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2018: Year of the Crypto Fund

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A protracted bear market in cryptocurrencies has not deterred hedge funds and other institutional players from entering the digital currency space. According to new research, 2018 is shaping up to be a record year for crypto funds, with the number of new ventures growing steadily.

Crypto Funds on the Rise

A total of 96 cryptocurrency funds have launched this year, according to Crypto Fund Research, putting the market on track to outperform last year’s pace of 156. The Rohnert Park, California-based research firm expects there will be a total of 165 crypto hedge funds launched this year.

“We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand.” said Josh Gnaizda, founder of Crypto Fund Research. “However, the pace of new fund launches is a bit surprising given the dual headwinds of depressed prices and less than favorable regulatory conditions in many regions.”

If 2017 was “the year of bitcoin,” 2018 is shaping up to be the year of the crypto fund, Gnaizda says. There are now 466 cryptocurrency funds around the world, with more than half coming into existence over the past 18 months.

Pantera Capital, one of the earliest and most well known funds, boasts a lifetime return of 10,000% investing in digital assets.

Crypto funds are also proving popular among Chinese investors, who are barred from investing in digital assets in their home country. As Hacked reported in June, Chinese nationals have made Singapore their destination of choice for launching token investment funds.

The researchers claim that crypto hedge funds are the fastest growing segment of the market, accounting for more than half of the total. A total of 252 funds are located in the United States, followed by 34 in Hong Kong and 29 in the United Kingdom.

Protracted Bear Market

Although the rise of crypto hedge funds is evidence that more investors are taking interest in digital currencies, failure rates are likely to rise if bear-market conditions persist.

“While volatility in the crypto markets can attract some investors to sophisticated crypto funds. It remains unclear if the industry can support such a large number of funds, with limited track record, if we experience an extended bear market,” Gnaizda added.

The cryptocurrency market is once again becoming synonymous with bitcoin as traders cut ties to more speculative altcoins and tokens. At the time of writing, bitcoin’s dominance rate, or the share of the total market capitalization held in BTC, was 51.9%.

After a minor recovery, coin values were down again on Monday. According to CoinMarketCap, the total value of all coins in circulation is $210.5 billion. Last week, the market bottomed near $207 billion, the lowest in a year.

A look at the technical charts reveals little evidence that a bullish reversal is imminent. However, fundamental developments have been positive with banks and stock exchange operators announcing big plans to enter the market.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 664 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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3 Comments

3 Comments

  1. dennisterh

    August 13, 2018 at 10:48 pm

    Hi Sam,

    Thanks for the update. I have three follow-up questions, if you don’t mind 🙂

    – What is – in general – your take on the increase of crypto funds?
    – What would you say should be the key criteria to look for when picking one of these 466(?) funds?
    – Any chance Hacked will do (more) reviews on funds in the future (same as you guys do on ICOs)?

    Cheers!

    • SholaO

      August 14, 2018 at 4:10 pm

      great questions @dennisterh

  2. dennisterh

    August 26, 2018 at 9:34 pm

    I guess we will not know the answers SholaO..

    Or will we Sam?

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Cryptocurrencies

Why Investors Should Pay Attention to Decred

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Bitcoin has massive potential as an investment, there’s no denying it. Anything with the goal of becoming a global currency has the ability to be an option to replace “all the money” in the world and gain a similar market capitalization.

But at the same time, Bitcoin has its problems. Having been released in 2009, there has been plenty of time for some of its weaknesses to be exposed. One of the largest weaknesses is with how it is governed, but there are several more. This is why Decred was developed.

Free of Third Party Influence

As an autonomous coin, there have naturally been many questions with how Bitcoin is governed and what the best way to continue advancement in the area is. This is to be expected, but there are also many things about Bitcoin to be envied, such as the fixed supply, fungible coins, and diehard community that surrounds it.

The founders of Decred were Bitcion developers in teh beginning, but they saw issues with the protocol. In their analysis of the coin, they identified 3 main issues: governance, funding, and security.

The governance issue is to do with stakeholders. The way Bitcoin is designed, miners are decision makers. This doesn’t mean they will always act in accordance with what is best for token holders though.

Additionally, the method of funding development is uncertain, to say the least. Incentives need to be in place to get developers dedicated to teh long-term prosperity of the proejct, and right now, that just isn’t happening.

Finally, security is in question due to the vulnerability to 51% attacks from miners. All of these issues essentially come down to planning a way to align the incentives of miners with those of tokenholders.

New Solutions to Old Problems

Upon proposing their solutions, these developers were essentially excommunicated, which led them to start Decred in 2013.

One of the main innovations of Decred was the Proof of Work/Proof of Stake hybrid they invented in order to solve teh governance issues. Additionally, the algorithm was designed to pay 10% of block rewards to developers from the very beginning.

And as for security, with the new POW/POS protocol in place, potential attackers would need both the majority of hashpower and the majority of tokens. This makes it far too costly for any entity to ever attack Decred without ruining themselves in the process.

Governance Issues Create Opportunity

Governance has always been an issue in question with a protocol whose original reaosn for being designed was to move away from the centralized model of doing business that led us into so many financial crises. Decred is designed to start aligning the incentives of all stakeholders, and still holds true to many of the original promises of Bitcoin (its maximum supply is even the same at 21 million).

The DCR token is currently trading around 0.006 BTC and is ranked 25th in market capitalization ($312 million). This is a relative low for the coin and it may be worth picking up a small position as a minor hedge against Bitcoin.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Cryptocurrencies

Why Investors Should be Paying Attention to Substratum

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Decentralization has become one of the key buzzwords surrounding the blockchain craze, but sometimes people forget the main reason decentralization is important: control. Right now, studies show that Amazon controls 40% of cloud services and Netflix controls 15% of the world’s Internet traffic. This is borderline insane, especially when you consider how all of these companies are native to the United States.

Similarly, a need for privacy exists, and with the growing NSA and CIA threat of being spied upon at home, as well as any foreign agencies, it would be useful to be able to have control of your own Internet services.

Substratum to the Rescue

Would you give computing resources to help make the internet a better space, and get paid along the way? Substratum is betting on the idea that people would be keen to participate in this market, and have been building a company that is able to facilitate it.

They ran their ICO in August 2017, with the goal of raising the funds necessary to create a market for hosting services.

Their proprietary token, SUB, is used as payment for serving requests. Network members are compensated with microtransaction for hosting sites, databases, and applications.

On a longer time horizon, Substratum aims to help maintain net neutrality, which has become a consistent topic of discussion in the tech world as of late. Their services will focus on privacy and security (by using encryption) to provide superior hosting services in the beginning and then expand to other services like decentralized storage and service of content, as well as development tools for the new “decentralized web”.

The End Mission

The end mission of a company like Substratum is to create a decentralized version of the web that doesn’t have any of the setbacks that results from many of the  oligopolies currently in effect. Net neutrality has become a major topic of argument in the last few years, and finding new ways to avoid anti-competitive practices is absolutely essential as we move into the next phase of mankind’s technological development.

We can all imagine how this would affect the western world, but the promise carries even more importance when you look at more restricted parts of the world, like China or Vietnam. The firewalls currently in place may be circumvented without needing Tor or a VPN.

Substratum has the ability to solve a lot of the current issues regarding censorship resistance. There have been occasional threats or suspensions of service by hosting platforms when they deem something to be “outside their terms of service”, but this is a slippery slope that can be mitigated by having a platform like Substratum. The main difference is that nodes are fully encrypted so they can’t even tell what they are hosting.

A Profitable Opportunity

Whenever a coin hits an all-time low, that makes for a great buying opportunity. Substratum has been hit recent lows, and this makes for a great trade. You may either wish to get in around 0.00001-0.00002 BTC and sell off when you break 0.00005, or you can turn this into a longer-term trade. It really depends on your risk appetite at this moment in time.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Cardano Price Analysis: ADA/USDT Smashes Out of Wedge, but Saved by Critical Demand Zone

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  • ADA/USDT testing a huge area of demand and a breach by the bears could be catastrophic.
  • Cardano Foundation confirm reshuffle, as Michael Parsons, the former chairman, steps down.

ADA/USDT has continued to be victim of downside pressure after its latest bull run. The price had gained a chunky 20%, between 31st October and 6th November. ADA/USDT managed to peak just above $0.08200 territory. This was the highest level seen since 15th October. Shortly after, gradual selling started to take place, to then see all the gains plus much more taken by the heavy bears.  It appears current bull runs are not sustainable, very much vulnerable to being sold- particularly as these tend to happen in an explosive manner within a short time frame.

Cardano News Flow

Cardano this week made an announcement that Michael Parsons, the former chairman, has resigned from his position at the Cardano Foundation. Prior to this rapid departure, there had been much history of community members demanding for him to be removed. The position will be filled by the Council Member Pascal Schmid, a University of St. Gallen graduate and a financial expert. Cardano’s creator, Charles Hoskinson, accused the foundation and Parsons of neglecting their duties, in addition to bringing in close friends and family into top positions within the organization.

Technical Review – ADA/USDT

ADA/USDT daily chart

ADA/USDT is running at three consecutive sessions in the red- a move which is inline with the broader market, a mass cooling across all major cryptocurrencies. The price was forced to drop a hefty 13% in the late part of the session on Wednesday. Price action was initially moving within a wedge pattern. This had been the case since the back end of September. ADA/USDT was contained within this formation.  Given the noted heavy selling pressure that was seen across the market late Wednesday, the lower trend line of the wedge was forced to give way to sellers.

Looking to the downside, ADA/USDT has been saved from further declines thanks to a critical demand zone. The area is seen tracking from $0.07000 down to $0.06000. It has proven to see strong buyers swoop in. The price last traded down here between 12-18th September. Buyers kicked in to then drive ADA/USDT to the north, seeing gains just shy of some 50%. The bulls were able to run the price up to $0.09500 into a known supply area. A peak was seen, and this rally was then gradually sold.

Should the above-mentioned demand area fail to hold and see a daily close below, it could be catastrophic. A development such as described, could leave the door wide open to a fresh wave of heavy selling.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 50 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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