Crypto Market Update for 07.16.2018

Crypto Market Update 07.16.2018

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

 

CRYPTO INDEX PERFORMANCE

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

  • B10/USD down over 5% in last week and down over 65% over last 6 months
  • BTOTAL/USD Even index down nearly 10% in last week
  • Platform, App, and Currency index all negative vs USD in past 7/30/90 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: $262.05 billion  ( down from $272.05 billion 1 week ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share sits at 41%, 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 88% 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). 

  • Little change in trading signals for BTC and ETH

 

CRYPTO PERFORMANCE

  • BTC/USD down over 5% over last week
  • ETH/USD fared worse; down over 8%

 

Google Trends

 

Google Trends hasn’t continued slight downward trend over last 90 days.

WooBull Charts

NVT Ratio –  180 – This long-term cycle tracking ratio has move somewhat higher recently. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has fallen to 118, down from 123 three weeks ago.

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 – Kalvichikin’s NVT has moved sideways recently.

Articles of Note

 

— CoinBase announced they are looking into adding new tokens. This transparent nature should alleviate allegations of insiders benefiting from the foresight of an impending addition to CoinBase’s exchange. 

“Going forward, you should expect that we will make similar announcements about exploring the addition of multiple assets.”

Coinbase is Exploring Cardano, Basic Attention Token, Stellar Lumens, Zcash, and 0x
Coinbase The Coinbase Blog

“Today we are announcing that we’re exploring the addition of the following assets to Coinbase:Cardano (ADA)Basic Attention Token (BAT)Stellar Lumens (XLM)Zcash (ZEC)0x (ZRX)1

– A discussion of the trading conditions and trends around BTC results in a general bearish sentiment. 

“Despite declining daily transactions, NVT has begun to decrease, suggesting more on-chain value is being transmitted”

Bitcoin Price Analysis – Bearish in the interim
Bravenewcoin

“Using a 30-day Kalichkin network value to transactions (NVT) ratio, BTC remains in the upper-third of its historical NVT value. NVT has not been this high since January 2015 but has begun to turn downward recently, which suggests increasing on-chain network usage based on the dollar amount being transacted. Additionally, inflection points in the NVT ratio can correlate with extreme highs or lows in price.2

— Major League Baseball is launching a cryptokitties-like non-fungible token. Rather than digital baseball cards, these will be tied to specific in-game moments. 

“Lucid Sight, a blockchain gaming company, is launching MLB Crypto Baseball, through a licensing deal with MLB”

MLB launching MLB Crypto Baseball game
Daniel RobertsSenior Writer finance.yahoo.com

“In MLB Crypto Baseball, users will pay in ether to buy digital avatars tied to specific moments in recent games. They can then sell the items, or in some cases, earn rewards and stickers. The game is a decentralized app, or “dApp.”3

— Kyle Samani of MultiCoin Capital discusses the Web 3 stack, including current status of various levels and what still needs to be built for blockchain/Dapps to gain serious traction. 

“The dapp revolution will happen shortly after the Web3 stack achieves some level of usability, stability, and feature-completeness”

The Web3 Stack – Multicoin Capital
by Kyle Samani Multicoin Capital

“Interestingly, almost no one in crypto talks about decentralizing application hosting. This is particularly curious because this layer is centralized in basically every dapp today. It’s centralized either because the web server hosting the app is centralized, or because there’s a single download link to download the app and install it on the client device, pushing the ecosystem back towards the walled-garden model, which is by definition centralized. In an ideal world, the application host would be both decentralized and delivered just in time, a la modern web applications.4

— Augur, which allows anyone to bet on anything without a middleman, launched last week. It’s a project we’re watching closely. 

“What distinguishes Augur from a traditional betting market is that no single party sits in the middle, meaning that users are likely to pay lower prices.”

Augur Is Live: Decentralized Prediction Market Launches After 2-Year Beta
CoinDesk David Floyd

“Now, the Forecast Foundation, the not-for-profit behind Augur’s development, has announced the launch of the long-awaited platform, which was accompanied by the release of the final version of the Augur application as open-source software.
The years-long delay in reaching this point may have been frustrating for token holders, but it has allowed the Augur team to aggressively vet their code through internal audits and a generous bug bounty program. Notably, Augur offered $200,000 for bugs that qualified as “critical” (though the team hasn’t announced any rewards larger than $5,000).5

 

  1. https://blog.coinbase.com/coinbase-is-exploring-cardano-basic-attention-token-stellar-zcash-and-0x-9e44f0eb823f
  2. https://bravenewcoin.com/news/bitcoin-price-analysis-bearish-in-the-interim/
  3. https://finance.yahoo.com/news/exclusive-major-league-baseball-going-crypto-134033104.html
  4. https://multicoin.capital/2018/07/10/the-web3-stack/
  5. https://www.coindesk.com/augur-is-live-decentralized-prediction-market-launches-after-2-year-beta/

Weekly Cycle: Market Outlook for 07.16.2018

Weekly Cycle: Market Outlook for 07.16.2018

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.

 

“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day-if you live long enough-like most people, you will get out of life what you deserve.”

― Charles Munger, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger

 

Market Performance

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

 

Observations:

  • VNQ (Vanguard REIT index) up over 8% over last 90 days
  • SPY up slightly oer last week
  • MJ down over 7% vs last year
  • VWO (emerging markets) down over 8% over last 90 days

 

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 remains bullish, BOND remains bearish
  • MJ is down significantly from a week ago
  • XHB has surged in the last week
  • HACK very positive after 2 weeks of somewhat weaker scores

 

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 in Weighing the Week Ahead: Anything Goes!

“Short-term trading conditions continue at highly favorable levels. Actual volatility remains low.”

“I continue to find that anyone with a reasonable approach to economics and any sort of analytical track record shares this basic thesis. Despite this, the people getting air time and page views are those whose recession forecasts are of the “kick the can” variety. They are now focused on 2020. How have their two-year forecasts done in the past?1

 

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 in Weekly Market Recap Jul 15, 2018

“TRADE WARS ™!!!! certainly seems like a “sell the rumor, buy the news” event.”

“Short term: Very choppy on the S&P 500 of late but a new “higher high” (a high higher than the previous high – in this case early June) was hit.  NASDAQ same story but now all time highs.2

 

Articles of note

— A macro data update from Fat Pitch blog shows continuing positivity around the economy. 

“The macro data from the past month continues to mostly point to positive growth”

July Macro Update: The Economy Is Fine. Trade War Rhetoric Is The Main Risk

“In summary, the major macro data so far suggest positive but modest growth. This is consistent with corporate sales growth.  SPX sales growth in 2018 is expected to only be about 6-7% (nominal).

With the rise in earnings and the moderation in share prices, valuations are now back to their 25 year average. The consensus expects earnings to grow about 18% in 2018 and 10% in 2019. Equity appreciation can therefore be driven by both corporate growth as well as valuation expansion (chart from JPM).3

— More positive signs for the economy in general

“Currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight”

Investment and Recessions
Bill McBride Calculated Risk

“Currently new home sales (and housing starts) are up solidly year-over-year, and this suggests there is no recession in sight4

—  Many seem to think Chinese Tech industry is largely a copy of the American tech industry. Here’s an in-depth look at how it differs.

“Chinese tech isn’t an imitation of its American counterpart. It’s a completely different universe.”

Letter from Shenzhen
Logic Magazine

“Shenzhen is a city built on exceptions. David explains that when the Chinese government decided to experiment with capitalism in the 1980s, it didn’t want to expose existing major cities like Beijing or Shanghai to the risk of failure. Instead, the government chose Shenzhen, a tiny cluster of fishing villages, even building up a wall in some parts to demarcate the boundary between socialism and capitalism.
Since the beginnings of the experiment, Shenzhen has exhibited all kinds of hockey-stick-shaped growth that people in Silicon Valley talk about in hushed tones of exaltation. The population has skyrocketed from 30,000 to almost 12 million, the cost of living has gone up, innovation is surging, and the time it takes to create, design, or build a new product decreases day by day.5

— Here’s a bit of background on two Chinese tech giants; Tencent and Alibaba. 

“In 5 years, technology services will make up 65 percent of Ant Financial’s revenue, compared with ~34 percent in 2017”

Alibaba versus Tencent: who will win? – Chris Skinner’s blog
Chris Skinner’s blog

“Alibaba and Tencent. Both have market capitalizations that hover around half a trillion U.S. dollars. Both command sectors of the rapidly growing Chinese digital landscape: Tencent owns the leading gaming and messaging platform, while Alibaba rules e-commerce. Both are aggressive investors inside and outside China. Each is the pride of their not-quite-first-tier hometowns: Alibaba of the ancient city of Hangzhou near Shanghai and Tencent of shiny-new Shenzhen across the border from Hong Kong. Finally, both touch an astounding percentage of the world’s most populous country: Alibaba’s various online marketplaces count 552 million active customers; Tencent’s WeChat messaging service recently surpassed 1 billion accounts …6

— Vitaliy Katsenelson on Softbank’s Masayoshi Son and the outlook for Softbank. 

“You can think of [Softbank] as buying a stock at a roughly 50% discount to the market value of its assets or as a way to buy Alibaba at less than half its current price”

What Would You Get if You Crossed Warren Buffett, Richard Branson and Steve Jobs? (Updated)
Vitaliy Katsenelson Vitaliy Katsenelson Contrarian Edge

“Like Apple co-founder Jobs, Son is blessed with clairvoyance. He saw the internet as an transformative force well before that fact became common knowledge. In 1995 he invested in a then-tiny company, Yahoo!, earning six times his investment. But he didn’t stop there; he created a joint venture with Yahoo! by forming Yahoo! Japan, putting about $70 million into a company that today is worth around $8 billion. (Yahoo! Japan is a publicly traded company listed in Japan.)7

— Sticking with Softbank, here’s an article from the NYTimes Dealbook on how underpriced SFBY is compared to the underlying assets. 

“SoftBank’s stake in Alibaba alone is now worth nearly $132 billion, or 40 percent more than SoftBank’s market cap.”

Investing in SoftBank Is Becoming a Bet on Its Founder’s Deal-Making Prowess
www.nytimes.com

“If those deals go through, what would be left of the company is essentially a gigantic, publicly traded venture capital firm. Its holdings would include:■ A 27 percent stake in Alibaba Group, the Chinese internet behemoth■ A 43 percent stake in Yahoo Japan■ A stake in ARM, the British designer of computer chips■ An investment in its nearly $100 billion Vision Fund, the much-ballyhooed tech investment vehicle that owns stakes in Uber and much more8

— On the Irreverent Investor, Michael Batnick presents a simple momentum strategy idea that has outperformed the S&P 500 index. 

a simple momentum investing strategy “outperformed the S&P 500 with significantly lower drawdown”

Simple Momentum

“Here are the rules: If the S&P 500 outperformed 5-year U.S. treasury notes over the previous twelve months, invest 100% of this portfolio in the S&P 500 in the following month. If the 5-year U.S. treasury notes outperformed the S&P 500 over the previous twelve months, invest 100% of this portfolio in bonds in the following month. That’s it. Pretty simple.9

— Mike Williams takes a rational look at the prospects of trade wars and believes it’s bluster than will go the way of countless other scares. 

“And the reality break here is that China has few attractive options other than making trade fairer.”

Like Water Off a Black Swan’s Back
Mike Williams Alan Steel

“The bluff and bluster will go the way of Brexit, Chinese Yuan devaluation fears (Acts I, II, II, IV, V, VI and VII), Ebola outbreaks, the outrage at the Border (I mean the Janet Reno version – not the current remake), and everything else that was previously going to throw the globe into the pits of hell.
10

 

 

 

 

 

  1. https://dashofinsight.com/weighing-the-week-ahead-inflation-on-the-horizon/
  2. https://www.stocktrader.com/2018/07/15/weekly-market-recap-jul-15-2018/
  3. http://fat-pitch.blogspot.com/2018/07/july-macro-update-economy-is-fine-trade.html
  4. http://www.calculatedriskblog.com/2018/07/investment-and-recessions.html
  5. https://logicmag.io/04-letter-from-shenzhen/
  6. https://thefinanser.com/2018/06/alibaba-versus-tencent-will-win.html/
  7. https://contrarianedge.com/2018/07/09/what-would-you-get-if-you-crossed-warren-buffett-richard-branson-and-steve-jobs-updated/
  8. https://www.nytimes.com/2018/07/13/business/dealbook/softbank-valuation-masa-son.html
  9. http://theirrelevantinvestor.com/2018/07/09/simple-momentum/
  10. https://www.alansteel.com/media-centre/letter-from-america/2018/07/like-water-off-a-black-swan-s-back/

Crypto Market Update for 07.09.2018

Crypto Market Update 07.09.2018

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

 

“The whole idea is anyone, anywhere should be able to trade value with anyone, anywhere else—trust them immediately—and do it directly.”

Getting Back to Blockchain Basics
Jeremy Epstein Never Stop Marketing

 

 

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

  • B10 vs USD up over 7% over last 90 days, down 65% since January
  • EVEN Indexes continue to show greater volatility – and greater returns
  • Plaform index up over 1% over last 90 days vs BTC and 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: $272.05 billion ( down from $288.56 billion 3 weeks ago)

Market Share of Top Cryptocurrencies

Bitcoin’s market share has risen to 42%, 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 88% 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 remain with weak trading signals

 

CRYPTO PERFORMANCE

  • ETH up 20% vs BTC and 18% vs USD over last 3 months
  • USDT token has remained relatively stable

 

Google Trends

 

Google Trends hasn’t continued slight downward trend over last 90 days.

WooBull Charts

NVT Ratio –  170 – This long-term cycle tracking ratio has moved sideways recently. The ratio is very high and suggests BTC is towards the end of long-term cycle.

NVT Signal -This short-term signal has fallen to 123, up from 115 three weeks ago.

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 moved sideways recently.

Articles of Note

Crypto investor Ari Paul on the decline in valuations of ICO-funded projects. 

“These things play out in slow motion, because both investors and projects are reluctant to realize mark-downs”

Early stage valuations fall to earth
Ari Paul The Cryptocurrency Investor

“These things play out in slow motion, because both investors and projects are reluctant to realize mark-downs, and the lack of a liquid exchange price means they can fool themselves.  1

— Mike Maples Jr on how crypto can help create better “commons” to benefit all via governance tokens to overcome the traditional problem of overuse via individual self-interest. 

“As long as we discover new ways to create value, new types of businesses will emerge”

Crypto Commons – Mike Maples, Jr. – Medium
Medium

“The “Tragedy of the Commons” was coined by Garrett Hardin in 1968 as a critique of the commons. It describes how individuals, acting independently according to their self-interest, can accidentally destroy a shared resource.A real-world example is the Grand Banks Fisheries off the coast of Newfoundland, Canada. For centuries, explorers and fishermen marveled at this region’s endless supply of codfish. In the 1960s and 1970s, fishing technology improved and allowed much larger catches. By the 1990s, cod populations were so depleted that the Grand Banks Fisheries failed. It was too late for traditional governance in the form of regulation or private markets; the cod stocks were damaged irreparably.2

– CryptoKitties sounds ridiculous to many – and extremely interesting to a small number of people. That’s often how big things start and non-fungible tokens have a lot of potential. 

“may be at the cusp of a new wave of billion dollar companies that expand beyond the niche of digital collectibles.”

In Defense of CryptoKitties
Richard Chen The Control – Medium

“Working on things that could be dismissed as “toys” often produces good startup ideas. As Paul Graham explains in his essay “How to Get Startup Ideas”:3

Speaking of NFTs, VC Fred Wilson wrote about a cryptokitty charity auction.

“a lineage of CryptoKittens ‘hatched’ to both raise funds and be ambassadors for causes and to be bought, sold, and bred within the game”

Honu – A CryptoKitty Charity Auction
Fred Wilson AVC

“It’s a first step in a broader project he is developing with Bill Tai to bring together incentivized communities through unique cryptoassets into a larger framework for non-profit projects everywhere.4

— Bitcoin investor Willy Woo on the difference in forecasting and predicting. He uses past information to forecast, similar to a meteorologist, rather than saying something will happen before the event. 

“This is the masses losing objectivity and just getting emotional, which is exactly what we as traders wanna drop”

Overheard in a chatroom: Forecasting vs predicting
Willy Woo Woobull

“Most people have too much bias, it’s like they are “willing the price” in a direction they want, then drawing the chart. And noob traders are the most subjective, they try to predict and not forecast.
To this point, everytime I tweet a bear call, the noob troll armies attack, they don’t wanna hear it. Vinny Lingham’s bearish tweets [during the Bitcoin scaling debate] last year had the same issue, the trolling got so bad he ceased making price calls. This is the masses losing objectivity and just getting emotional, which is exactly what we as traders wanna drop.5

— Coinbase has strategically been slow to add new tokens, as they believe it the best way to bring crypto to the masses. There’s discussion of increasing the number of assets available in the future. 

“Coinbase is moving toward an algorithm-fueled decision process for adding more tokens”

Coinbase CTO: Business in the Front, Party in the Back
Gerelyn Terzo Hacked: Hacking Finance

“Coinbase CTO Balaji Srinivasan painted a different picture, saying the exchange is more like a mullet for its business6

 

  1. https://thecryptocurrencyinvestor.com/2018/06/22/early-stage-valuations-fall-to-earth/
  2. https://medium.com/@m2jr/crypto-commons-da602fb98138
  3. https://thecontrol.co/in-defense-of-cryptokitties-16dd2e447d9e?source=rss—-ce012282ea98—4
  4. https://avc.com/2018/07/honu-a-cryptokitty-charity-auction/
  5. https://woobull.com/forecasting-vs-predicting/
  6. https://hacked.com/coinbase-cto-business-in-the-front-party-in-the-back/

Weekly Cycle: Market Outlook for 07.09.2018

Weekly Cycle: Market Outlook for 07.09.2018

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.

 

“Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

~Howard H. Aiken
via Why Share?
Howard Lindzon

 

 

 

Market Performance

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

 

Observations:

  • VNQ (Vanguard REIT index) up over 10% over last 90 days
  • SPY down just over 1% since 1 month ago
  • China tech (CQQQ) down over 8% last 90 days (trade war fears, possible buying opportunity)
  • Emerging markets ( VWO BKF) down 10% and 8% over last 3 months.
  • Cannabis (MJ) up 8% over last 90 days

 

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:

  • VIX signals are down significantly
  • SPY considerable stronger
  • VNQ and QQQ much stronger than 1 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 in Weighing the Week Ahead: Inflation on the Horizon?

“Short-term trading conditions continue at highly favorable levels. Actual volatility declined dramatically in the four-day week.”

“Homebuilders. Barron’s especially likes Toll Brothers (TOL), suffering from an “excessive decline” leaving the stock “significantly undervalued.” The company has been performing well despite the highly-publicized headwinds of higher interest rates and increased costs. [Jeff – I agree but have chosen two of their competitors.]1

 

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 in Weekly Market Recap Jul 08, 2018

“Currently the action for short term traders is choppy and tricky. Those with a long term view still are in cruise control”

“Long term: Still very positive for the “buy and never sell” crowd.2

 

Articles of note

— Today’s tech stocks (FAANG) are not nearly as overvalued as the biggest tech stocks of the dotcom bubble

FAANG “currently trading at 37x earnings and 5.5x sales. The four in the late 90s were trading at 100x earnings and 26x sales.”

The Ghost of Tech Stocks Past

” These four stocks would collectively fall 77%. Other stocks got hit much harder.

Nortel was worth $283 billion. It went bankrupt.
Lucent was worth 285 billion. It merged with Alcatel in 2006, which currently has an $11 billion market cap.
America Online  was worth $220 billion at its peak before it merged with Time Warner. They were bought by Verizon for $4.4 billion.
Yahoo was worth $125 billion. It was also recently bought by Verizon, for $4.5 billion.3

Speaking of FAANG stocks, Domino’s has beat all of them since 2010, and there are a handful of businesses in much more traditional industries that have grown by as much as 5500% since 2010

“since 2010 it is Domino’s that beats Netflix and the rest of FAANG since 2010:”

Who Has The Best Business Model?
Howard Lindzon Howard Lindzon

“If you are looking for the best stocks since 2010 it is actually paint protection film, manufactured housing and commercial dry cleaning equipment that have made their investors the most money4

— Is there a problem brewing with passive, blind index investing? Here the case is made that the largest companies are being overvalued and that indexes are bending criteria to include the biggest tech stocks. 

“consequence is an ocean of money flowing into the largest companies for reasons that could be unrelated to their merits as investments”

The Hidden Index Bubble
Isaac Pino, CPA The Motley Fool

“For investors, this raises questions about whether there’s a bubble within index investing. So far, valuation metrics like price-to-earnings ratios have not gone completely haywire, as they did in 1999 during the dot-com bubble. Back then, the cyclically adjusted price-to-earnings (CAPE) ratio was nearing 45 at the time of that bubble’s collapse; it’s at 33 today.
But that time frame provides some context. In 1998, just before the dot-com bubble, the largest stocks were thriving. The 10 largest companies in the U.S. market were up 38.5% that year. Then the market turned and took everyone with it — shareholders in small and large companies alike.5

— A good read on the excessive number of bear calls and how the noise makes it difficult to know when to take action. 

‘Turning to Amazon, again we have over 100 different ETFs that have overweighted the stock”

Same Old Greed In A Shiny New Wrapper
The Felder Report

“It’s the very same sort of insatiable greed on the part of Wall Street serving the insatiable greed on the part of investors that has driven every speculative mania throughout history. Only this time it comes in a brand new, shiny wrapper that people can use to call themselves “passive investors.”6

“For all the time spent worrying about this risk, the overwhelming majority of short term traders…haven’t found a way to avoid it”

The Money Gods’ Price For Achieving High Returns

“Briefly, stay long when SPX is above the 10-mma at month end, move to cash when below. There are still drawdowns of more than 15-20% (e.g., 1987, 1990, 1998) and the strategy can underperform in a grinding bull market, but the long term track record is excellent.7

— Canada’s Shopify scored a big win in British Columbia. Presumably, this is a large growing market given Canada’s recent law changes allowing recreational cannabis nationwide. 

“Shopify has been named as the sole vendor to provide ecommerce services for cannabis sales across…British Columbia ”

Shopify to run ecommerce cannabis sales within BC
Business Chief Canada

“The Liquor Distribution Branch (LDB), set to become BC’s only public retailer of cannabis products, stated that Shopify was selected ahead of a number of other bidders due to its proven track record of offering reliable delivery services.8

— A look at the best business model, which typically results in giving away a great product cheaply (or freely) to the majority of customers, while providing the opportunities for best customers to spend. QVC and Amazon are cited as examples. 

“A key to shared-value transactions is that you then use a portion of the spend from your best customers to indirectly fund products for your average users”

Who Has The Best Business Model (And It’s Not Google Or Facebook)
Medium

“What if instead you had a business model that could maximize revenue from your best customers, and then share that value across all your customers, while not annoying users in the process? Sounds good right? Not only does such a model exist, but it’s being used by many companies to great success. I’ll call this strategy shared-value transactions.9

 

 

 

 

  1. https://dashofinsight.com/weighing-the-week-ahead-inflation-on-the-horizon/
  2. https://www.stocktrader.com/2018/07/08/weekly-market-recap-jul-08-2018/
  3. http://theirrelevantinvestor.com/2018/06/30/the-ghost-of-tech-stocks-past/
  4. http://howardlindzon.com/who-has-the-best-business-model/
  5. https://www.fool.com/investing/2018/06/24/the-hidden-index-bubble.aspx
  6. https://thefelderreport.com/2018/06/27/same-old-greed-in-a-shiny-new-wrapper/
  7. http://fat-pitch.blogspot.com/2018/06/the-money-gods-price-of-achieving-high.html
  8. https://canada.businesschief.com/marketing/2728/Shopify-to-run-ecommerce-cannabis-sales-within-BC
  9. https://medium.com/@efeng/who-has-the-best-business-model-and-its-not-google-or-facebook-ca36f967bbd1

Weekly Cycle: Market Outlook for 07.02.2018

Weekly Cycle: Market Outlook for 07.02.2018

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.

 

“The goal is not necessarily to “beat the market” but to manage risk and help investors survive severe market downturns.”

“In my mind, to turn trend-following into a strategy that works in the real world you have to figure out how to:

Keep turnover relatively low for cost and tax purposes.
Know how it generally works over a number of different market environments.
Make it rules-based to take emotions out of the equation.
Keep it liquid so you don’t ruin the diversification benefits.
Keep it simple because people have a hard time following and understanding complex approaches.1

My Evolution on Asset Allocation
Posted June 26, 2018 by Ben Carlson awealthofcommonsense.com

 

 

Market Performance

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

Observations:

  • SPY slightly down over last week and last month
  • CQQQ down 9% over last month
  • Emerging markets [VWO & BKF] down over 8% over last month

 

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:

  • Most indexes show weakened indicators
  • VNQ (housing REIT) shows significant improvement
  • Tech [QQQ CQQQ HACK] much weaker

 

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 in Weighing the Week Ahead: Is it Time to Worry About 2020?

“Short-term trading conditions continue at highly favorable levels. Actual volatility was higher last week, but still below long-term levels.”

“Short-term trading conditions continue at highly favorable levels. Actual volatility was higher last week, but still below long-term levels. The VIX continues to overstate volatility. The decline in the rate for the ten-year note, coupled with lower stock prices, has made stocks even more attractive by comparison.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 in Weekly Market Recap Jun 24, 2018 – StockTrader.com

“This was a second week of consolidation with generally good action in the Russell 2000 and NASDAQ.”

“Short term: The S&P 500 held its breakout level at just over 2740 – watch that number next week.   The NASDAQ remains quite strong.

 

Articles of note

“This report describes 20 flaws, biases, and causes of bad behavior I’ve seen pop up often when people deal with money.”

The Psychology of Money
Collaborative Fund

“People’s lives are a reflection of the experiences they’ve had and the people they’ve met, a lot of which are driven by luck, accident, and chance. The line between bold and reckless is thinner than people think, and you cannot believe in risk without believing in luck, because they are two sides of the same coin. They are both the simple idea that sometimes things happen that influence outcomes more than effort alone can achieve.3

“random chance has a powerful influence and failure of any kind is statistically followed by success.”

The thought father: Nobel Prize-winning psychologist Daniel Kahneman
Evening Standard

“One of the most amusing episodes in the book comes when Kahneman visits a Wall Street investment firm. After analysing their reports, he calculated that the traders, who were highly prized for their ability to “read” the markets, performed no better than they would have done if they made their decisions at random. The bonuses that they received were, therefore, rewards for luck, even though they found ways of interpreting it as skill. “They were really quite angry when I told them that,” he laughs. “But the evidence is unequivocal — there is a great deal more luck than skill involved in the achievements of people getting very rich.”4

“it could finally start to monetize the Groups feature that’s grown to more than 1 billion users”

Facebook tests ‘subscription Groups’ that charge for exclusive content
Josh Constine eCommerce – TechCrunch

“During the test, Facebook won’t be taking a cut, but because the feature bills through iOS and Android, those operating systems get their 30 percent cut of a user’s first year of subscription and 15 percent after that. But if Facebook eventually did ask for a revenue share, it could finally start to monetize the Groups feature that’s grown to more than 1 billion users.5

“a tariff on car imports from Mexico raises the cost of US auto production”

Trade War Costs in a Supply Chain World
Alex Tabarrok Marginal REVOLUTION

“a tariff on car imports from Mexico raises the cost of US auto production6

“Tesla’s capital needs will be even higher…with negative cash flows for the next 8 years, and $22 billion in new capital over that period.”

Twists and Turns in the Tesla Story : A Boring, Boneheaded Update!
Aswath Damodaran Musings on Markets

“Note that the median pre-tax operating  margin for auto companies is only 4.81%, with double digit operating margins putting you at the 80th percentile of all auto companies. It is also worth noting that among the ten largest auto companies, there is not a single one that generates an operating margin higher than 10%; BMW has the highest margin, at 9.89%.7

“Consumption weakness is the biggest risk I’m worried about. ”

Debate: What Will Trigger the Next Recession?
@conorsen Bloomberg.com

“weakness in the corporate credit sector would come about from growing bottlenecks in the economy. Consumption weakness is the biggest risk I’m worried about.8

“China and the world cannot function without Alibaba” $BABA

Alibaba Is A No Brainer
Jae Jun The Value Investing Blog of Old School Value

“Alibaba has built the economy to what it is now and has the backing of the government. It’s an unfair advantage that Alibaba has taken full advantage of. It comes with its own consequences, but the difference with Amazon in USA and Alibaba in China is that, should Alibaba shut down, China will be in chaos.9

“positive news usually does not attract viewers and readers to [media]; therefore receives much less attention”

A Little Perspective And Balance Would Be Useful
David Templeton, CFA The Blog of HORAN Capital Advisors

“as one looks at the economic, company level and consumer data, the positives currently outweigh the negatives at the moment. Unfortunately, positive news usually does not attract viewers and readers to the media publications; therefore receives much less attention from the media.10

 

 

 

  1. http://awealthofcommonsense.com/2018/06/my-evolution-on-asset-allocation-2/
  2. https://dashofinsight.com/weighing-the-week-ahead-is-it-time-to-worry-about-2020/
  3. http://www.collaborativefund.com/blog/the-psychology-of-money/
  4. https://www.standard.co.uk/lifestyle/london-life/the-thought-father-nobel-prize-winning-psychologist-daniel-kahneman-on-luck-9199162.html
  5. https://techcrunch.com/2018/06/20/facebook-subscription-groups/
  6. http://marginalrevolution.com/marginalrevolution/2018/06/trade-war-costs-supply-chain-world.html
  7. http://aswathdamodaran.blogspot.com/2018/06/twists-and-turns-in-tesla-story-boring.html
  8. https://www.bloomberg.com/view/articles/2018-06-29/next-u-s-recession-will-be-triggered-by-something-unexpected
  9. https://www.oldschoolvalue.com/blog/stock-analysis/alibaba-no-brainer/?source=rss
  10. https://disciplinedinvesting.blogspot.com/2018/06/a-little-perspective-and-balance-would.html

Weekly Cycle: Market Outlook for 06.18.2018

Weekly Cycle: Market Outlook for 06.18.2018

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.

 

“Technology innovation is happening in all sectors of our economy and all parts of the world”

“We now have more angel and seed and venture capital being invested in startups every year than ever before. It took a long time, almost twenty years, to pass the go-go years of 1999 and 2000, but pass it we have and even though many see that as a sign that we are in bubble territory again, I am not one of them. Technology innovation is happening in all sectors of our economy and all parts of the world. I think the expansion of capital being deployed into startups can continue for some time to come.1

Rapid Experimentation
Fred Wilson AVC

 

 

Market Performance

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

Observations:

  • SPY slightly down over last week.
  • Overall, seeing less volatility across major indexes
  • Emerging markets [$VWO] down nearly 9% over 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:

  • Tech remains strong [$QQQ, $HACK, $CQQQ]
  • [VFH] Financials weakened after one strong week last week
  • Worldwide indexes much worse than 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 in Weighing the Week Ahead: What is Working, and Will It Persist?

“Short-term trading conditions continue at favorable levels, much improved from a quarter ago. Also noteworthy is the reduced volatility.”

“My fundamental triad: Growth in expected earnings, low recession risk, and comparison of stocks with other easily purchased assets. I provide the ingredients every week. You need not read my entire post, although I appreciate those who do. You can just check out the indicator snapshot. And my secret sauce? I know enough to find real experts and then follow their lead.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 in Weekly Market Recap Jun 17, 2018 – StockTrader.com

“Short term: The S&P 500 was quiet while the NASDAQ continued to churn up.”

“After two weeks of rallies, the S&P 500 mostly consolidated this week – except for Friday the action was very reminiscent of 2017 with almost no volatility at all intraday and modest gains or sideways action.3

 

Articles of note

“no guarantees that stocks will be up big over the long run [because] everyone has a different definition of.. long run”

Why Do Stocks Generally Go Up Over Time?

“The long-term track record of the world stock market is not perfect but it is quite compelling. However, long-term average returns are promised to no one because we don’t know what the future holds. In many ways, investing in the stock market is a faith-based exercise; faith in human ingenuity; faith in the capitalist system; and faith in other people wanting to improve their lot in life4

Buffett’s rule is absurd: “Anyone who has ever invested in the history of the world has lost money at one time”

The #1 Rule in Investing
Charlie Bilello pensionpartners.com

“In fact, the entire notion is absurd. Anyone who has ever invested in the history of the world has lost money at one time or another. Buffett himself lost close to 50% on two separate occasions.5

“a bad case by the government has led to, at best, a merger that was never examined for its truly anti-competitive elements”

AT&T, Time Warner, and the Need for Neutrality
Ben Thompson Stratechery by Ben Thompson

“The question is not what AT&T can do to increase the revenue potential of Time Warner content (which was the government’s focus), but rather what Time Warner content can do to increase the potential of AT&T’s services, particularly mobile.6

“constantly amazed at people’s ability to be completely blindsided by an unexpected event”

When the Unexpected Leads to the Unexpected

“There are things that happen in this world on a regular basis that are totally unexpected — natural disasters, accidents, terrorism, disease, tragedy, market crashes, geopolitical events and so on. There are certain things you can never really plan for in terms of when, how, and why they’ll happen.7

 

 

 

 

 

  1. https://avc.com/2018/06/rapid-experimentation/
  2. https://dashofinsight.com/weighing-the-week-ahead-what-is-working-and-will-it-persist/
  3. https://www.stocktrader.com/2018/06/18/weekly-market-recap-jun-17-2018/
  4. http://awealthofcommonsense.com/2018/06/why-do-stocks-generally-go-up-over-time/
  5. https://pensionpartners.com/the-1-rule-in-investing/
  6. https://stratechery.com/2018/the-need-for-neutrality/
  7. http://awealthofcommonsense.com/2018/06/when-the-unexpected-leads-to-the-unexpected/
  8. https://twitter.com/naval/status/1002106893265920000

Crypto Market Update for June 18, 2018

Crypto Market Update 06.18.2018

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

I love the term “frontier” because it beautifully captures the opportunities and perils involved. It sounds like a wide-open opportunity, adventurous, perhaps even romantic. But it’s also a place where you have a non-trivial chance of ending flat on your face with a bunch of arrows in your back.

Matt Turck – Investing in Frontier Tech

 

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

  • Down nearly 20% vs USD for both B10 and BTotal over last 3 months
  • No indexes are positive vs USD over last 7/30/09 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: $288.56 billion ( down from $299.54 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 88% of the total crypto market share, a relatively significant rise from 85% a week ago suggesting smaller tokens and currencies have been hurt more than the larger currencies.

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). 

  • Not much change from a week ago. Both BTC and ETH remain with negative total technical indicator scores
  • ETH showing strength over BTC

 

CRYPTO PERFORMANCE

  • BTC down nearly 10% vs USD over last week and 20% over last month
  • ETH down over 10% in last week vs USD and 25% over last month

 

Google Trends

 

Google Trends saw a slight increase this past week, though still an overall downtrend since February 2018.

WooBull Charts

NVT Ratio –  182 – 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 fallen to 115, down from 130 last week.

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 suggesting a short term downward trend.

Articles of Note

“don’t want Bitcoin and Ether to have the advantage of being the only tokens that are not deemed to be securities’

Ether Is Not A Security
Fred Wilson AVC

“this is not about Ether, but about the fact that a token can be used to raise capital (the “fundraising that accompanied the creation of Ether”) and at some point no longer resemble a security in the eyes of the SEC.1

“Smart contracts will significantly reduce transaction costs and thus let people create valuable, new private orderings.”

Towards An International Court of Smart Contract Arbitration
Alex Tabarrok Marginal REVOLUTION

“Contract law, for example, is filled with concepts like mistake, misrepresentation, duress, negligence and intention that are not easily formalized in code. Contract law is a human enterprise. And the humans who write contracts want law with terms like negligence precisely because these terms fill in for gaps which cannot be filled in and formalized in contracts let alone in code2

“It’s an odd choice. For background, Ethereum Classic was created during a hard fork of the Ethereum blockchain back in 2016.”

Coinbase Announces Listing Of Ethereum Classic
noahsayres Hacked: Hacking Finance

“Coinbase has finally added a fifth cryptocurrency to what was formally the “elite four” of the platform, Bitcoin, Litecoin, Ethereum, and Bitcoin Cash3

“An oracle should be expected to share in the consequences  –  skin in the game is necessary”

Blockchain Oracles Will Make Smart Contracts Fly – Hacker Noon
Doug von Kohorn Hacker Noon

“an oracle provides a connection between real world events and a blockchain. In my opinion, all of the really interesting complex smart contracts require outside information — financial derivatives, gambling, stablecoins, identity4

“NFTs seem like a good platform for tokenizing all types of assets, digital or real”

Mapping the Emerging Non-Fungible Token Landscape – Point Nine Land – Medium
Medium

“As a passionate Magic the Gathering player in my early high school years, I can totally relate to the promise NFTs bear for digitizing collectible cards and see a natural initial application for them when it comes to gaming. This is also the area in which most of the current NFT projects are experimenting.However, I believe applications of NFTs can go far beyond that. For one, NFTs seem like a good platform for tokenizing all types of assets, digital or real, and to enable all the interesting crypto features for dealing with them, such as trustless transfers, trading or fractional ownership. This5

“all market-based exchange, price is determined by a meeting of the minds of a buyer and seller, not by an algorithm,”

“Stablecoins” are trending, but they may ignore basic economics
Mike Orcutt MIT Technology Review

“developers of stablecoins fail to account for basic economic principles by assuming that they will always be able to “incentivize users of their systems to purchase their coins at an arbitrary price.”6

“Prediction markets are speculative markets with the primary purpose of aggregating information rather than hedging risks.”

The Power of Prediction Markets – Gnosis
Nadja Beneš Gnosis

“Prediction markets are speculative markets with the primary purpose of aggregating information rather than hedging risks.7

” Whereas cloning is frowned upon in established tech, it is openly embraced in the blockchain ecosystem”

“Frontier Tech” And Blockchain / Crypto – Mike Dudas – Medium
Medium

“There is the Bitcoin maximalist tribe, the Ethereum disciples, the security token believers and the enterprise blockchain evangelists. Each believes in their own purity of purpose of intentions, while many show skepticism at the purity and purpose of others who don’t think the same way. This is because they all “believe”: it is an ecosystem where the missionaries far outweigh the mercenaries8

 

  1. https://avc.com/2018/06/ether-is-not-a-security/
  2. http://marginalrevolution.com/marginalrevolution/2018/06/towards-international-court-smart-contract-arbitration.html
  3. https://hacked.com/coinbase-announces-listing-of-ethereum-classic/
  4. https://hackernoon.com/oracles-help-smart-contracts-resolve-subjective-events-d81639d8291c
  5. https://medium.com/point-nine-news/mapping-the-emerging-non-fungible-token-landscape-ee56f0d1079f
  6. https://www.technologyreview.com/s/611370/stablecoins-are-trending-but-they-may-ignore-basic-economics/
  7. https://blog.gnosis.pm/the-power-of-prediction-markets-fedea0b71244
  8. https://medium.com/@mdudas/frontier-tech-and-blockchain-crypto-b3073b287c2e

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/