The Ripple Effect

Market Report: 25th Jan. 2019— Subscribe to our newsletter.

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CRYPTO NOTE

The daily view from our desk

The US secret service has distributed a number of, worthless, coins as a gesture of goodwill whilst the government shut-down continues, a pratice all too familiar to crypto enthusiasts. And in a surprising U-turn, a renowned gay conversion therapist has divorced his wife and come out as gay. Almost as suprising as finding out your pet dog is actually a black bear!

GO FORK YOURSELF

All market cap metrics are bad. But some are worse than others

Boredom entices war. Most say they don’t care about price. But when the markets don’t move — with total market cap since Monday being mostly flat, with volatility rapidly declining — the charts are forgotten. It seems the lack of a common enemy — be it noob retail investors who fall for pump and dumps, that scammy project who just raised millions in a shady ICO, or Bitmain — incentivises the cryptosphere to fork itself.

And that’s not bad — quite the contrary! The perpetual calling of bear sheet is what makes these crypto-dramas special, and the latest to unfold concerns Ripple. Ryan Selkis, co-founder of Messari, a cryptoasset data and research firm, is not a long-time fan of the remittance-focused project. And while everyone criticises market cap as a metric in abstract, Messari explained what’s wrong with Ripple’s XRP market cap: it’s “likely overstated by $6.1 billion”, or 46% of its current value. Don’t miss the next episode!

THE RIPPLE EFFECT

Drop a pebble in the water: just a splash, and it is gone. Or not

It’s sad when potentially healthy backlash translates into threats — which Ryan Selkis claims to be receiving from the XRP community. Many argue “the Ripple leadership team bears some level of responsibility” for that, so it will be interesting to see the outcome of the battle. Meanwhile, even more interesting is to follow Su Zhu’s advice and remember to focus on the wider war — developing new metrics applicable to all tokens.

As Qiao Wang, who also works at Messari, explains, this is a critical problem all across the space. Because “when you overestimate the circulating supply, you may underestimate the level of potential selling pressure”. But, in the case of XRP, few are getting the point that the reduction in circulating supply actually means there’s potentially less selling pressure. Anyway, if you still want to look at the charts over the weekend, we recommend following Hsaka’s constant analysis and DonAlt’s support and resistance levels.

WHAT YOU CAN’T MISS TODAY

Don’t leave for the weekend what you should read today

▪ Adena Friedman, NASDAQ’s CEO, believes “cryptocurrencies could still be a global currency of the future”. But, before, projects need to be transparent and fair.

▪ You’ve likely heard about the latest troll attack on Bitcoin by the Bank of International Settlements. If not, Larry Cermak did the best summary of the 31-page report.

▪ To better understand what a good attack on Bitcoin’s model after miner rewards end, read Matteo Leibowitz excellent analysis of this threat and the road ahead.

▪ Many believe Bitcoin’s code is resilient. But Galen Moore argues ”not all hacks are technical” and that “the social layer is key to crypto success” Must-read here.

▪ This week there were several boring news articles about Seattle and Wall Street-backed crypto investments. But only Jessica Klein managed to make sense of the shenanigans.

▪ Lastly, everyone is talking about the leaked photos of the new Samsung S10 phone, which shows a cryptocurrency wallet. But all that matters is a Google Pixel wallet.

QUOTE OF THE DAY

High-brow crypto enthusiasts love to shun TA. But the best recognise its value.

“It’s funny (“lumbar support”), but I have nothing really to say about it. A lot of people are going to send me this comic, so I might as well tell you now that I have seen it. Also I should say that I have become more sympathetic to technical analysis as I get older. The terminology can be silly, but go read that paper I linked above — about how people are constantly buying the wrong stock because they can’t keep the tickers straight — and tell me that a stock chart is a random walk. A stock chart is a stylized picture of human behavior, and sometimes people are silly in predictable ways.”

by Matt Levine