assets where “the ownership stake retained by the team is a minority stake”. This may or may not be the case with Ripple, where ~50% of the supply is held in an escrow account which is sorta, not really, but definitely controlled by the Ripple team.
Ripple is one of those “on the fence” cases. Are they decentralized? Are they not? Does it really matter? Probably not for Coinbase. They just care about tradable assets at the end of the day.
Two: The Samsung Galaxy S10 introduced a built in Crypto Wallet
This is the holy grail for a wallet provider. Enjin wallet has been selected by Samsung as partners for the new upcoming S10 phone. The move presumably means that each new S10 will come pre-installed with an Enjin wallet, opening up Enjin's potential user base to millions more customers. Predictably, Enjin doubled on the news.
Gaming functionality could be a factor in the decision. The Enjin team has strong credibility in blockchain gaming, having created the ERC-1155 token, used for in-game goods and digital item ownership. Samsung has strong ambitions in the blockchain gaming space, and so the choice of Enjin might seem like a natural fit. Other cryptocurrencies that the Enjin wallet supports include:
The bottom line: Samsung isn't the first to provide support blockchain wallets, with HTC and Huawei both releasing phones that come with wallets. However recent Samsung releases like the S8 and S9 have averaged around 40 million in first year sales. Before this announcement, the total number of blockchain wallet users worldwide had been estimated to be 32 million. That's a hell of a lot of potential new wallet users, which will hopefully push usage of cryptocurrencies towards mainstream adoption. The one thing that will drive the markets forward is inflow of new users, a historically difficult exercise that should become smoother with easier access to crypto.
Why this matters for you, the trader: Enjin doubled on the news. There *is* a way to catch this early.
Three: Binance Launchpad Proves Worth, as Fetch.AI sells out in 10 Seconds
Distribution, distribution, distribution. The ICO, STO and general markets are finally realizing that the most important thing for a successful raise is no longer flashy websites, big promises or even execution. It’s all about audience building.
In 2017 and 2018, there were hungry retail investors sifting through the dirt for nuggets of gold. That doesn’t happen anymore. In addition to the capital drain that most cryptocurrency investors have experienced, we’ve seen massively different behaviors as well. Investors will jump at opportunity placed in front of them (see: all the new broker dealers popping up for STOs), but are not seeking out opportunity anymore.
Binance Launchpad provides and easy and exclusive way to generate hype for your product while simultaneously bringing it in front of the largest collection of people likely to invest. I’m expecting the Launchpad to become a much bigger part of the ecosystem in the coming months and I’d implore you to pay attention if you like money.
Why this matters: Seeing as you can only invest in the projects on Launchpad with BNB, there are easy trading opportunities. BNB reacts very predictably, running up in advance of . There are plenty of ways to take advantage.
Go deeper: learn about Binance Launchpad and it’s upcoming ICO’s
Market Outlook:
Quick Take
Bitcoin: Bitcoin’s volatility finally picked up over the last two weeks, running up to 4,100 before dropping back down to ~3800, a level between the two previous level of churn. I’m expecting more churn here and would be selling volatility for the next 3 days. The next break will determine the structure of the market. A break above 3860 would indicate a positive expected value for longs with a target of 4200. A break below 3730 would indicate positive EV for a short with a target of 3530. If we were to fall through 3530, a short to 3300 would be the next logical play.
Key Support: 3860
Key Resistance: 3730, 3530
Overall Market: The overall implied volatility of Bitcoin is hovering around 60-70% which makes this an attractive time to sell volatility short term and buy long term volatility. Altcoins have also proven themselves to still be alive, with many such as Enjin, Binance Coin, Ripple, DAOstack and others moving on positive news. At these valuations, many experimental protocol coins such as Holochain and 0Chain offer interesting R/R as their main nets approach, which historically has coincided with increased awareness and price.
Fear & Greed
The F&G index is pointing towards a slight pullback but is neither
What I’m reading today:
Bitcoin has saved my family: A story of Bitcoin use in Venezuela
This NY Times article really illustrates the core value proposition of Bitcoin and other cryptocurrencies: censorship-resistance. While this may not seem essential to many in developed countries such as the US, in many places with unstable monetary environments and repressive regimes it can quickly become a matter of life and death. Venezuela, with an inflation rate of 1.7 million percent in 2018, has become a leader in the use of Bitcoin and other cryptocurrencies as it’s citizens face troubles from the government and financial institutions.
Some key takeaways:
Bitcoin is still volatile, but that doesn’t preclude it from being useful. But by using it as a store of value, some Venezuelan families have been able to mitigate against the financial misery caused by hyperinflation. Here's how it works:
The author holds his money in bitcoin and uses LocalBitcoins to find a buyer who uses the same bank. Doing this ensures that wire-transfers go through immediately.
He sells small amounts in exchange for wire-transfers of bolivars (Venezuela's fiat currency) to his bank account.
He spends the bolivars immediately, ensuring that he isn't affected by the daily inflation that occurs.
Don't underestimate the importance of portability. When people want to flee a country they are often harassed by border guards for money or items of value. This isn't about people losing their petty cash, for refugees fleeing a country their only remaining life savings may be the money they have on them. With Bitcoin this becomes much less of an issue - the only thing people need is their private key and seed phrase.