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/

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
SPY274.24-0.63%-1.61%0.60%6.27%12.88%
VTI142.85-0.70%-1.00%1.51%7.33%14.56%
BOND102.720.04%0.15%0.50%-0.88%-3.57%
VWO42.72-1.41%-3.87%-5.94%-6.87%5.66%
VEA43.46-0.69%-2.93%-4.50%0.35%5.87%
VEU52.52-0.91%-2.99%-4.77%-1.32%5.61%
VFH69.62-0.26%-0.70%-2.90%2.97%13.24%
VNQ80.160.48%0.53%4.31%9.34%-5.23%
VIX14.6414.46%
QQQ175.71-0.87%-1.06%4.48%10.85%24.85%
HACK38.47-0.95%-2.26%3.89%13.45%27.76%
CQQQ58.18-1.56%-5.87%-1.17%-3.37%22.33%
BKF42.69-1.59%-4.43%-5.47%-5.89%14.88%
MJ31.722.59%5.00%3.19%3.15%8.30%
XHB40.09-1.06%-2.22%2.69%0.50%3.81%

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.