CryptoAM: Ethereum Futures, Tron vs Neo, and Patents Pending

Tuesday, September 4th

🍁Our first newsletter after Labor Day means that summer is coming to an end. As we enter the fall season I’d like to remind you that it is Bitcoin’s favorite time of the year :)

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3 things you need to know:

One: Ether futures incoming? CBOE is telling market makers that ETH futures will soon be live.

  • Coming soon: CBOE Global Markets is planning on releasing ETH futures soon, potentially by December 2018. The futures will be based on Gemini’s underlying market, similar to the BTC futures released last year. The provider is waiting for the CFTC to become familiar and comfortable with ETH futures prior to their release. BTC pumped wildly post-futures release, and with ETH futures allowing more speculative participation in the Ethereum market, it will be interesting to see what price action will follow.

  • Maturation: The launch of an ETH futures market would be a significant step in the maturation of the ether markets as well as the crypto markets in general, and it could pave the way for futures to be introduced for other top digital tokens. A healthy underlying spot and derivatives market is essential for a market to be considered mature and these steps towards a better market increase the likelihood of more crypto-financial products, such as an ETF.

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Two: Tron had some BitTorrent rivals. Coindesk reports that Tron was not the only bidder on the BitTorrent deal, and they certainly weren’t the highest bidder.

  • Healthy rivalry: It turns out that Justin Sun’s rival in the BitTorrent acquisition was none other than Neo, one of Tron’s top competitors. Sun bid $120mm, a whole $50mm less than Neo’s offer; however, Tron ended up winning the bidding despite the lower offer price. Apparently, Neo’s offer was not as enticing despite the higher price tag, likely due to issues around timing for closing the deal, as Neo removed a 6 month deadline to close the deal in a subsequent offer.

  • Potential synergies? It is widely speculated that Sun was interested in the deal for the purpose of acquiring BitTorrent’s user base or to add legitimacy to the Tron project. In terms of real synergies, Tron’s bet on BitTorrent was likely based on a thesis that a decentralized file storage system could be built by BitTorrent to be used in a decentralized internet project.

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Three: Alibaba and IBM go patent crazy . Alibaba and IBM are the number 1 and 2 companies, respectively, in terms of blockchain patent applications. They’re neck and neck…Alibaba with 90, IBM with 89.

  • Traditional exposure to blockchain: Investors who are not comfortable with the idea of purchasing digital tokens but believe in the transformative potential of blockchain technology can look to traditional corporates, such as Alibaba and IBM, to get exposure to blockchain through an investment in their underlying equity. This provides investors with the comfort of a traditional equity investment structure, including claims to the firms assets (behind senior securities like first-lien debt), while still allowing them to benefit from blockchain-based growth. It will be interesting to see what other traditional tech players will attempt to compete with IBM and Alibaba in developing patented blockchain technology for future deployment.

  • Noteworthy patents: Each company has filed some noteworthy patents, prime examples being:

    • Alibaba: The Chinese tech giant filed a patent for a food supply chain tracking system/blockchain solution to fight fraud and provide transparency through the blockchain.

    • IBM: The American firm filed a patent for a blockchain application testing solution that can do automated app testing using a pool of resources.

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Also in the news:

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Market Outlook:

Quick Take

Direction: Great looking charts this morning. BTC looks bullish on all timeframes, and this slow climb up is keeping the RSI and moving average differences within acceptable ranges. This is some of the most bullish overall price action we’ve seen in the past 8 months. It’s likely we experience a slight pullback before resuming upwards.

Key Support:  7270, 7200, 7074

Key Resistance: 7430, 7825

Actions: I’m taking a small short here with the expectation that BTC will have a slight pullback to the 7200 range before resuming it’s run. Longs in the 7200-7250 range provide decent R/R.

Daily Chart

Fear & Greed

F&G is in reasonable territory thanks to the slow climb. Speculation and breadth are low right now, indicating that alts have room to run. A few more days of bullish price action on BTC and we should be seeing more alts pop off. Since I’m expecting a slightly pullback I will be scooping up alts after we retrace a bit.

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

A glimpse into the dark underbelly of cryptocurrency markets

Nobody should have to tell you this — but if you didn’t know, the cryptocurrency markets are pretty new. Their current form has really only existed since 2015, which makes them about 3 years old. Go further back and the scene becomes pretty different then the crazy version we have today. It was slightly more chaotic but much less scammy (at least on a $ scale).

As with every new industry that has ever cropped up, we see fraudulent actors. There is a distinct lack of professionalism within the industry, which is partly a result of the time it takes to build truly professional solutions.

I mean, people with cartoon avatars on twitter garner hundreds of thousands of followers. There is a problem with accountability in the cryptocurrency markets, namely that there is none.

In this great article, Nic Carter explores the union of alt coin developers, exchanges, crypto ranking sites, the lack of accountability that accompanies the unholy trio, and it’s impact on you, the investor.

Spoiler: it’s not good for you. Everything in life comes back to incentives, and this case is no different. By working in tandem, the three aforementioned parties can extract wealth from retail investors without them quite realizing they are being fleeced until it’s too late.

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