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

Bitcoin moving closely with $SPY

Bitcoin’s case as a store of value has not proven especially strong in the past month, as it’s typically gone the way of $SPY.

Bitcoin and stocks bottomed at almost exactly the same moment. This is bad for Bitcoin. Part of Bitcoin’s appeal is that it is weird, and perhaps does not covary with standard financial assets in traditional ways. But at least yesterday it did, and that should be a force pushing Bitcoin lower.

via Bitcoin and covariance at Marginal REVOLUTION

Automation may not replace jobs as quickly as predicted

Automation is touted to be ready to take over many jobs, including truckers. Here’s a rebuttal, specifically related to truck drivers, from a comment at Marginal Revolution. A few highlights:

One of the big failings of high-level analyses of future trends is that in general they either ignore or seriously underestimate the complexity of the job at a detailed level. Lots of jobs look simple or rote from a think tank or government office, but turn out to be quite complex when you dive into the details.

I’ve been working in automation for 20 years. When you see how hard it is to simply digitize a paper process inside a single plant (often a multi-year project), you start to roll your eyes at ivory tower claims of entire industries being totally transformed by automation in a few years.

A lot of pundits have a sense that automation is accelerating in replacing jobs. In fact, I predict it will slow down, because we have been picking the low hanging fruit first. That has given us an unrealistic idea of how hard it is to fully automate a job.

Based on my own experience with setting up routine tasks for online-oriented jobs, the role of a human to adapt to changes is very underestimated.  It seems more likely that automation will be used as a tool by humans. It requires a different set of skills, but it’s far from robots working without human interaction.