Monthly Archives: May 2022

Laser-Eyed Folks Be In Triage Right Now

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DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

To answer this question, first, we shall declare our own stance on cryptocurrencies; you can use that to interpret the rest of this note which will help you decide whether this work is of any use to you!

In short, whilst we are no spring chickens here at Cestrian, neither are we boomers. This gives us, we think, some degree of neutrality as regards the utility and longevity of crypto as an asset class. Nobody here uses crypto as anything other than an investable, tradable security, because no one knows why they would need to actually ever spend it. In consequence, nobody here has ever owned crypto in its native form, preferring to gain exposure to it through funds (Grayscale Bitcoin Trust (OTC:GBTC), Grayscale Ethereum Trust (OTCQX:ETHE), ProShares Bitcoin Strategy ETF (BITO)) or stocks (Coinbase (COIN) at present; Marathon Digital (MARA) and Riot Blockchain (RIOT) in the past). (We can give you all kinds of high falutin reasons for this, but in the end, it's because we just know that we will lose our cold wallets and be that guy combing through the municipal landfill to find what was meant to be his future Lambo but is now just a soggy USB stick covered in carrot mush).

To us, the asset class is something of a curio. We neither see immediate personal utility, so we aren't true believers; nor do we think "bah humbug, this scam will end badly for those pesky kids". Mainly though, as career tech investors we long ago learned that writing off the new-new thing is usually a mistake. So in investing generally we lean toward growth and our interest in crypto is from that angle.

Amongst the laser-eyed community, you will find a clear division drawn between "fiat currencies" and "decentralized crypto". Fiat, they argue, is a scam, being government-controlled, deflatable at will by central bank policy, and so forth. Old folks on the other hand believe that crypto is no more than a grand pump & dump scheme which will inevitably end in disaster because the fundamental value of any particular crypto is zero.

Neither of these extreme views is quite true, of course. The value of any currency is formed only by consensus, just as is the case for the value of any particular security. What is the correct price of the SPDR S&P 500 Trust ETF (SPY)? There is no correct price! The correct price is what market participants are agreeing to pay one another at the current time. You can have an opinion about what market participants may decide to pay one another in the future, and you may invest or trade on the basis of your opinion, but nothing about this calculation is based on any kind of immutable physical reality; it's just opinion.

Actually, the common term 'fiat', usually used to mean currencies not pegged to physical goods like gold, can also be dispensed with here because, what is gold worth? Again, it's just worth what folks agree to pay one another at any particular time.

So let's use a different lens. Let's talk about state-backed currencies like the dollar or the euro or the yen, etc., and then about crypto.

The rise of state-backed currencies was, as the name suggests, a function of the rise of the nation-state. And the rise of the nation-state was a function of the ability of those who sought to obtain and maintain political power to be able to centralize and enforce that power through actual or threatened violence which they deemed to be the sole form of legitimate violence. If you want to read the long-form version of this theory, you could start by reading the OG, Thomas Hobbes, whose Leviathan may have been written in the seventeenth century but remains a pretty darn accurate portrayal of what the state is and why. If you're busy, however, just watch the Clint Eastwood western, Hang 'Em High, which makes all the same points.

State currencies are only valuable because somebody says so. In the Middle Ages, the sovereign. Today, federal governments and market participants.

Cryptocurrencies are only valuable because somebody says so. Since Satoshi never did wield any centralized power, Bitcoin's (BTC-USD) viability comes down to its market participants.

To us, it's that simple.

The question is, will market participants decide that crypto will be worth more, or less in the future? The whole ecosystem just got slammed as risk appetite was reduced, and the minor coins in particular have been roadkill. We suspect most of them will remain that way because they lacked the critical mass to be self-sustaining when trouble hits. Per Hobbes, life has indeed proven nasty, brutish, and short for many of them.

Our own interest is in Bitcoin and Ether (ETH-USD), the two major cryptos by market capitalization. So far they have been damaged by the selloff but no more than your average too-hot-to-handle growth stock. So let's dig into these some.

Now for some other out-loud statements of our own prejudice. We believe that at a minimum, two cryptocurrencies will survive and probably prosper long term.

Bitcoin, because it is the closest to the gold standard amongst crypto. It is truly decentralized, doesn't have a guru (or furu!) type leader espousing its potential to change the world or change your ability to fund your kids' college fees, and it has been around a long time now. Institutions have started to invest in Bitcoin in reasonable number and they have most likely done so as they follow the changing demographic of their clients. If GNUs Not Unix, Bitcoin Is Not Beenz.

And Ether, because although it most certainly does have a founding guru it also actually has utility insofar as you need it for 'gas fees' for transactions on its blockchain... and crucially its blockchain might become a major transaction bus for the Metaverse even as the Metaverse goes mainstream. And by the way we very much believe that the Metaverse is a thing and going to be more of a thing.

Crypto in our view can only be invested in or traded on a technical basis, specifically because it lacks fundamentals. Now, in our own work, we find that trying to invest or trade on technicals is risky in the extreme when dealing with niche assets - which for us means most if not all the altcoins - because the crowd behavior that technical trading methods attempt to measure and predict doesn't take place in a way consistent with those technical methods. Whilst all technical methods differ, generally speaking, they work best in highly liquid instruments that are freely traded by both institutions and retail alike. We like to use the Elliott Wave / Fibonacci method in our work - not because we believe it is the unique or supremely valid method but because we've found success with it. And the more liquid, the larger, the less related to fundamentals of the instrument, the better we find the method works. Take SPY - the S&P500 proxy ETF - for instance. Since the 2016 lows, we find it has moved with textbook clarity according to wave & Fibonacci principles - the extensions up and retracements down have (so far! let's see how the rest of 2022 plays out) been very predictable in this system. You can open a full-page version of this chart, here. (And before you ask, yes we did call the bottom in March 2020 and yes the top in November 2021, in our subscriber service Growth Investor Pro where those articles can still be found).

SPY Chart (TradingView, Cestrian Analysis)

So let's take a look at whether either Bitcoin or Ether can be traded using this method. Best guess is that Bitcoin suits the method better than Ether, because it is larger, better known and has more institutional involvement.

First, the past. From the 2018 lows, BTC puts in a Wave 1 up followed by a Wave 2 down that troughs a little below (our) ideal 0.786 retracement. It then puts in a monster Wave 3 up peaking at the 5.618 extension of Wave 1, which is crazy and rarely seen in our world. For comparison, the recent highs in SPY, the Invesco QQQ ETF (QQQ) and ARK Innovation ETF (ARKK) represented the 1.618, 2.618 and 3.618 extensions of their respective prior wave 1s up. Yes, that spooked us out too but it's true. So 5.618 up is truly extended and investors would have reasons to be fearful at that point. Then comes a Wave 4 down troughing at a textbook 0.618 retracement of that Wave 3 - and then a new Wave 5 higher that peaks just above the prior Wave 3 high. So from the end of 2018 to early November 2021, we can say, yup, this method seems to work quite well.

BTC Chart (TradingView, Cestrian Analysis)

Let's look at the 'hard right edge' now though. Can we use the method to forecast what happens next? In this method, at least as we use it, we like to find a Wave 1 up and a Wave 2 down that conforms to type (specifically a 0.786 retracement of the W1 up) to give us confidence in projecting the period to come. We don't have that yet in BTC. We think that BTC is in a 'larger degree' Wave 2 down, like this (full page version, here)

BTC Chart II (TradingView, Cestrian Analysis)

So far that Larger Degree W2 down found support at the 0.618 retracement of the Larger Degree W1 up. That might prove to be the bottom of the wave but (1) the 0.618 level was breached once already and (2) that A, B, C corrective pattern you see in light blue - if you want a really high confidence statement to say a correction has ended, you want to see A = C, i.e., the price drop in the A-leg is the same as the price drop in the C-leg. We don't have that yet. A=C would put BTC in the mid-12000s. Countering that you could say, well, that's below the 0.786 retracement level (17,200) so that's not likely - but countering that you could say, well, the last substantial W2 down in BTC - the drop into the Covid crisis - troughed below the 0.786 too. Because crypto be like that - super volatile.

Supporting that analysis would be - look at the volume profile. The first high volume node (where a whole lot of volume was transacted) doesn't start until the 14,200 area - that will likely prove stronger support than the present price which has nothing but low volume nodes around it (indeed the whole move up from the mid-14ks to the high 60ks can be seen to be a fairly low-volume exercise, which can explain why the instrument was so easy-up as well as why so easy-down).

Our conclusion on BTC for now is: we do believe it will ride again, we aren't sure the selling is done yet, and whilst we hold some BITO recently acquired, we will likely take short term profits should they arise rather than trying to play long-longtime from here. If the 0.618 retrace holds firm then we would change our view but our gut is, a bear rally now, then another leg down, then a true move back up.

Ether?

Ether Chart (TradingView, Cestrian Analysis)

It may amuse you to see exactly the same pattern as BTC! The Wave 3 up was an even crazier extension but the big Wave One up and the big Wave Two down are now at the same place, i.e., trying to find support at that 0.618 retracement of the larger degree wave one up (that means around 1867 may prove to be of support) but with risk to the downside because the A-B-C correction hasn't concluded (yet) at A=C. If A=C that puts ETHUSD at around 800, again below the 0.786 retracement. So for Ether we think - there can most certainly be some short term upside but speaking for staff personal accounts we will probably not be treating that as a real move up until such time as support is really proven, i.e., with multiple retests, the rest of the market also moving up, etc.

Our own view is that Bitcoin and Ether are here to stay and that they are investable. If you were minded to open new positions in both - directly or via proxies such as GBTC and ETHE - we can see the sense in starting now but we would suggest not betting the farm, instead waiting to see if this is just temporary respite from selling until a lower low forms support.

If we got a 0.786 retracement in these two cryptocurrencies, we would be much more inclined to start layering in bigger allocations in the hope of enjoying the next major ride upwards.

Cestrian Capital Research, Inc. - 23 May 2022

The rest is here:
Is Now A Good Time To Invest In Cryptocurrency? - Seeking Alpha

The attack against the Ronin Network in March was quickly speculated to be one of the largest cryptocurrency hacks of all time. Approximately $540 million was stolen from the cryptocurrency and NFT games company in a combination of USDC and Etherium, with $400 million of the stolen funds owned by customers playing the game Axie Infinity.

This attack was the latest in a string of thefts perpetrated against crypto and should be a jolt to both the digital asset and cybersecurity communities to bring the security of cryptocurrencies into line.

A History of HeistsThe current vogue of large-scale crypto heists goes as far back as the 2014 Mt. Gox hack (another cryptocurrency exchange built around a game, Magic: The Gathering), which went into bankruptcy after losing $460 million of assets.

However, the trend has been gathering pace. In the months leading up to the Ronin Network attack, cybercriminals stole nearly $200 million worth of cryptocurrency from the crypto trading platform BitMart, attacked 400 Crypto.com users, and orchestrated NFT-related scams, to name but a few incidents.

There is often an uncomfortable tendency to see these attacks as something that takes place in isolation in a remote part of the Internet whenthey actually have a huge impact on thousands of people. Axie Infinity, for example, has millions of players around the world, and in the wake of the Ronin Network attack,regular users reported losing tens of thousands of dollars. In some cases, this was their livelihood, with many players in the Philippines playing to win digital assets as a full-time job.

Crypto Goes MainstreamThis demonstrates how digital assets have become more deeply ingrained into our society since the Mt. Gox hack. Cryptocurrency is now used by a far broader cross-section of the population (13% of Americans traded crypto in 2020), major companies now accept it as payment (such as Tesla), and nations have integrated cryptocurrencies into their economies.

El Salvador famously became the first country to adopt Bitcoin as an official currency in 2021, but many countries are now looking to join the party. The UK, for example, recently announced its intention to become a "global hub" for the crypto industry, proposing new regulations for stablecoins and even an NFT backed by the Royal Mint. President Bidens Executive Order on Digital Assets, released in March, also acknowledged the growing role of cryptocurrencies in the US economy.

The Knock-on Effects of a HackAs digital assets become deeply ingrained into our lives, the attacks against them have wider societal impacts. For example, crypto is the currency of choice for cybercriminal activity and the Dark Web, including ransomware attackers, malware operators, scammers, human traffickers, dark-net market operators, and terrorist groups.

Their vulnerability and the ease in which they can be laundered therefore contributes to the coffers of cybercriminals. An analysis of wallets controlled by cybercriminals suggested that at least $8.6 billion of cryptocurrency was laundered in 2021. There is also evidence of stolen cryptocurrencies funding hostile nation-states, with North Korean groups reported to have stolen $400 million of cryptocurrency last year, potentially to offset financial sanctions.

This criminal activity also creates a burden on law enforcement around the world. In 2021, the Department of Justice launched the National Cryptocurrency Enforcement Team (NCET), focusing specifically on crime involving digital assets. In one single seizure this year, the task force obtained 94,000 Bitcoin ($3.6 billion), demonstrating the scale of the illegal market it is trying to tackle.

Security and RegulationFirst, crypto companies need to improve their cybersecurity fast. The Ronin Network admitted that it took six days to notice that a hacker had exploited a security flaw and stolen $540 million worth of cryptocurrency. This level of security is unacceptable. If these organizations are asking users to trust them with assets, they must provide the security to protect them. If they dont invest in security, the attacks will continue and users will very quickly lose confidence in these platforms.

Second, the increasing severity of these attacks supports the argument that crypto companies require greater regulation. Regulated financial institutions cannot afford to get away with the loss of millions in assets. Of course, attacks do happen, but regulations hold the security of regulated institutions to a sufficient standard that losses are mitigated. When these standards are not met, there are consequences put in place by the regulators.

We have to eliminate the perception that crypto hacks are inconsequential, only affecting those at the margins of society. They are not: Thousands of people are affected directly, with ever more joining the cryptocurrency world every day. Moreover, with cryptocurrencies funding the criminal community, these hacks will increasingly impact everyone whether you directly engage with digital assets or not.

Go here to see the original:
Crypto Hacks Aren't a Niche Concern; They Impact Wider Society - DARKReading

Bitcoin illustrationGetty Images

The Fed said 46% of American adults who used crypto as an investment last year had annual income of $100,000 or more.

Meanwhile, 29% of crypto investors had incomes of $50,000 or less, according to the Economic Well-Being of US Households in 2021 report.

Overall, 11% held crypto as an investment, 2% used it to buy something, and 1% used it to send money to friends or family.

Close to half of US cryptocurrency investors in the US last year had high incomes, the Federal Reserve said in a report Monday.

According to the report on the Economic Well-Being of US Households in 2021, said 46% of American adults who used cryptocurrencies only as an investment made $100,000 or more annually, while 29% of investors had an income of $50,000 or less. The Fed's prior report didn't include data on crypto usage.

Overall, 11% of US adults held crypto as an investment, while 2% used it to buy somethingand 1% used it to send money to friends or family.

The findings coincide with last year's massive crypto rally, which saw bitcoin soar as high as $69,000. But the sector has been slammed this year amid a sell-off in risk assets overall.

While investors made up a larger share of crypto users, the Fed reported that roughly 60% of those using cryptos for payments made less than $50,000 annually, compared to 24% for those making $100,000 or more.

And those using cryptos for payments were less likely to have access to mainstream financial tools: 13% of these users did not have traditional bank accounts and 27% lacked credit cards.

Read the original article on Business Insider

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Nearly half of US cryptocurrency investors last year had six-figure incomes, the Federal Reserve says in a new report - Yahoo Finance

Crypto Crash News and Top Cryptocurrency Prices Today: The global crypto market cap has crashed again to $1.26 trillion, a day after showing some signs of recovery. For the last several days, crypto market cap has been stuck in the $1.24-$1.31 trillion range, indicating the struggle to break beyond this barrier.

On Monday, the global crypto market cap had jumped to $1.31 trillion, rising 3.66% over the last day, as several top crypto prices also witnessed upward movements. However, Mondays crypto gains have vanished over the night, data on CoinMarketCap at the time of writing (May 24, 7.30 am) shows.

The global cryptocurrency market volume over the last 24 hours increased 37.22 percent to $84 billion. The total volume in DeFi was $9.62 billion, which is 11.46% of the total crypto market 24-hour volume. Stable coins volume was $73.70 billion, which is 87.74% of the total crypto market 24-hour volume.

Bitcoin price fell below $30,000 again, decreasing by over 3 percent in the last 24 hours. Meanwhile, Bitcoins dominance as top crypto asset also decreased by 0.36% to 44.22% over the day. Overall Bitcoin price has decreased by 2.44% in the last 7 days. At the time of writing, Bitcoin price was $29,227.

The crypto market struggled to stay in the green as sellers dominated the market to open the week. Tether has paid $10 billion in withdrawals since the crypto market which indicates large-scale liquidations across the crypto market by the investors to recalibrate their portfolio, Shivam Thakral, CEO, BuyUcoin, said.

The crypto market is expected to stay in a bear phase for some time and most the investors will stay in a wait and watch mode, he added.

Edul Patel Co-Founder and CEO of Mudrex, said, Bitcoin and other cryptocurrencies rallied on Monday after a well-known fashion brand Balenciaga announced to accept crypto payments but fell later in the day. BTC is currently trading at US$29,200, which is the lowest since January 2021. It is likely that BTC may break below the current level testing its support once again.

Since April, BTC has been on a bearish consolidation due to several macroeconomic factors and Terras collapse adding to it. It seems like investors and institutions have paused and are a little hesitant to return to the market, Patel added.

Several top crypto prices have dropped in the last 24 hours. Take a look:

Ethereum (ETH): Ethereum price decreased by 2.17% as it once again dropped below the $2000 mark to $1985 in the last 24 hours. In the last 7 days, ETH price has decreased by 2.50%. It is currently ranked second largest crypto asset in terms of market capitalisation.

Binance (BNB): Binance Chain coins price increased by 1.89% to $325 in the last 24 hours. In the last 7 days, BNB price has increased by 8.26%. It is currently ranked as fourth biggest crypto asset in terms of market capitalisation.

XRP: XRP coins price decreased by 2.33% to $0.4106 in the last 24 hours. In the last 7 days, XRP price has decreased by 4.38%. It is currently ranked as 6th biggest crypto asset in terms of market capitalisation.

ALSO READ | Will crypto rise again in 2022 after crash?

Solana (SOL): Solana price decreased by 4.66 to $49.71 in the last 24 hours. In the last 7 days, SOL price has decreased by 9.06%. It is currently ranked as 9th biggest crypto asset in terms of market capitalisation.

Cardano (ADA): Cardano tokens price decreased by 4.07% to $0.5171 In the last 24 hours. In the last 7 days, ADA price has decreased by 8.02%. It is currently ranked as 8th biggest crypto asset in terms of market capitalisation.

Popular memecoin Dogecoins (DOGE) price decreased by 1.9% in the last 24 hours. DOGE is currently ranked 10th in terms of market capitalisation. The price of DOGE at the time of this report was $0.08397.

Meanwhile, prices of Polkadot (DOT) and Avalanche (AVAX) decreased by 0.34% and 5.93 per cent in the last 24 hours respectively. DOT and AVAX are currently ranked 11th and 13th on CoinMarketCap. Polygon (Matic) price decreased by 3.27% to $0.6463 in the last 24 hours. It is currently ranked 17th on CoinMarketCap.

(Cryptos and other virtual digital assets are unregulated in India. They are considered extremely risky for investment. Please consult your financial advisor before making any investment decision)

See original here:
Crypto Crash Update 5/24: Top cryptocurrencies fall again; Bitcoin, Ethereum, Solana, Cardano in the RED - The Financial Express

Cryptocurrency is an umbrella term that refers to digital currencies built on the blockchain. Cryptocurrencies have grown in popularity among the general public due to their ability to be traded for potentially lucrative returns.

Furthermore, many cryptocurrencies include powerful utility features such as smart contracts, cross-platform interoperability, and lightning-fast transaction speeds.

However, some aspects of cryptocurrency, such as its relatively high volatility and unpredictability, can elicit a cautious and measured response from existing and potential investors alike.

There are also cryptocurrencies whose value fluctuates infrequently and are known for their stability when compared to others such as Bitcoin, Ethereum, and others. These coins are known as 'StableCoins.'

This list of the most stable cryptocurrencies is sorted by market cap because it is regarded as a true indicator of the value and worth of stablecoins because the majority of them are pegged to the USD with a value of one.

Tether

Tether (USDT) is one of the crypto market's oldest stablecoins. It was first introduced in 2014. Tether is also the fourth most valuable cryptocurrency in terms of market capitalization, as well as one of the most stable cryptocurrencies.

USD Coin

USD Coin (USDC) is also pegged one to one to the USD. It was launched in 2018 and is managed by Circle and Coinbase through the Centre Consortium, which they co-founded.

Binance USD

Binance USD (BUSD) is a stablecoin offered by Binance, the world's largest crypto exchange. The New York State Department of Financial Services has approved the use of BUSD (NYDFS).

TerraUSD

TerraUSD (UST) is a stablecoin that Terra provides. It is intended to track the value of one US dollar, so it is pegged at one to one. TerraUSD is the 31st most valuable cryptocurrency in terms of market capitalization.

Dai

Dai (DAI) is a stablecoin that differs from the others on the list. Dai is backed by ether tokens and is pegged to the USD. Dai was introduced by MakerDAO in 2015 and is the 36th most valuable cryptocurrency by market cap.

Read more from the original source:
Cryptocurrency: Which is the most stable and why? - Marca English