Crypto Market Update 06.11.2018

Crypto Market Update 06.11.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

“Let’s say the market can support 4000 different monies, one public the others private..which services get tokenized? “

The ongoing experiment with bootstrap equilibria, also known as tokens
Tyler Cowen Marginal REVOLUTION 1

 

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • Very poor week across the board
  • All indexes are down over 20% vs USD over last 3 months

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $299.54 billion ( vs $336.31 billion one week ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share has remained at 39%, up from a recent low of 34% in early May. Looking longer-term, Bitcoin continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 85% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH trading signals look much worse vs 1 week ago

 

CRYPTO PERFORMANCE

 

  • BTC down up 3.5% vs USD over last week, down over 20% in last 30 days
  • ETH has performed slightly better than BTC over last 7 days, lagging ~7% over last year

 

Google Trends

 

Google Trends have have shown slowly declining searches out after falling significantly in February.

I’m tempted to stop tracking this, as I believe there will be fewer searches as the public gains knowledge. However, significant price action could still lead to search volume surges.

WooBull Charts

NVT Ratio This long-term cycle tracking ratio has continued the upward trend seen the last few weeks. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has risen to 130, up from 125 last week, continuing an upward trend.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s NVT

Articles of Note

“Developers are a lot more incentivized to build on a platform that they know is NOT going to change the rules…”

Ethereum Will Be the Backbone of the New Internet – Loom Network – Medium
James Martin Duffy Medium

“The number of developers using Ethereum’s Truffle Suite each month is not only growing — it’s accelerating.2

“$BTC.X investment theses to help “clarify how much of an impact a given narrative could have to Bitcoin’s valuation”

Bitcoin Investment Theses (Part 1) – Pierre Rochard – Medium
Pierre Rochard Medium

“Investment theses with a short holding period are focused on using bitcoins as a method of payment. Some of these theses would find ubiquitous usage while others are niche verticals. 3

$BTC “suggests that there are intrinsic economic limits to how economically important it can become in the first place”

The Economic Limits of Bitcoin and the Blockchain
Tyler Cowen Marginal REVOLUTION

“Perhaps the most positive scenario for Bitcoin is if those coordination costs rise with the returns to the attack itself, in which case a much higher market value for Bitcoin still might be stable
4

“a brand-new metric to factor in the growth in network value” & “a more responsive trading indicator”

Improvements on the Network Value to Transactions (NVT) Ratio & Introducing Network…
Vikram Arun Medium

“However, as described in this great article by Dmitry Kalichkin, the original NVT ratio (while an amazing theory) is not predictive or descriptive. You should check out his article but essentially what Dmitry and Cryptolab Capital found after experimenting is that the following NVT ratio works much better.
5

“Rebalancing a high performer is like selling down your Facebook convertible notes to get more MySpace”

When it’s time to rebalance your crypto-assets in your portfolio
Willy Woo Woobull

“I think rebalancing a crypto portfolio to reduce exposure to a single crypto-asset is the most intuitive yet completely wrong move long term investors make.
6

 

  1. http://marginalrevolution.com/marginalrevolution/2018/06/ongoing-experiment-bootstrap-equilibria-also-known-tokens.html
  2. https://medium.com/loom-network/ethereum-will-be-the-backbone-of-the-new-internet-88718e08124f
  3. https://medium.com/@pierre_rochard/bitcoin-investment-theses-part-1-e97670b5389b
  4. http://marginalrevolution.com/marginalrevolution/2018/06/economic-limits-bitcoin-blockchain.html
  5. https://medium.com/ledgercapital/improvements-on-the-network-value-to-transactions-nvt-ratio-introducing-network-569569f6b3e3
  6. https://woobull.com/on-portfolio-rebalancing/

Weekly Cycle: Market Outlook for 06.11.2018

Weekly Cycle: Market Outlook for 06.04.2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

“In our ordinary state of mind, we can only achieve ordinary things. All success comes from the ability to transcend routine”

The Unappreciated Key to Success
Brett Steenbarger, Ph.D. TraderFeed1

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest. 

Observations:

  • Homebuilders Index [$XHB] up 4% in last week
  • Tech [$QQQ, $HACK, $CQQQ] all up over 25% over last year
  • VIX “only” up 8% vs 1 year ago, which is surprising given the narrative of market volatility

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Observations:

○ $SPY, $VTI still look strong
○ $MJ looks much improved fr
○ Emerging markets $VWO and $BKF much improved
○ $VIX has dropped significantly since a week ago

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes that “Short-term trading conditions continue at favorable levels, much improved from the month-ago data“, much improved from the month-ago data.”

“The market reaction suggests that most agree with my assessment: It is a problem, but not an immediate problem.2

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes:

“Last week was much like the ones we saw throughout 2017! Up, up, up nice and slow… with little volatility.”

“Short term: The S&P 500 finally broke out of this range marked in yellow.”3

 

Articles of note

—-

“odds of a positive May – October are only slightly below the odds of a positive return from November – April”

Buy in May and Stay Invested
Charlie Bilello pensionpartners.com

“the returns from May through October are still positive, with the average May-October up 3.9% and the median up 5.3%4

 

“Uber has the biggest advantage of all: the millions of people who already have the app”

The Scooter Economy
Ben Thompson Stratechery by Ben Thompson

“What is striking about dockless scooters — at least when one is parked outside your door! — is that they make ride-sharing services feel like half-measures: why even wait five minutes, when you can just scan-and-go?
5

$WMT looking ahead – “IBEF projects ecommerce sales in India to surpass the U.S. by 2034”

What the Walmart-Flipkart Deal Means for India
Manish Dudharejia Practical Ecommerce6

“Fox News manipulated the most vulnerable people in America to the most powerful drug cocktail ever: Visceral gut feelings of existential outrage”

FEAR & UNbalanced: Confessions of a 14-Year Fox News Hitman
Medium

“Well it’s obvious now: Partisan conservative politics staged and acted out as performance art was Roger’s “gift” to America. Above all else, Roger understood and practiced the concept of “culture trolling” before the term “trolling” ever became commonly used.
7

“Each fatality of a self driving car will cut the number of VC’s likely to invest in #AI by half”

AI winter – Addendum
Piekniewski’s blog

“Same for every AI startup that quietly folds down. At the same time those who already heavily invested, will be pumping the propaganda while quietly trying to liquidate their assets. It is only once there is nobody to buy this, which is long after seed financing had dried out, when the AI winter becomes official.8

$SPLK will “deliver a “platform of engagement” that combines event management, monitoring, on-call management, and ChatOps.”

Splunk to acquire DevOps incident management platform VictorOps for $120 million
Paul Sawers VentureBeat
9

 

 

 

 

 

  1. http://traderfeed.blogspot.com/2018/06/the-unappreciated-key-to-success.html
  2. https://dashofinsight.com/weighing-the-week-ahead-do-individual-investors-face-a-pivotal-decision/
  3. https://www.stocktrader.com/2018/06/11/weekly-market-recap-jun-10-2018/
  4. https://pensionpartners.com/buy-in-may-and-stay-invested/
  5. https://stratechery.com/2018/the-scooter-economy/
  6. https://www.practicalecommerce.com/walmart-flipkart-deal-means-india
  7. https://medium.com/@tobinsmith_95851/how-roger-ailes-fox-news-scammed-americas-la-z-boy-cowboys-for-21-years-1996ee4a6b3e
  8. https://blog.piekniewski.info/2018/06/06/ai-winter-addendum/
  9. https://venturebeat.com/2018/06/11/splunk-to-acquire-devops-incident-management-platform-victorops-for-120-million/

Crypto Market Update 06.04.2018

Crypto Market Update 06.04.2018

Our weekly crypto market update uses a standard set of information sources in an effort to get a less biased opinion of the market. 

 

“Let’s say the market can support 4000 different monies, one public the others private..which services get tokenized? “

The ongoing experiment with bootstrap equilibria, also known as tokens
Tyler Cowen Marginal REVOLUTION 1

 

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • A positive week for BTC vs USD, with the B10 Index outperforming BTC by ~3%
  • B10 and BTotal even indexes slightly underperformed weighted indexes over past 7 days, which is a typical
  • All sector indexes were positive over last week vs USD and BTC.
  • All sector indexes outpferformed B10 and BTotal last week
  • Platform index up over 12% vs USD over last week, down nearly 20% past month

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $336.31 billion ( vs $326.65 billion one week ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share has climbed to 39%, up from a recent low of 34% in early May. Looking longer-term, Bitcoin continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 86% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH have turned much more positive vs USD since last week
  • ETH indicators show significant strength over BTC

 

CRYPTO PERFORMANCE

  • BTC down up 3.5% vs USD over last week, down over 20% in last 30 days
  • ETH has performed slightly better than BTC over last 7 days, lagging ~7% over last year

 

Google Trends

 

Google Trends have have shown slowly declining searches out after falling significantly in February.

I’m tempted to stop tracking this, as I believe there will be fewer searches as the public gains knowledge. However, significant price action could still lead to search volume surges.

WooBull Charts

NVT Ratio This long-term cycle tracking ratio has continued the upward trend seen last week. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has risen to 125, up from 115 last week, continuing an upward trend.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s NVT

Articles of Note

 

“Blockchains and tokenization are a way to incentivize the creation of a commons.”

Blockchains and the Opportunity of the Commons
Alex Tabarrok Marginal REVOLUTION

“Precisely because the blockchain is unowned the designers have to get much more correct, right out of the gate. Changing a commons on the fly, forking, is costly, disruptive and not always possible
2

“Flipside have built a service which allows individuals to buy baskets of #cryptoassets – a new one is released each day”

Coinmetrics, Flipside, and Secure Chains
the Coinmetrics Team Coin Metrics

“So this morning Flipside Crypto, a data-driven asset manager, released their Coinmetrics secure chains basket.
3

“Once you move past speculative pricing of cryptocurrencies and ICOs, Blockchains are a way to create economies.”

CryptoEconomics : Why Blockchains need Computer Scientists & Economists to come together?
Medium

“An alternate interpretation of CryptoEconomics is at the application layer: creating incentives for each participant to either create or consume value, using a token as a medium of exchange for the transaction.
4

“I don’t want to hold cash as working capital – I‘d rather stay fully invested while my wallet proportionally sells assets”

The Security Token Thesis – Hacker Noon
Hacker Noon

“lay out the reasons why security tokens dominate other methods of recording and trading ownership claims. Taken together, the features listed below form the foundation of the thesis that security tokens will see widespread adoption across numerous asset classes in the coming years.
5

“Instead of looking at “blockchain”, look at what you actually need and see what fits you best.”

Alternatives to Blockchain – Jimmy Song – Medium
Medium

“some alternatives that use aspects of blockchain technology that do a lot of what “blockchain” advocates claim, but do it a lot cheaper.
6

“The peak $BTC.X price coincided with the day bitcoin futures started trading on the Chicago Mercantile Exchange”

How Futures Trading Changed Bitcoin Prices
Federal Reserve Bank of San Francisco

“The peak price coincided with the introduction of bitcoin futures trading on the Chicago Mercantile Exchange. The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. Rather, it is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset.
7

 

 

Our Take

Short term: bullish though cautious as a bear market may still be coming.
Long-term: very bullish, especially on dapps and digital assets

  1. http://marginalrevolution.com/marginalrevolution/2018/06/ongoing-experiment-bootstrap-equilibria-also-known-tokens.html
  2. http://marginalrevolution.com/marginalrevolution/2018/06/blockchains-opportunity-commons.html
  3. https://coinmetrics.io/coinmetrics-flipside-and-secure-chains/
  4. https://medium.com/koinearth/cryptoeconomics-why-blockchains-need-computer-scientists-economists-to-come-together-fd0eda583834
  5. https://hackernoon.com/the-security-token-thesis-4c5904761063
  6. https://medium.com/@jimmysong/alternatives-to-blockchain-9f858c0a1f2d
  7. https://www.frbsf.org/economic-research/publications/economic-letter/2018/may/how-futures-trading-changed-bitcoin-prices/

Weekly Cycle: Stock Market Outlook 06.04.2018

 

“The most painful realization…is that the people who disagree with us are not especially hypocritical or contradictory.”

The Acrobat and the Fly
Rusty Guinn Epsilon Theory1

 

Market Outlook Update for [June 06, 2018]
Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

 

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest. 

Observations:

  • Volatility [VIX] has dropped considerably over the last week
  • Emerging Markets VWO ( and BKF) up over 3% in last week
  • China Tech surged again last week.
  • Cannabis down over 10% last 3 months

 

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Observations:

○ Big improvement from a week ago for $SPY, $VTI
○ $CQQQ looks much improved this week
○ Emerging markets $VWO and $BKF much improved
○ $VIX has dropped significantly since a week ago

 

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes that “Short-term trading conditions continue at favorable levels, much improved from the month-ago data.”

He also writes on how investors should handle news and speculation regarding Trade Wars:

“Is it time to worry about a trade war? For investors, not yet. For citizens, yes.

Free trade is an issue that differs dramatically in two ways:

  1. First-order impacts are very clear and immediate. The impact is on cohesive industry and worker groups. Nations emphasize their role as exporters.
  2. Other impacts are delayed, nuanced, and difficult to measure. Retaliatory tariffs have gradual impacts – inflation, producers (think soybean farmers) leaving the business, Fed rate increases in response to price pressures, and eventually a recession.

Investors cannot profitably plan now for these effects, since they will take many months or even years to show up.2

 

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes that despite increased volatility “small caps (Russell 2000) and tech stocks held in quite well and we don’t have any major technical change in the indexes – more on that later..”

Short term: The S&P 500 remains mostly range bound and has for a few weeks, meanwhile the NASDAQ is looking a bit more spiffy of late.

Long term: Still very positive for the “buy and never sell” crowd.

 

Technical Analysis Update

Hacked (subscription-only) publishes a weekly technical update on U.S. indices with a weekly analysis of the S&P 500, NASDAQ, and DJIA, as well as a general market outlook. Other posts include trade recommendations (stocks, crypto & forex markets), worldwide-market updates, ICO analysis, and much more.

This week, Hacked has not yet posted an update.

 

Articles of note

$TSLA “The larger economic issue is that every durable good is becoming a service”

Software is Eating the World-Tesla Edition
Alex Tabarrok Marginal REVOLUTION

“stances. This week Consumer Reports changed their review to recommend after Tesla improved braking distance by nearly 20 feet with an over the air software update!3

“Consider this: how many investors buy stocks thinking they will sell at the bottom? NONE.”

Easy in Theory, Difficult in Practice – Of Dollars And Data
Of Dollars And Data

“Months go by and now the market is down 40%. Your spouse says to you, “Honey, we need to stop this. Think about our children’s future.” As this happens, one of your closest friend’s brags about how he sold when the market was down only 15%. CNBC reports this is the worst financial crisis of the modern era. You’re still buying and holding, yes?
4

User & subcribers models “grounded in fundamentals, with value coming, as it always does, from cash flows, growth and risk.”

User and Subscriber Businesses: The Good, the Bad and the Ugly!
Aswath Damodaran Musings on Markets

“Consequently, I went back to valuation first principles, where the value of any asset is a function of its cashflows, growth and risks, and adapted that approach to valuing a user or subscriber:
5

“Why is it that position sizing and actively managing a portfolio is seen as “trading”. It shouldn’t be.”

One Position Sizing Strategy for Long Term Success
Jae Jun The Value Investing Blog of Old School Value

“It’s that people believe a value investor has to invest a certain way.
By this, I mean things like:

don’t buy and sell often
know everything about the business you buy
hold small number of positions and bet big

6

GDPR is helping centralize market further to benefit of $FB $GOOGL

GDPR is centralizing the market
Tyler Cowen Marginal REVOLUTION

“The reason: the Alphabet Inc. GOOGL +2.58% ad giant is gathering individuals’ consent for targeted advertising at far higher rates than many competing online-ad services, early data show. That means the new law, the General Data Protection Regulation, is reinforcing—at least initially—the strength of the biggest online-ad players, led by Google and Facebook Inc.
7

“Predicting the A.I. winter is like predicting a stock market crash – impossible to tell precisely when…but almost certain that it will”

AI winter is well on its way
Piekniewski’s blog

“This gradual shift from rich, big corporations to government sponsored institutes suggests to me that the interest in this kind of research within these corporations (I think of Google and Facebook) is actually slowly winding down. Again these are all early signs, nothing spoken out loud, just the body language.
8

“With fewer births, and less net migration, demographics will not be as favorable…”

U.S. Births decreased in 2017
Bill McBride Calculated Risk

“Births have declined for three consecutive years following increases in 2013 and 2014.”
9

 

 

 

 

  1. http://epsilontheory.com/the-acrobat-and-the-fly/
  2. https://dashofinsight.com/weighing-the-week-ahead-is-it-time-to-worry-about-a-trade-war/
  3. http://marginalrevolution.com/marginalrevolution/2018/05/software-eating-world-tesla-edition.html
  4. https://ofdollarsanddata.com/easy-in-theory-difficult-in-practice-4d28200f638
  5. http://aswathdamodaran.blogspot.com/2018/05/user-and-subscriber-businesses-good-bad.html
  6. https://www.oldschoolvalue.com/blog/investing-strategy/position-sizing-strategy/?source=rss
  7. http://marginalrevolution.com/marginalrevolution/2018/06/gdpr-centralizing-market.html
  8. https://blog.piekniewski.info/2018/05/28/ai-winter-is-well-on-its-way/
  9. http://feedproxy.google.com/~r/CalculatedRisk/~3/Xnk5DygKf_g/us-births-decreased-in-2017.html

Crypto Market Outlook 05.29.2018

the root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.

Satoshi Nakamoto on February 11, 2009

Bitcoin open source implementation of P2P currency

Crypto Market Update

Our weekly crypto market update uses a standard set of information sources in order to cut through attention grabbing headlines and get a less biased opinion of the market. 

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

Observations

  • Bletchley 10 and Total Market down significantly vs USD over past week (-20%)
  • Very negative performance for B10 and BTotal over last 3 months
  • Even Indexes continued to underperform weighted indexes
  • Platform, Application, and Currency indexes all down against USD and BTC over last week
  • Only the application index remains positive over last 3 months vs BTY, yet still significantly underperformed USD

 

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $326.65 billion ( vs $379.72 billion one week ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share has climbed to 38%, a recent. Looking longer-term, Bitcoin continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 86% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH have turned much more negative vs USD since last week
  • ETH signals look somewhat better than BTC

CRYPTO PERFORMANCE

  • BTC down over 11% vs USD over last week and nearly 30% over last 3 months
  • ETH and BTC have performed similarly vs USD over last year

 

Google Trends

 

Google Trends have have shown slowly declining searches out after falling significantly in February.

I’m tempted to stop tracking this, as I believe there will be fewer searches as the public gains knowledge. However, significant price action could still lead to search volume surges.

WooBull Charts

NVT Ratio This long-term cycle tracking ratio has spiked significantly in the past week, continuing the uptick seen in the last few days before last week’s update. The ratio is very high and suggests a correction could be due and that this is the end of long-term cycle.

NVT Signal -This short-term signal has moved down slightly over the past week from 122 to 115. It has broken a support trend, suggesting bearish price movement in the short term.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo also recently published a Tweet thread where he suggested BTC may go to $5500-5700 next.

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s NVT has dropped recently, indicating a bearish short term market.

Articles of Note

“Yesterday we were provided with an incredible reminder of why Bitcoin’s slow and steady + simple approach when it comes to development is the right call in the long-run.”

Marty’s Ƀent – May 23rd, 2018 – Issue #238
Master List Archive Feed

“The more complex projects try to get in an attempt to create “fairness” the bigger their attack surface gets. Verge thought five mining algorithms was a clever way to make their network fairer, but have discovered that they just made the network more insecure. Apparently, Verge wasn’t the only chain to experience an attack this week”
1

“It’s interesting to think about what the landscape will look like 3–5 years from now, and which DEXs will manage to carve out significant market”

Token Economy #50: Paradox?
Yannick Roux Token Economy – Medium

“And Coinbase isn’t the only centralized exchange entering the DEX arena, Binance is also building its own version. It’s interesting to think about what the landscape will look like 3–5 years from now, and which DEXs will manage to carve out significant market share independently and how, if at all. ”
2

“Content provided by creators gets instantly tokenized, published to the Fan Bits marketplace, and pays out Ethereum to the creator after each sale”

Announcing Fan Bits: A DIY crypto-collectible creation platform
Medium

“While there’s clear demand for this kind of asset, creating crypto-collectibles is a highly technical pursuit that requires extensive development work. We’re ecstatic to announce that that’s about to change.”
3

“It manages more than 20 million accounts, almost as many as Fidelity Investments, twice as many as Charles Schwab and about as many accounts as Vanguard has investors.”

Move deliberately, fix things: How Coinbase is building a cryptocurrency empire
Brian Fung Washington Post

“But in many ways, Coinbase styles itself the anti-start-up. Its attitude, both hungry and calculating, may be the key to its survival as it seeks to sell the world — from mom-and-pop investors to massive hedge funds — on the idea that it has become to cryptocurrency what Google is to Web searches.”
4

“Our final estimate from looking at the UTXO age distribution is that between 3–3.8M BTC are lost.”

Bitcoin Data Science (Pt. 2): The Geology of Lost Coins
Dhruv Bansal Unchained Capital Blog – Medium

“We believe bitcoin loss occurred over two distinct “cryptogeologic” eras:Systemic loss: a large cohort of BTC which was mined together and lost together in the earliest days of Bitcoin by Satoshi and the other first miners. (Bitcoin’s carboniferous period.)Incremental loss: BTC lost by individual users gradually over different periods of time.”
5

 

Our Take

Short-term: The crypto market continues to look bearish in the short-term. We’re still bullish long-term and believe there are interesting projects right now that will establish themselves for the long term.

  1. https://mailchi.mp/4c3c61136fe8/martys-bent-may-23rd-2017-issue-238
  2. https://tokeneconomy.co/token-economy-50-paradox-d8f2270c0dce
  3. https://medium.com/@fanbits/announcing-fan-bits-a-diy-crypto-collectible-creation-platform-7028616e13e1
  4. https://www.washingtonpost.com/business/economy/move-deliberately-fix-things-how-coinbase-is-building-a-cryptocurrency-empire/2018/05/17/623d950c-587c-11e8-858f-12becb4d6067_story.html
  5. https://blog.unchained-capital.com/bitcoin-data-science-pt-2-the-geology-of-lost-coins-79e5a0dc6d1?source=rss—-c6f7bef2c97e—4

Weekly Cycle: Market Update 05.29.2018

You can’t do the same things that other people are doing and expect to outperform them. When you do what everyone else does, you’re going to get the same results everyone else gets. But it’s not enough to be different — you also need to be correct

Second-Order Thinking: What Smart People Use to Outperform – Farnam Street Blog

Market Outlook Update for May 29, 2018

Each week, we review the stock market using a specific set of information sources in order to cut through the noise generated by media publishing attention grabbing headlines. Weekly updates give e the opportunity to play trends while not overreacting on a daily basis.

Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest. 

Observations:

○ Volatility [VIX] has risen considerably in the last week
○ SPY and VTI have dropped slightly over last week, remain positive for last 30 days
○ Financials [VFH] and [MJ] performed worse over past week
○ Homebuilders [XHB] performed strongly over past week

Technical Indicators

Based on data and info from TradingView (Click for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

Observations:

○ Indicators for SPY and VTI have dropped and remain positive over longer term
○ QQQ, HACK signals remain very strong
○ Signals for international markets [VEA, VEU] turned significantly worse
○ VIX has turned significantly more positive, which indicates a signal towards increased volatility

OldProf’s Risk Analysis

Each week, at the Dash of Insight blog, OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf writes that Short-term trading conditions improved dramatically.”

He also writes that this week is a very busy week for economic news this week and believes many will be wondering it it’s still worth listening to. Our typical preference is to ignore headlines about what might happen and instead react to what we see happening.

There is an avalanche of economic news in the shortened week ahead. While this will provide plenty to talk about, I expect many to be asking:

Should investors basically ignore the daily geopolitical news?

The Pundit-in-Chief commented that the market is getting it wrong every day, mistakenly trying to trade every swing in the news flow.

Art Cashin observed that traders seem to be learning a pattern. Aggressive statements by world leaders, including the Trump Administration, followed by more moderate policies. Art sees this understanding as part of the recent reduction in volatility.

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Mark writes that it was “The second week in a row of low volatility which is usually advantage bulls” and goes out to point out positive signs in the Nasdaq.

“Short term: The S&P 500 is consolidating while the NASDAQ tipped its head over this trend line connecting highs of the year.

Long term: Still very positive for the “buy and never sell” crowd.”

Technical Analysis Update

Hacked (subscription-only) publishes a weekly technical update on U.S. indices with a weekly analysis of the S&P 500, NASDAQ, and DJIA, as well as a general market outlook. Other posts include trade recommendations (stocks, crypto & forex markets), worldwide-market updates, ICO analysis, and much more.

This week, Hacked has not yet posted an update.

Articles of note

“Real Bear Markets, “The Big One” we hear so much about today is what produces excruciating, prolonged equity market declines. They have recessions attached. There is no sign of that I can find today. None.”

If You Want To See Bears, Go To The Zoo
Lloyd Clucas Seeking Alpha

“In my view we are experiencing a global economic “dead-cat bounce”. That worked for ’17 and should suffice for 2018. I hope it will be longer. But hope is not an investment strategy. Earnings have turned up and are accelerating again. How long? I have no idea. But you take what is there. [If you don’t, you can have tea with John Hussman or Jeremy Grantham.] And earnings are looking good for 2018. The tax cut for corporations is a big deal for 2018. It pushed up central value for many companies and hiked this year’s earnings estimate growth materially.”
1

“Now, with public and private funding flowing into Chinese start-ups, entrepreneurship has become an appealing alternative for a generation disillusioned with the conveyor-belt career paths of their forebears.”

How China’s Tech Revolution Threatens Silicon Valley
Alec Ash The Atlantic

“The tech revolution in China is ubiquitous in urban life. I use the messaging app WeChat for work calls and vacation bookings. I pay for a cup of coffee or a ride in a car with a scanned QR code on my phone. I go to work at a rented desk in an “experimental life space” called 5Lmeet, built in an old soy-sauce factory, which offers pop-up cuisine, a cashless, staffless convenience store, and an office space, the entrance gate to which uses face-recognition software to let me in. Every time I come out of a subway stop in Beijing, I have to fight through a mass of the cheap, rentable bicycles that have transformed transportation in the city. Dai Wei, the CEO of the leading bike-rental firm, Ofo—reportedly valued at $2 billion—is 27 years old.”
2

“Amazon had lowered prices at Whole Foods by an average of 5% over the last year. ”

Shopping at Whole Foods is finally a good deal—if you have Amazon Prime
Alison Griswold Quartz

“On May 16, Amazon announced that Prime members could get an extra 10% off sale items by downloading the Whole Foods mobile app, signing in with their Amazon account, and scanning a code at checkout. The “member deals” are available now at Whole Foods in Florida and will begin rolling out to the rest of the US this summer, Amazon said”
3

From 4 years ago and still a great read on common knowledge and where to look for big challenges

When Does the Story Break?
Epsilon Theory

” I believe that public markets today are essentially hollow, as what passes for volume and liquidity is primarily machines talking to other machines for portfolio “positioning” or ephemeral arbitrage rather than the human expression of a desire to own a fractional ownership share of a real-world company. I believe that today’s public market price levels primarily reflect the greatest monetary policy accommodation in human history rather than the real-world prospects of real-world companies. I believe that the political risks to both capital market structure and international trade (which are the twin engines of global growth, period, end of story) have not been this great since the 1930’s. Simply put, I believe we are being played like fiddles. That does NOT mean, however, that I think anything has to change next week … or next month … or next year … or next decade. The human animal is a social animal in the biological sense, and as such we are cognitively evolved to maintain our beliefs and behaviors far beyond what is “true” in an objective sense. This is, in fact, the core argument of Epsilon Theory, that there is no such thing as Truth with a capital T when it comes to the institutions and the social organizations that we create. There’s nothing more “natural” about our market behaviors than there is around, say, our fashion behaviors … the way we wear our clothes or the way we cut our hair. For 150 years everyone knew that everyone knew that gentlemen wore wigs. This was the dominant common knowledge of its day in the fashion world, absolutely no different in any way, shape or form than the dominant common knowledge of today in the investing world … everyone knows that everyone knows that it’s central bank policy that determines market outcomes. And this market common knowledge could last for 150 years, too.”
4

“This is ultimately the most important distinction between platforms and aggregators: platforms are powerful because they facilitate a relationship between 3rd-party suppliers and end users; aggregators, on the other hand, intermediate and control it.”

The Bill Gates Line

Ben Thompson Stratechery

“Third — and this is the point of this article — what Yelp seems to want will only serve to make Google stronger”

“it is suggestive of further growth in the year ahead and this should be positive for stocks, all else being equal.”

Only The Good News
David Templeton, CFA The Blog of HORAN Capital Advisors

“The purpose of this post is to highlight a number of the positive data points that one would expect to see in a strong economic environment like we are in now”

Our Take

Volatility has increased today after a few weeks of relatively low volatility. It’s still best to ignore more headlines as there appears to be more headlines than real changes.

We’re remaining mostly invested and believe there are short term opportunities. Risk has increase greatly from a year ago though no obvious reason for a general market downturn on the horizon, historically speaking.

Recent Market Performance

Performance of a handful of macro indexes, as well as index and ETFs on specific sectors of particular interest. Used in our Weekly Cycle: Market Outlook Updates.

Stock Ticker
SPY277.13-0.57%-0.51%2.14%2.45%13.27%
VTI144.15-0.10%0.02%2.82%3.08%14.16%
BOND102.720.15%0.27%0.58%-0.90%-3.46%
VWO44.2-0.54%-1.87%-1.67%-6.75%7.75%
VEA44.46-0.69%-1.51%-1.75%-0.13%5.98%
VEU53.81-0.61%-1.46%6.01%
VFH70.08-0.09%-1.57%-0.86%-2.83%12.06%
VNQ79.69-0.06%-0.49%5.08%4.99%-6.19%
VIX11.98-1.16%-3.00%-10.73%-37.01%15.53%
QQQ176.98-0.35%1.18%5.68%26.00%
HACK39.02-0.86%1.14%4.64%11.71%29.08%
CQQQ61.06-1.21%-0.59%3.83%
BKF44.43-0.54%-1.70%-1.13%-5.79%18.04%
MJ29.99-0.73%-3.41%-1.51%-6.60%-0.07%
XHB40.88-0.06%-1.23%3.05%-0.70%5.09%

Crypto Update: Invaluable

If your customers had to stop using your product or service tomorrow, how much would they miss it?

From How cold is the turkey? by Seth Godin

Crypto Market Update

Our weekly crypto market update uses a standard set of information sources.

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

crypto index performance 05.21.2018

Obserservations

  • Bletchley 10 and Total Market down over slightly vs BTC and 5-10% vs USD
  • Both Bletchley 10 and Total Market index remain up over ~20% over last 30 days
  • Even Indexes performed worse than weighted indexes over last 7 and remain better over longer periods
  • Platform, Application, and Currency indexes all down against USD and BTC over last week
  • Currency down nearly 10% vs USD over last 7 days and over 22% in last 3 months

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $379.72 billion

total crypto market cap 05.18.2018

Market Share of Top Cryptocurrencies

Market Share of Top 5 Cryptocurrencies - 05-21-18 Bitcoin’s market share remains at~36%, close to all-time lows. This continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Market share of top 20 cryptocurrencies

Market Share of Top 20 Cryptocurrencies - 05-21-18

The top 20 currencies (by market cap) currently make up roughly 86% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Crypto Performace 05.21.2018

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC and ETH have turned much more negative vs USD since last week
  • ETH is looking worse vs BTC than the last two weeks

CRYPTO PERFORMANCE

Crypto Performace 05.21.2018

  • BTC down over 6% vs USD over last week and nearly 30% over last 3 months
  • ETH has outperformed BTC significantly in last year

Google Trends

Google Trends Bitcoin + Crypto 05-21-2018.png

Google Trends have mostly flattened out after falling significantly in February.

I’m tempted to stop tracking this, as  I believe there will be fewer searches as the public gains knowledge. However, significant price action could still lead to search volume surges.

WooBull Charts

Google Trends Bitcoin + Crypto 05-21-2018.png

NVT RatioThis long-term cycle tracking ratio has mostly continued a downward trend, although a slight uptick in the past few days. Regardless, the ratio is quite high and suggests a further downturn is due.

Bitcoin NVT Signal Chart 05.21.2018

NVT Signal -This short-term signal has moved down slightly over the past week from 126 to 122. It appears to be breaking a support trend, suggesting bearish price movement in the short term.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

 

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin's NVT - BTC ETH 05.21.2018

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s NVT has remained mostly flat compared to last week. ETH has moved higher.

Articles of Note

Crypto’s Big Lie

Parker Thompson writes that crypto does not make venture capital style investing available to anyone, as is often stated.

Setting aside the fact that investing is not independent of wealth (you need money to invest), these markets are opaque, controlled by insiders, and by the time “anyone in the world” has the opportunity to invest, the price is often an order of magnitude or three higher than the price paid by venture capitalists (first in line), and significantly higher than what accredited investors paid in pre-sales (second in line).

And you hear it in private conversations with crypto teams as well. To paraphrase one statement (but not much), “we are letting value-add VCs buy equity in the company, and pushing the dumb money that got rich on bitcoin into the public sale.” When money is abundant, who it is attached to matters even more, and money has never been as abundant in traditional venture as it is in crypto.

Why Crypto’s A Growing Threat To FAMGA (a.k.a. Facebook, Apple, Microsoft, Google and Amazon)

Lou Kerner believes crypto is a real threat to the ever-growing massive tech companies.

The point of my post last year, was that FAMGA’s increasing domination has profound implications, including the stifling of innovation that results from the MAJORITY of value creation going to just five companies.

A year ago I didn’t see any emerging technology that could impede the FAMGA’s increasing dominance. But I did state that “History has taught us that nothing is constant but change”, as noted by the great graph below showing the market cap market share of the top 100 tech companies over time:

Consensus & Token Summit Recap

Last week was crypto week in New York with mulitiple conferences and events. Patrick Mayr  from Token Economy provided a good summary, including a bit about the revenue from ticket sales alone.

Consensus (May 14–16, 2018)

Raking in approximately $17million in ticket sales alone, Consensus provided a glimpse into lucrative ripple effects of the technology: event planning with unprecedented top line.

An analysis of batching in Bitcoin
 As a way to avoid ridiculous fees, batching has been implemented to reduce transaction volume. CoinMetrics looked at the result and found impressive results.

Today, around 12% of all transactions on the Bitcoin network are batched, and these account for about 40% of all outputs and between 30–60% of all transactional value. The fact such that a small set of transactions carries so much economic weight makes us hopeful that Bitcoin still has a lot of room to scale on the base layer, especially if usage trends continue.

Introduction TxTenna: Decentralizing the Last Mile in BitCoin

In Token Economy #49: Crypto Extravaganza, a new project is mentioned which allows offline bitcoin transactions. This could be huge for making BTC viable for a many more people.

Bitcoin is unstoppable, but only to a point: its single point of failure is actually physical, as the network still relies on ISPs for internet connectivity. These are centralized communication networks with a history of censorship (imposed by governments, see the whole net neutrality situation), attacks or fragility (natural or manmade disasters).

So the folks at Samurai Wallet, using the GoTenna SDK, a toolkit provided for free by GoTenna (the makers of an off-grid mobile mesh networking platform) have developed the TxTenna app. The app can broadcast offline bitcoin transactions off-grid via goTenna Mesh devices, effectively enabling an alternative physical communication layer for bitcoin. This is how it works:

Using the Samourai Wallet app the user creates a standard bitcoin transaction and signs it. This is possible while offline and without wifi or mobile access.The Samourai Wallet app then passes the offline transaction to the TxTenna App and TxTenna broadcasts it to nearby mesh nodes via a paired goTenna mesh device. Other goTenna devices in the area relay the transaction until an internet connected goTenna node also running TxTenna receives it and forwards it to the Bitcoin network.”

Final Thoughts

Bitcoin and the crypto markets more widely look susceptible to a short term price drop. Long term, there are are still many positive signs.

Weekly Cycle: Curiosity Drives Change

It’s curiosity, not conviction, that drives change. We should be fueled, not by a desire for a quick catharsis or a life hack, but by intrigue.

From Why “Dumb” Questions Are Key to Innovation by Ozan Varol.

Stock Market Outlook 05.21.2018

Each week, I review the market using a specific set of information sources to gauge the stock market rather than relying on headlines from news sources looking to generate attention. Weekly checkups give me the opportunity to spot trends, while not overreacting on a daily basis.

Performance
stock index performance 05.21.2018
  • SPY up slightly over last week and nearly 15% in last year
  • Volatility (VIX) down over 25% in last 3 months
  • HACK up 10% over last 3 months and over 23% in the last year
Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

stock market technical indicators 05.21.2018

 

  • China Tech (CQQQ) spiked last week after returning to less bullish signals this week
  • Financials (VFH) signals are very bullish
  • SPY and VTI signals remain very positive for the third consecutive week
OldProf’s Risk Analysis

Each week OldProf takes a look at a variety of sources to gauge overall market risk on both a short and long-term basis. He tracks a handful of indexes, economic indicators from respected sources, and volatility indicators. His weekly updates include a discussion of events with potential to effect markets, as well as general insight. Highly recommended reading.

This week, OldProf short-term conditions have improved significantly

The overall picture remains positive. Economic strength is reasonable, and inflation is low.


Short-term trading conditions improved dramatically.

He mentioned an increase risk of a recession in the next 9 months, though it remains relatively low.

A notable feature of the chart is that we recently increased the nine-month recession odds to a chance of 25%. While this is significantly higher than it has been during the long stock rally, it does not yet represent a real threat. Instead of thinking of the odds as higher than before, we must keep in mind the continuing evidence that a near-term recession is unlikely. The odds are only slightly higher than the long term average.

As he’s written in the past, he reminds that many financial headline are “noise”, a subject on which Daniel Kahneman discussed in an article linked below.

The current interest rate story is mostly noise. The same sources that criticized the Fed for “punishing savers” with low rates are now worried about the gentle and gradual increase. There are so many who are selling something – and therefore on a mission!

StockTrader Recap

Mark Hanna publishes a weekly Market Recap full of charts and insight on news and market trends at StockTrader.

This week, Hanna writes that after it was a relatively quiet week with some consolidation and little change to the short and long term outlook.

This was a generally quiet week in the senior indexes, consolidating some of the prior week’s move up.

Short term: The S&P 500 remains above this trend line connecting highs of 2018.

Long term: Still very positive for the “buy and never sell” crowd.

Technical Update

Hacked (subscription-only) publishes a weekly technical update on U.S. indices with a weekly analysis of the S&P 500, NASDAQ, and DJIA, as well as a general market outlook. Other posts include trade recommendations (stocks, crypto & forex markets), worldwide-market updates, ICO analysis, and much more.

This week, Hacked’s outlook is “Bullish short-term outlook as long as U.S indices remain above their respective 8 EMAs.” They are bearish whenever S&P 500 and NASDAQ break their respective intermediate-term supports.

More info on in the weekly update.

Articles of note
Noise: How to Overcome the High, Hidden Cost of Inconsistent Decision MakingThe Projected Improvement in Life Expectancy

Daniel Kaneman is working on a new book titled Noise. He’s written on the topic previously, including an HBR article in October 2016, where he makes the case for algorithms over human decision making to overcome noise.

Algorithms are also less likely to be useful for judgments or decisions that involve multiple dimensions or depend on negotiation with another party. Even when an algorithmic solution is available in principle, organizational considerations sometimes prevent implementation. The replacement of existing employees by software is a painful process that will encounter resistance unless it frees those employees up for more-enjoyable tasks.


The most radical solution to the noise problem is to replace human judgment with formal rules—known as algorithms—that use the data about a case to produce a prediction or a decision.


It is less well known that the key advantage of algorithms is that they are noise-free: Unlike humans, a formula will always return the same output for any given input. Superior consistency allows even simple and imperfect algorithms to achieve greater accuracy than human professionals. (Of course, there are times when algorithms will be operationally or politically infeasible, as we will discuss.)

Kahneman also spoke on the subject recently with Erik Brynjolfsson, where he described the problem and solution rather succinctly.

What are the bigger risks — human or the algorithmic biases?

Daniel Kahneman: It’s pretty obvious that it would be human biases, because you can trace and analyze algorithms.

….

An algorithm could really do better than humans, because it filters out noise. If you present an algorithm the same problem twice, you’ll get the same output. That’s just not true of people.

The legal sports betting arena is about to get crowded and we’re not ready

Sports betting is coming quickly to many states, and it’s likely to be chaotic, according to Greg Bettinelli, a VC familiiar with the gambling industry.

And if you haven’t been following the case, you probably don’t realize how much is about to change. Short answer: A whole lot, very quickly. And in my opinion, straight out of the gate, it’s not going to be pretty.

Sports betting is a very low-margin business. The take rate of sports wagering is around 5 percent, while it’s closer to 20 percent in horse racing. And in unregulated markets (which will occur somewhere in U.S.), the price of the product is going to get close to zero. It’s going to be hard to make any money, and customer loyalty will be basically nonexistent without pricing power.

Bettinelli also names a handful of businesses that may look to capitalize on the new opportunities.

In addition to all the sports leagues like MLB, MLS, NCAA, NFL, NHL and the PGA, keep an eye on media companies like AT&T (DirecTV), CBS, Comcast (Golf Channel), Disney (ESPN), Fox, Time Warner (Turner), Verizon (Oath) and Action Network/Barstool Sports (with the backing of the Chernin, Kerns and Jacobs dream team). Don’t be shocked if StubHub and even Ticketmaster figure out a way to get in the game, as they know the customers with high propensity to bet on sports

The Finance To Value Framework

Venture capitalist Fred Wilson wrote on the subject of how much startups should raise. In the post, he lays out his philosophies of valuing businesses that are yet to turn profitable.

The first thing you need to know is how your business will be valued by a buyer or the public markets when it is a scaled business. I like to use EBITDA and Revenue multiples for this work. And the best place to get them is from bankers who work in your sector and/or investors who are active in your sector. The key point is these multiples are what you are going to be valued at upon exit or IPO, not currently.

Revenue multiples work better for this than EBITDA because very few companies have positive EBITDA during their growth phases.

I’ve always been impressed with his commitment to investing for the long-term and how he manages to look at startups with a framework more similar to value investing than most startup investing.

“Do People Really Downsize?”

Bill McBride pulled some quotes from a post by economist Josh Lehner, at the Oregon Office of Economic Analysis on the topic.

In fact it is less common today than in decades past. However, among those that do move in their 60s and 70s, they downsize. Given the large Baby Boomer generation continues to age into their retirement years, the absolute number of such moves is expected to rise, even if it remains a relatively small share of the housing market overall.

The original study did not include state by state data. My guess is there are very few intrastate moves in California, due to tax laws that tie tax values to the purchase price, thus adding a cost even when downsizing to those that purchased homes at prices far below today’s values.

Do Long-Term Investors Need Bonds?

Ben Carlson answers a reader’s question on bonds, saying they have underperformed stocks in all but three eras. He believes they are important for investors looking for more stability:

Investing 100% of your retirement assets in stocks may seem like the right thing to do on paper but very few investors have the intestinal fortitude to pull it off in the real world. Investing all of your money in stocks sounds great until you actually have to live with seeing bone-crushing losses and volatility in your life savings.

I tend to believe bonds are not worthwhile for a relatively active investor given the small upside.

Sheep Logic – Epsilon Theory

A long, winding post on the behavior of sheeps, and what we can learn about humans, herds and investing.

Here’s the thing I’ve learned about sheep over the years. They are never out of sight of each other, and their decision making is entirely driven by what they see happening to others, not to themselves. They are extremely intelligent in this other-regarding way.

It’s not what the crowd believes. It’s what the crowd believes that the crowd believes. The power of a crowd seeing a crowd is one of the most awesome forces in human society. It topples governments. It launches Crusades. It builds cathedrals. And it darn sure moves markets.

This type of observational decision making seen from herds leads to common knowledge.

Common knowledge is information, public or private, that everyone believes is shared by everyone else.

The power source of the Common Knowledge Game is the crowd seeing the crowd, and the dynamic structure of the Common Knowledge Game is the dynamic structure of the flock.

Final Thoughts

Nothing much has changed in the short-term and we are remaining fully-invested, letting curiosity lead to new opportunities.

 

Crypto Market Update: Blow Up

Crypto Market Update

My weekly crypto market update uses a standard set of information sources.

Crypto Indexes

The Bletchley Indexes “offer the most thoughtful and consistent approach to index construction” according to CoinMetrics. 

Original “top X” indexes were launched in June 2017, followed by a market-wide index in December 2017 and sector specific indexes in February 2018. In total, there are 13 Bletchley indexes, with charts over various timetables available for each on their site.

Below is an alternate view of the performance based on the downloadable data made available by Bletchley. This view is intended to give a side-by-side snapshot of a handful of indexes.

crypto index market update 05.14.18.png

Obserservations

  • Bletchley 10 and Total Market down over 16% against USD over the past week
  • Both Remain up over 20% over last 30 days
  • Even Indexes roughly down the same amount as weighted indexes over last week
  • Platform, Application, and Currency indexes all down against USD and BTC.
  • Currency has performed best recently and is up over 25% vs BTC over last 90 days

Global Crypto Charts

For a quick look at the global markets from another perspective, Coinlib.io provides simple charts with a lot of info, including Bitcoin marketshare, a visualization of the top 20 currencies by volume and market cap, and more.

Total Market Cap of Cryptocurrencies: $410.58 billion

total market cap 05.14.2018

 

Market Share of Top Cryptocurrencies

Market Share of Top 5 Cryptocurrencies - 05-14-18

Bitcoin’s market share has declined to ~36%, close to all-time lows. This continues a long-term declining trend, with new currencies such as EOS and BCH taking some of that market share.

Marketshare of top 20 cryptocurrencies

The top 20 currencies (by market cap) currently make up roughly 85% of the total crypto market share.

TradingView Technical Indicators

Based on data and info from TradingView (Click  for 30% off a pro subscription)

tradingview technical indicator score crypto 05.14.2018

Scores based on the cumulative total of positive and negative technical indicators signals over three time horizons on Trading View. Scores are weighted by multiplying total as follows: daily (x 1) weekly (x 2), and monthly (x 3). 

  • BTC has turned much more negative in the short-term, while the 30-day technical analysis remains very positive
  • ETH remains postive vs USD, albeit less strongly than last week.

CRYPTO PERFORMANCE

bitcoin eth performance 05.14.18

  • BTC down over 7.5% vs USD over last week
  • BTC up 418% in last year – and “only” 35% in last 6 months.

Google Trends

Google Trends Bitcoin + Crypto 05-14-2018.png

Google Trends have mostly flattened out after falling significantly in February.

I’m tempted to stop tracking this, as  I believe there will be fewer searches as the public gains knowledge. However, significant price action could still lead to search volume surges.

WooBull Charts

Bitcoin NVT Ratio - 05.14.2018

NVT RatioThis long-term cycle tracking ratio has mostly continued a downward trend, although a slight uptick in the past few days. Regardless, the ratio is quite high and suggests a further downturn is due.

 

NVT Signal -This short-term signal has moved down significantly over the past week from 142 to 126. It appears to be breaking a support trend, suggesting bearish price movement in the short term.

In the original post introducing NVT Signal, 150 was indicated as an overbought signal.

Willy Woo recently gave is own update using the two charts above in a Twitter post. Great insight as to how he reads these charts. His take:

Putting it all together, BTC is still unwinding from mania, I think we are on the plateau of another dead cat, I put the next downward move, more gentle this time in the window of 7-14 days from now. /7

But price-wise I don’t think we are that far from the bottom. So not far to go on the short side, lots of long to go when it fully unwinds and sets up in the second half of this year. /8

CoinMetrics Charts

CoinMetrics has provides great charting tools for a number of top cryptocurrencies. Kalvichkin’s NVT is a regular check for checking short term trading signals. 

Kalvichkin's NVT - BTC ETH 05.14.2018

Kalvichkin’s NVT – Similar to NVT Signal, Kalvichikin’s has begun to trend downward both both BTC and ETH.

Articles of Note

On Radical Markets

Here’s a post from Vitalik Buterin inspired Eric Posner and Glen Weyl’s new book, Radical Markets,

First, although I spend most of my time in the blockchain/crypto space heading up the Ethereum project and in some cases providing various kinds of support to projects in the space, I do also have broader interests, of which the use of economics and mechanism design to make more open, free, egalitarian and efficient systems for human cooperation, including improving or replacing present-day corporations and governments, is a major one.

Consider a system where property owners themselves specify what the value of their property is, and pay a tax rate of, say, 2% of that value per year. But here is the twist: whatever value they specify for their property, they have to be willing to sell it to anyone at that price.

Sitting with the cyber-sleuths who track cryptocurrency criminals

Crypto isn’t as secure as many believe, as shown in this inside look at fighting criminals using crypto.

Once multiple accounts have been linked to the same owner, you can try to figure out who that owner is. Linking Bitcoin accounts to real-world identities is possible because information tends to leak out. Regulated cryptocurrency exchanges—generally those in the US or Europe—must follow know-your-customer and anti-money-laundering rules, which require people to hand over identification before using their services. Some people are even so careless as to post their supposedly private Bitcoin addresses in online forums. “What people forget is that the blockchain is just one half of the equation,” says Knottenbelt.

In blockchain we trust – MIT Technology Review

Regardless of the price, blockchain will have major implications, as predicted in this piece on how this is a shirt akin to the advent of double ledger bookkeeping.

A new form of bookkeeping might seem like a dull accomplishment. Yet for thousands of years, going back to Hammurabi’s Babylon, ledgers have been the bedrock of civilization. That’s because the exchanges of value on which society is founded require us to trust each other’s claims about what we own, what we’re owed, and what we owe. To achieve that trust, we need a common system for keeping track of our transactions, a system that gives definition and order to society itself. How else would we know that Jeff Bezos is the world’s richest human being, that the GDP of Argentina is $620 billion, that 71 percent of the world’s population lives on less than $10 a day, or that Apple’s shares are trading at a particular multiple of the company’s earnings per share?

 ‘Ebay for CryptoKitties’ Raises $2 Million from All-Star VCs
Digital goods are just getting started and marketplaces seem like a natural way to exchange them.

 users need a place to more easily buy and sell those items.

It turns out OpenSea wasn’t alone: the decentralized online marketplace for physical itemsOpenBazaar has plans to open up its platform for digital items such as CryptoKitties as well, plus OPSkins recently created Wax, a platform for spinning up decentralized exchange services for these items.

Word on the street: A big week for institutional interest in crypto

includes:

JP Morgan’s boss of blockchain project says more to come

NYSE owner planning bitcoin swaps and crypto exchange

Former Goldman Sachs president backs blockchain

The 10 largest ICO fund raises: successes, controversies and lessons learned
The top ten ICOs have been very successful in gaining early positive attention around their projects; however, many on this list have had lackluster performances in the time since their ICOs.

Final Thoughts

Bitcoin and the crypto markets more widely look susceptible to a short term price drop. Long term, there are are still many positive signs that it will “blow up.”

For me, I grew up listening to hip hop, I grew up in Oakland. It’s a little bit more like, “let’s try to make something that doesn’t suck, let’s try to do great stuff, let’s try to make big things”. But it’s a little bit less of, “let’s create an in-crowd and define all the things that that in-crowd hates so that we all feel closer to each other”.