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Asset Allocation in a Hornet’s Nest

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The cryptocurrency markets have provided one of the only ways for people like you and I around the world to achieve financial freedom. Through ICOs, strategic investing, or dumb luck; for better or for worse there are opportunities every single day for you to drastically increase your net worth with a minimum upfront investment.

Now that we’ve gotten that out of the way, let’s talk about investing like adults in a market that was designed for children.

First, let’s discuss the industry. The blockchain industry has designed various superhighways on the internet that allow rapid transfer of almost any form of data. Currently, the industry is fixated on money transfer and settlement, with scaled data/content sharing slowly becoming a reality. The cars that travel on these super highways are cryptocurrencies. Each car is designed to travel the highway in a certain way that will benefit it’s user. Anonymity, speed, transparency; no matter what the driver is trying to do, there is a strong possibility there is a car designed for that person. For example, there is (somehow) a successful coin that focuses on dentist transaction processing in a minimal geography.

Next, the coins. There are currently thousands of investable coins across various marketplaces worldwide. Most of the coins that you see today, including those in the top 10 in market cap, are projects. Not businesses. They are in the infancy of their business, and have crowdfunded on a scale and format never seen before. This is where things get tricky. No matter who you talk to, no one will be able to tell if a non-functioning business will ever function. Each investment in a project is completely speculative based on analyzing their road map, white paper, and team background. The price of each coin fluctuates in a way that is incomprehensible. A very common story is a coin could just launch an amazing partnership with a business to use their blockchain road, and still be down 20-30% on the day. The key word here is: irrational.

So, finally, how to be rational in an irrational market. The answer to this question is why you watch YouTube videos like smoking crack, download telegram where for every price target you get 15 spam ads, and read wonderful pieces like this one. I will not disappoint, I will provide my opinion of how to navigate this market the same way all year. 2 rules. 1. Invest in businesses, not projects 2. Circulating Supply is more important than Twitter.

1. Invest in Businesses, not Projects

I will get heat for this one. The majority of money lost in cryptocurrency is money bet on projects that do not have a product or customers. The ICO market is a complete bloodbath. An example is Porn Coin – During the ICO, the CEO vanished with all of the encrypted currency he just received – whoduhthunkit! 2018 is the perfect storm year. You don’t need to be wasting time with porn coins when there are coins that already have working businesses that are trading on the same exchange.

What are the businesses to look for? Logical ones! If it doesn’t make sense to you, then why would it make sense to the hedge fund or institution that’s going to be looking at it 2 months from now. The only investments that I have are the ones that are A. Making money B. Targets for indexing or investment by American financial companies and institutions. Those two filters alone will get you down to a maximum of 10 coins. Of those 10 coins, probably 3 will be around in 3-5 years. Never, ever, invest in one or two things. If you just want one investment, buy Ethereum. Creating an index of different functioning businesses will limit the losses you can incur in a single day. The risk over weeks, months, and years cannot be mitigated. Cryptocurrency is new.

2. Circulating Supply is more important than Twitter

The cryptocurrency market is unregulated. That is probably the first thing I tell people when they ask me about blockchain. Anything can happen here, and everything does happen. You name the scam, it’s probably happened thousands, if not millions of times. Twitter, Telegram, and YouTube have caused more losses than gains. If you listened to the first rule, you know you have very few companies to invest in. Circulating Supply is what I look at after the business. I want the price to be VERY sensitive to new entrants, in which I am incurring the risk of the price being VERY sensitive when someone exits. If I am investing in a functioning business with very little quantity, I now have a coin that is used in a functioning blockchain that not many people have. Think of all the coins you know about, and the people who you know who have invested them. Are they using them? No! of course not! These are like “GoFundMe” tokens that have purely intrinsic value. So people HOLD them. If something has 4,000,000 supply, and there are early adopters holding large percentages, then the market is now limited in supply. My bet is that prices will have to go up in order to entice people like me to take their coins out of cold storage. This is a bet. Not a fact.

Right now, that strategy has yielded me a lot. In 3/6 months, I believe that strategy will reward me much more. Don’t invest in new technology. Use your computer skills to preemptively invest in things you know deep pockets will invest in. With a low supply, you only need a couple more big boys to come in for you to reap the benefits. My heart starts pumping with a supply of anything larger than 150mm. Now, you’re saying, “But what about XYZ coin! It holds the door open for you and gives you chocolate!” I am 100% sure the coins I have invested in are not the best tech in the market. In fact, I’m probably sure of it. But I am not crowdfunding a coin that gives me no equity in their business simply for the fact it can “change the world”. Don’t chase technology. Chase money.

Conclusion

Don’t make cryptocurrency complicated. This is a highly speculative investment category that is just taking shape. Using the two rules above, you can create an index of coins that will give you the highest probability of a return. One thing pundits will say is that the market cap in cryptocurrency is going to rise. That has an inherently higher possibility than any cryptocurrency price prediction. Creating an index of already profit reaping, low supply currencies will mitigate your risk, while amplifying your returns.

This is my strategy, and I encourage you to look into it. None of what I say is financial advice. My purpose of this article is to stimulate thought, and thought only.

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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4.4 stars on average, based on 27 rated postsMythological God of Lightning. Cryptocurrency/Blockchain writer, evangelist, and friend. May the odds be ever in our favor.




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4 Comments

4 Comments

  1. andrewmayne1

    January 13, 2018 at 10:14 am

    Thanks for the article. Two questions –
    1) When you say business rather than project, are you saying that it has to be able to make money beyond the premine? Ie be sustainable? Or that it has a working product which allows use of the token

    2) How do you determine the circulating supply? Presumably that’s the amount of the crypto that’s on the market ie not premined to fund the the project. Bitcoin has a relatively low supply of coins, but I would I be right in assuming that you’re talking about low market cap coins?

    Thanks

    • Raiden

      January 14, 2018 at 4:49 pm

      Hi Andrew

      1) I want businesses with customers. The ICOs are crowdfunding, and somehow we have decided that the crowdfunding tokens we bought have value and should be traded. I think what you said was correct “Working product which allows use of the token” I believe it is use OF and use BEYOND the token (DAPPS/Smart Contracts are just the beginning). This all goes back to the intended target market of the token. who do they want to adopt their blockchain/currency and why would the target market do it? Are they already doing it? If they aren’t already making money from volume/customers, there are some that are. I choose to go with the safer bets in general.

      2) coinmarketcap.com total circulating supply. You are completely correct Andrew, there is absolutely no way to determine what is actually on the market at a given time. But, it is extreme peace of mind that when the total supply can reach only reach in the 10s or low hundreds of millions. some coins incentivize by deleting one coin per transaction, etc. This is a strategy some employ, obviously not for everyone.

      Not recommending XMR or any other currency. Talk soon! -R.

  2. efipm

    January 14, 2018 at 8:20 am

    Great article. It is the first one here on Hacked that “teaches fishing rather than offering a free meal”!
    What is your social media presence RAIDEN? Love to follow you everywhere.

    Give us an example of how we could guessestimate the Circulating supply.
    Maybe using an example like CIVIC coin and or IOTA (App layer and protocol layer).

    Thanks alot

  3. Raiden

    January 14, 2018 at 4:55 pm

    Gonna start up a twitter soon, will keep you posted.

    My strategy is bare bones simple. I am not trying to figure out how much is there at what time. I just see how much can be made in total. I think CVC is 1,000,000,000 if I am not mistaken. I think current circulation is 343,000,000ish. Each coin/token is different. This one has split it into thirds, each piece can be used (in their bi-laws) for a distinct purpose towards their business.

    hope this helps talk soon -R.

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Altcoins

Dash Price Analysis: DASH/USDT Downside Risks Linger Despite Trust Wallet Support Announcement

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  • DASH/USDT price action is moving within a narrowing range formation, subject to further downside risks.
  • Trust Wallet, Binance-owed crypto wallet provider, announces support of DASH.

Price Behavior

DASH/USDT has been trading within a $6 range for the tenth session in a row, at the time of writing. The upper part of this range should be noted at $73. Looking to the downside, the lower support of the formation is seen at $67. The price, like many of its peers within the cryptocurrency market, is stuck within a narrowing range block. They are all currently demonstrating strong downside vulnerabilities, given the current behaviour.

This trading range came after a steep fall in the market last Thursday, 10th January. Double-digit losses were seen across the board after moving within a prior narrowing range formation. DASH/USDT had a strong run from 15th – 24th December, gaining as much as 81% within that time frame. Following the high print towards the latter part of that period, at $102.50, price cooling was seen and then begun to trade sideways.

Between 26th December 2018 – 9th January 2019, DASH/USDT was moving between a narrow $86 at the high and $73 at the low. This led to the explosive breakout to the downside, where the price dropped around 20% on 10th January.

Trust Wallet Supports Dash (DASH)

Trust Wallet, a mobile crypto wallet owned by Binance, announced earlier this week that it has added support for Dash. The announcement followed after just a week ago, when the wallet provider revealed the support of Litecoin (LTC), Bitcoin (BTC), and Bitcoin Cash (BCH). In addition, the app also supports Ethereum (ETH), Ethereum Classic (ETC), Tron (TRX) and others.

The team at Trust Wallet, upon their DASH support update, also left users somewhat excited about further announcements lined up. They stated, “Going forward, we will monitor the performance and stability of our Dash release very closely, and if everything works well, hopefully, we can surprise you with more new coins in the coming weeks!”

Technical Review – DASH/USDT

DASH/USDT daily chart.

A breakout of the key mentioned levels that make up either side of the range, $72 and $67, will likely determine the next committed trend. Firstly, in terms of the next major area of support south, eyes will be on the December low area, $58. To the north, drop supply remains heading into and just above the psychological $100 mark.

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 110 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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Bitcoin

Bitcoin’s Year of Accumulation

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Although bitcoin looks poised to extend its January losing streak to five consecutive years, 2019 will be a year of slow accumulation for the virtual currency, according to Eric Thies, a well-known technical analyst. In the meantime, traders can expect the bear market to reach its climax once a new yearly bottom is breached.

Accumulation Year

In promoting the view that 2019 will be an accumulation year for bitcoin, Thies directed our attention to the major bear trend that emerged in 2015. That was the year bitcoin exhibited significant volatility, albeit in a lower range. Following the latest breakdown in price, bitcoin could be in for a similar trading pattern this year.

“Similar to 2015, 2019 may be the year of accumulation,” Thies said, according to CCN. This means bitcoin is likely to be an attractive investment in $2,000-$4,000 range – even with wild swings priced in.

Bitcoin’s volatility regime has changed dramatically in the last two months. Following a period of unprecedented calm, volatility surged to nine-month highs in the back end of December. Volatility will likely remain a factor for the foreseeable future as the technical tug-of-war continues. More on this: Bitcoin Maintains Narrow Trading Range as Recovery Faces More Resistance.

Circulation Grows

That bitcoin will remain highly volatile is supported by the recent influx of digital currency into circulation. Anonymous owners of dormant bitcoin wallets have been trading with greater frequency since October, which means their activity may have predated the November price collapse.

Data from Flipside Crypto recently showed that long-dormant bitcoin wallets have accounted for about 60% of the market’s circulating supply in the last 30 days alone. What’s more, active bitcoin supply has increased by a whopping 40% since the summer. This, of course, feeds into higher expected volatility.

If that’s not enough, consider that 1,000 addresses hold 85% of available bitcoin. As Bloomberg recently noted, many of these holders remained on the sidelines during the 2017 bull run and its subsequent collapse. If dormant accounts are becoming active again, there’s good reason to suggest that the whales are looking to re-enter the market.

Not Overnight

It’s reasonable to expect that bitcoin will become more attractive at lower prices, especially as more institutional investors access the crypto market in the coming year. But that doesn’t mean the accumulation will happen overnight. Previous bear cycles have taught us that downtrends can stretch for 1-2 years before any noticeable accumulation takes place. The only difference this time is there are more people involved, and more eyeballs on the price.

Additional reading: Crypto Winter and the Fed?

To demonstrate bitcoin’s potential at current levels, and why 2019 will be an attractive year to boost one’s holdings, it’s worthwhile to reflect on the cryptocurrency’s yearly lows rather than its highs. Below is a quick snapshot of bitcoin’s yearly bottoms stretching all the way back to 2012:

  • 2012: $4
  • 2013: $65
  • 2014: $200
  • 2015: $185
  • 2016: $365
  • 2017: $780
  • 2018: $3,200

Traders tend to focus on bitcoin’s lack of new all-time highs as evidence that the market is going nowhere, but these figures clearly show that BTC is a solid investment at almost any period in the last seven years (of course, this isn’t the case if you bought during the peak of 2018).

Make no mistake: technical analysis and market sentiment clearly show there is more pain ahead for bitcoin and the broader cryptocurrency market. But as the long-term value proposition continues to hold, there’s strong reason to believe we haven’t seen the last bull market. In the meantime, 2019 prices could represent a unique buying opportunity for those who missed the boat two years ago.

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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4.7 stars on average, based on 742 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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Altcoins

Lite.IM Surpasses Facebook In Race To Support Cryptocurrency Compatible Messenger

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Since the early part of 2018, crypto traders have been bombarded with bad news.  Hacks, broken promises, and overall lack of enthusiasm have resulted in huge losses.  But more than that, some promising cryptocurrencies just haven’t survived.  As traders look to the future, they should begin looking at projects that have the potential to disrupt industries and take them to the next level.  One company that has the potential to accomplish that is Zulu Republic (ZTX).

Zulu Republic is an ecosystem of blockchain tools and platforms, designed as a place where people, businesses, and organizations can thrive on their own terms.  The company’s stated mission is to advance the development of decentralized technologies, to promote human rights and empowerment around the globe, and to reduce the global digital divide.

Well the company is off to a great start with the development of Lite.IM.

What is Lite.IM? 

Lite.IM is a project aimed at expanding global cryptocurrency adoption.  With Lite.IM, users can send, receive, and manage Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and the company’s native currency (ZTX), on Facebook Messenger, Telegram, and SMS (in the USA and Canada).  To get started managing these cryptocurrencies on the aforementioned platforms, users simply need to send a text-based command to the Lite.IM bot.  The commands are as follows:

Telegram:  @LiteIM_bot

Facebook Messenger:  @lite.im

SMS (USA and Canada only):  760-LITEIM-0

Competition with Facebook

On December 21st, 2018, Facebook announced that it was developing its own stable cryptocurrency that users would be allowed to exchange through its popular chat service, WhatsApp.  But while Facebook’s initial approach will target users based in India, Lite.IM is open to everyone in the world.  Further, Zulu Republic has previously mentioned that they expect to announce support for WhatsApp in the next few weeks.  It certainly appears as though Lite.IM has the upper hand here.  And that is before even addressing Facebook’s obvious privacy concerns.

When it comes to cryptocurrency, privacy and security have always been two issues at the forefront.  Given the rough year that Facebook has had in that regard, users must certainly be forgiven if they have trouble trusting the social media giant.  In September, 2018, Facebook announced that an attack on its computer network had exposed the personal information of nearly 50 million users.  Apparently, the hackers were able to exploit a feature in Facebook’s code to gain access to user accounts.  Even prior to this announcement, Facebook was already under Congressional scrutiny over revelations that a British analytics firm obtained access to private information from nearly 87 million Facebook users.  Not to mention Facebook’s rumored involvement with Russian election meddling.  Suffice it to say, it has been a tumultuous year for Facebook.

And while users may have concerns trusting Facebook’s ability to handle cryptocurrency data, they shouldn’t have those same concerns with Lite.IM.  Private keys are RSA encrypted with the user’s password.  Lite.IM will never ask for that information nor will it be stored.  Because of this, no third party will ever have access to that valuable information.

Conclusion

The truth of the matter is that Facebook is an absolute giant and has grown at an extraordinary rate since its initial public offering.  Facebook has hired some incredible talent, from executive positions to marketing to development.  And while one should never count them out, I simply wouldn’t be able to trust them with all of the recent issues.  Perhaps in time, after regaining the public’s trust, users could once again look to Facebook as a leader.

Fortunately, users have another strong and dependable option.  Lite.IM will allow users all over the world to manage popular cryptocurrencies via their favorite messenger platform.  Users should continue to stay tuned for future developments.

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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