CryptoAM: California Starts a Group, Colleges4Crypto, and Petro's Troubles

Thursday, August 30th

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3 things you need to know:

One: California takes on the blockchain. The California state legislature has passed a bill to establish a blockchain working group to explore regulations and blockchain use cases.

  • A community effort: The group will consist of a wide group of people including but not limited to: members of the state government, participants from both tech and non-tech industries (i.e. finance), legal appointees, and representatives from consumer and privacy organizations.

  • Collaboration is key: Regulators in the U.S. have been willing to work with members of the crypto/blockchain industries, and this is another example of just that. It will be good to have participation from all of these different groups because it will likely lead to a better outcomes from this program. The group will be drafting a report including these key details

    “(1) The uses of blockchain in state government and California-based businesses; (2) The risks, including privacy risks, associated with the use of blockchain by state government and California-based businesses; (3) The benefits associated with the use of blockchain by state government and California-based businesses; (4) The legal implications associated with the use of blockchain by state government and California-based businesses [...]”

  • Hold your horses: The bill still needs to approved by the governor, and it calls for the report to be published and submitted to the state legislature by July 2020 - so this won’t be happening overnight.

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Two: College students are going crazy for crypto. Coinbase recently published a report on the state of blockchain/crypto education, and the results are staggering. Over 42% of the top 50 universities now offer a course on either Blockchain or cryptocurrency.

  • Hands on experience: Universities are also launching launching blockchain-focused research labs. Stanford’s Center for Blockchain Research was launched earlier this year, for example, and the University of Waterloo, University of Illinois and Georgetown University are also preparing blockchain lab launches. The most prominent university lab is Blockchain at Berkeley, which has established itself as a major player in the cryptocurrency space.

  • Not just engineers: The Coinbase survey showed that 47 percent of social science students interested in learning about cryptocurrency compared to 34 percent of engineering students. Unexpected, but I guess makes sense. Blockchains are all about human behavior and how to incentivize people — we’re gonna need those social science students us engineers how to build things…

  • Why this matters: The younger generation drives innovation. Cryptocurrencies chance of success is directly tied to the amount of people exposed and learning about the subject day to day and it’s evident that cryptocurrencies are capturing the minds and talents of many current and recent college grads. It’s clear that crypto isn’t going anywhere.

  • Read more…

Three: Petro problems. A four-month Reuters investigation into Maduro’s controversial petro shows that there was almost no economic activity involving the troubled digital currency.

  • Is it a scam? Maduro has claimed that the currency was backed by 5bn barrels of oil, but the government doesn’t appear to be tapping into its reserves. The petro isn’t even listed on any of the country’s major crypto exchanges, and merchants don’t accept payments in petro. No one is even working at the address of the superintendent of cryptoassets. There is no way to link prices to petro, despite the fact that Maduro said that most transactions would be pegged to the petro. In other words:

    “There is no way to link prices or exchange rates to a token that doesn’t trade, precisely because there is no way to know what it actually sells for.” Alejandro Machado

  • People are Mad(uro): One petro investor remarked that he/she was being “scammed”. It certainly seems like this experimental currency could end up being one giant Ponzi scheme. While this wouldn’t be a great look for the space, everyone was suspicious of the petro from the get-go, so it won’t have an impact on the legitimacy of digital assets in general.

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Also in the news:

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Market Outlook:

Quick Take

Direction: We retraced as expected — but a little more violently. We broke through support at 6880 and are currently holding steady. EMA’s have turned down and momentum is slowing. Direction from here is more likely to be down than up, based on thinning volume and break of key support levels. A close in the middle yellow box would help me regain a bullish bias, but I’m bearish and expecting a test of the 6.8k level soon.

Key Support:  6800, 6750

Key Resistance: 6980, 7020, 7080

Actions: We barely broke through support, so I’m still calling this a no trade zone. There does not seem to be a good R/R here for a long or short. I’ve deployed some of my tether here in case we bounce from here.

Daily Chart

Fear & Greed

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

Is it cheating to say I’m reading what I was thinking this morning. I hope not.

Well, anyways…here’s a tweet thread about how to think about trading the cryptocurrency markets, and how to be creative.

It’s all about building blocks. Start a simple strategy (such as a moving average crossover) and slowly think about where exactly that strategies edge lies. Then refine, adapt and add more.

Avi Felman@AviFelman

So far, the best indicator for trading Bitcoin = moving averages & volume. Why? Bitcoin has no value other than what people ascribe to it. People are herd animals and tend to agree with whatever is going on around them. Buying induces buying. Selling induces selling.

August 30, 2018
If you want to kick around ideas with me, you know where to reach me.

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