This post started out as one of my "Cryptocurrency Shopping Cart" posts. But then it grew.

Those posts deal with what I have bought on the day. But the reasoning behind today's trades fleshed the post out so much that it became something else entirely. So I canned that idea and now this post is more of a "dashboard" - the most important information (at least from my perspective) in crypto for today.

From https://www.flickr.com/photos/twodolla/4762952830/ | shared under license | modified by @bitbrain

A little bit of EVERYTHING

The beginning is always a good place to start

I kicked off my trading today by selling off all my Quantstamp (QSP - a token dedicated to the verification of smart contracts). I sold it based on this news: https://www.coindesk.com/quantstamp-fire-buyers-say-faith-shaken-65-million-token/. I'm a fairly risky trader and I hold many low market cap coins. I have been burnt quite a few times in recent history (see this post), and with the market haemorrhaging so much of my investment lately, I'm unwilling to try to ride another storm out and hope for the best. I got the news quickly enough, so I sold.

It should be mentioned that selling a crypto when it is at a low point vs BTC is not a recommended move. But with the market being so poor right now, you can expect a few of the less well established coins to "crash and burn". In such a case, where you risk losing everything in that coin (e.g. as I did with Titanium (TBAR)), it's better to get out as fast as possible.

Unfortunately for me I had been building up a moderate position in Quantstamp (the idea behind it being solid and looking good for future expansion). But, as the article linked to above indicates, Quantstamp is suddenly looking like a very risky coin to hold. So I'm out. That left me with available funds - which in turn left me with a question: keep it in BTC or in altcoins?

To the shopping cart!

Without boring you with all the details, I decided against holding it in BTC. My reasoning is that I think the market is nearing the bottom (again). When the market climbs, I expect altcoins to outperform BTC. Time will tell if I am correct. I bought three coins today:

CargoX (CXO)

Two days ago I posted a "Top Tip" at the end of my daily post: "BUY CARGOX!" (https://steemit.com/cryptocurrency/@bitbrain/the-difficulty-of-mining)
I ended that post by saying: "Cheers, I'm off to see if I have anything to trade for CargoX!" Sadly for me, I didn't have anything to sell, so I couldn't buy CargoX. Until today. Happily, I've just managed to add almost 10% to my CargoX bag. I tell you again, this coin is the best crypto investment I know of. Buy it now, or cry later because you didn't - your choice! Get it at KuCoin (nice people will use my referral code: https://www.kucoin.com/#/?r=E39MoQ).

NEO (NEO)

The king of coins and my personal favourite. Buying NEO for $38 in 2018 is like buying an ounce of gold for $38! It's the deal of the century! If you're not stocking up on NEO now, you are missing out on the best long-term crypto investment there is. Period.

Binance Coin (BNB)

This coin has been performing consistently well and climbing the ranks during 2018. I envision it rocketing in value when Binance creates its own blockchain. By allowing traders to save on Binance fees, it should always be in demand. The more Binance grows, the more demand for it there will be.

BTC mining

My mining post, which I already referred to above, described the problem with BTC mining approaching the level of non-profitability. It's interesting to see that talk of this is rapidly becoming more common. There are many factors at play: duration that BTC is held for, price of electricity, merged mining (as pointed out by @sames - thanks again), amount of hashpower that pulls out of the market, the next difficulty update etc. Nothing surprising, but it's worth keeping an eye on.

"Is Bitcoin Really Un-Tethered?"

This is the heading of a paper published today by John Griffin and Amin Shams. You can view it here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066. It's making news because it blames Tether for over-inflating the price of BTC and causing a "bubble". Disclaimer: I haven't read all of it, just the important looking parts; but here is why:

From a fundamental point of view, I disagree with the way that the document has been researched and written. It is basically a statistics based market analysis of whether Tether is demand driven (people want stable-coin crypto and they buy it for that reason) or supply driven (Tether is printed regardless of demand and used to manipulate the price of BTC). I find their study to be a typical example of inductive reasoning, a pet hate of mine. I consider it to be "poor science" when an outcome is decided and then data is found/cherry-picked/manipulated to support the theory. It's much better (more accurate and a better explanation of reality) to gather data and then use it to postulate a theory (deductive reasoning). In my never-humble opinion.

Honestly I've never trusted Tether 100%. I am very wary of tether and Bitfinex and their not-so-transparent relationship and dealings. I never use Tether myself. But, while it took a long time (I've been waiting to hear the results for several months), it was only this week that the results of a Tether audit were finally released. The audit found no signs of foul play e.g. the creation of unbacked tether tokens, that I was afraid of. This further serves to severely undermine the argument of the paper above because the paper hinges much of the justification for it's "findings" on the possibility that not all Tether is 100% backed by USD.

Then, another pet hate: they spend a considerable amount of time talking about the "Bitcoin Bubble", something I have debunked on several occasions. This is a good example of such a post: https://steemit.com/cryptocurrency/@bitbrain/history-doesn-t-repeat-does-it. I consider people who think that crypto is a bubble to be short-sighted and I call into question their understanding of blockchains as a disruptive technology.

Here is another huge problem I have with their "scientific approach". They analysed and compared Tether and BTC blockchain data, looking for correlations and patterns. But they seem to have forgotten that BTC and Tether are not just traded against one another. BTC is traded for altcoins. This year we have seen a substantial change in BTC dominance as BTC funds flowed into the alts.

Furthermore (and even more damning): Tether trading with altcoins is now common. I have just done a quick back-of-serviette calculation of all Tether trades today (using information from https://coinmarketcap.com/currencies/tether/#markets). Just less than $1 bn has been traded today in BTC/USDT pairs between all of the exchanges combined. But the total USDT trading volume for the last 24 hours is $3.28 bn - meaning that not even one third of Tether is traded with BTC. Based on this and my previous statements I am happy to discount their theory.

I'm not saying that they're wrong, anything can happen in crypto, I'm saying that I don't agree with the way they've done their study and I deem any findings based on it to be unsubstantiated.

One last Tether fact: it overtook NEO today for 12th spot on the coinmarketcap ranking list. Like I said before: buy NEO now!

In other news

I read today that someone said "a V-shaped reversal in BTC price is unlikely" (I can't remember where I read it). Only three days ago I predicted just such a reversal here. I also alluded to it yesterday when speaking about Bollinger Bands. I won't rule it out yet, but it looks like I may have been mistaken. I'm still in two minds about this. I think that it may just occur more in macro terms as opposed to over two or three days. $6k BTC is a very real possibility within the next few days, though if I played the futures game, I would be going long rather than short... (which is perhaps why I must never trade futures!)

Looking on the bright side

Of my 70 odd coins I do have ONE today that is in the green. That's compared to BTC, ETH and USD. After dropping for months, LOCIcoin is finally showing some positive performance. LOCIcoin is a coin that places the process of patenting on a blockchain at an affordable price. With a market cap of less than $2 Mil, LOCI is so cheap right now that I can't help buying more whenever i can afford it (provided I don't spend all my funds on CargoX and NEO!) I really recommend LOCI at this price. I would recommend it happily at 10x or even 20x this price, no exaggeration. LOCI can also be bought on KuCoin (the best exchange there is - no kidding). Here's that convenient referral link of mine again... https://www.kucoin.com/#/?r=E39MoQ

I continue to watch the markets with interest (and a modicum of trepidation and mild terror) and can only hope that the proper bull market returns soon. Crypto is essentially triple-bottoming now, and with the fundamentals firmly in place for a meteoric rise, I can't wait to see what happens when the bulls finally get released! Until then: be patient, trade with your head - not with your heart, and keep a close eye on this blog.

As always I'm open to any relevant crypto related discussion or question that you may have - just drop a comment on one of my posts, even if it is completely unrelated. I'll do my best to get back to you ASAP.

Yours in crypto,
Bit Brain

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Published on

by Bit Brain

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