CryptoAM: Chinese Currencies, Crypto Facebook, and Crypto Twitter

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Happy AM everyone. What a week huh? We’re hitting yearly lows and my uncle won’t stop asking me to ICO his painting business.

3 things you need to know:

One: People’s Bank of China actively working on state backed digital currency. The PBoC’s Digital Currency Research Lab has filed 41 patents in the last year. The aim of the patents is to create a digital currency which is a hybrid between the traditional monetary system and cryptocurrencies.

  • Progress: China is far and away the nation that has done the most research on creating its own state backed currency. A cryptocurrency could significantly improve their ability to monitor Chinese citizens. By tying wallets to on-chain ID systems, and requiring payments in state backed cryptocurrencies, the government could know exactly what every single citizen is spending their money on. It could also significantly reduce corruption and under the table payments.

  • Read more…

Two: Your favorite twitter follows are making bank. Being an influencer on social media has been relatively lucrative for a while now, with some mildly famous instagram models making 5k+ a post. The crypto-space is no different, with ICO’s shelling out massive amounts of money for singular tweets from big names in the crypto-space (McAfee claims he got offered 105k per tweet…).

  • Be smart: Read everything with a critical eye. If an influencer seems to be talking up a particular project — ask yourself why. It may in fact be great, and make you a lot of money. More often than not though, the good projects don’t have to pay for promotion.

  • We got you though: You’ll never find ICO’s, tokens, whatever shilled here. We’re committed to high quality content (and also you know our names…). We may include sponsored content to help keep CryptoAM afloat, but it will be for well vetted crypto products, and not ICO opportunities.

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Three: Facebook reverses ban on crypto related advertisements. Now, there is only a ban on ICO ads. Back in January, at the height of the crypto fervor, Facebook banned all crypto related advertising.

  • My thoughts: This seems like a great solution for Facebook and cryptocurrency investors alike. Most ICO ads are more or less ads for vaporware and it’s impossible for the ads’ target demographic to tell to difference between the legitimate projects and the borderline scams. Facebook can now capitalize off of crypto ads and users can be exposed to cool crypto products without having to worry of falling victim to a scam.

  • Be smart: Facebook was looking into launching it’s own cryptocurrency. I wonder if they’ll be advertising it…

  • Read more…

Also in the news:

What I’m reading today:

Drowning In Tokens

There are a few things you must ask yourself before investing in any project. Does this project solve a problem? Does this project benefit from having a token? And what is the demand for that token? I am not of the opinion that a project must *need* a token to have value, it simply needs to benefit from having its own token. The more important question to ask is what the demand for a token will be. There are a lot of projects out there that genuinely could not function without their own unique token, but that doesn’t necessarily justify their valuation.

The crypto landscape these days is full of token squatters who are trying to dip their fingers in as many jars of honey as possible. Because of the sheer number of people trying to jam their fingers in these jars, there is a false sense of demand driving exorbitant valuations. Steady streams of announcements and money being invested by retail investors and funds alike is maintaining this demand. ICOs have tens of millions of dollars of runway to invest before they go under which can further perpetuate an illusion of a project’s success. At some point or another, the inflows of capital will stop and investors will be left with investments in a bunch of projects that no one actually uses.

At the end of the day, developers and investors must ask themselves what the long-term drivers of demand will be.

“Token economics are supply and demand. We are pumping out loads of supply but we have zero evidence of natural demand. Say it with me — there is NO NATURAL DEMAND FOR (MOST) TOKENS”

Around the corner:

Market Outlook:

The bad: Bearish thesis from yesterday intact, we broke down from the 6175 level and hit a low of 6050. Looking for another retest of the 6k level, the market structure looks like it’s breaking down and primed for another large red candle bringing us below 6k. Look to 5775 for support and you could probably scalp a couple longs by placing buys slightly below that level.

The good: Still above 6k I guess!

We’re *very* fearful right now and alts are getting destroyed. Consider exiting positions you aren’t comfortable holding very long term.

Here’s a reminder of what these criteria mean

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