If you’re reading this, there’s a chance you weren’t old enough to vote when the World Trade Center’s Twin Towers were struck down on September 11th, 2001. An event that caused a tectonic shift in US foreign policy and led to two US engagements in the Middle East (Iraq and Afghanistan) – followed by proxy wars in countries like Syria, Libya, Iraq.
It was a horrific day to be an American. Some of us were in high school, watching on television, wondering why school hadn’t been let out. The logic was that we don’t bend to the will of terrorism, rather, it bends to our will. Except if you look at the blood and treasure expended by the Bush Administration, it seems that the US very much does do as the terrorists want them to do.
The US National Archive recently released photographs of national leaders from the day. The one we center on is too interesting to ignore: Dick Cheney, leaned back in his chair, seemingly casual about what’s going on.
In another, below, he’s at the beginning or end of a smile while President George W. Bush has a genuine look of distress on his face, perhaps on the precipice of tears.
According to Forbes, body language is everything. Leaning back is a sign of disinterest, whereas leaning in is a sign of keen interest.
Conspiracy theorists have long charged a few things about Dick Cheney, chief among them that he was the one calling the shots during George W. Bush’s presidency. In 2013, it was revealed that Dick Cheney had previously been dishonest about the events of 9/11.
If nothing else, the newly released photos will strengthen conspiracy theories and potentially create new ones. One thing is for certain: the way that Dick Cheney is reacting in these photos is diametrically opposed to the way that most Americans reacted. More from that period can be found here.
Featured image from Albert H. Teich / Shutterstock.com.
Altcoin Investing Strategy as Futures Hit the Market
There is a lot of buzz around cryptocurrency right now as bitcoin futures hit Sunday evening. No one really knows how bitcoin futures will impact the underlying price of BTC/USD for the long-term. One theory states that large institutions will short bitcoin futures. If this happens, you can expect a lot of negative headlines to come from traditional media and advertising trying to tank the BTC price. The next important date to look out for is Dec. 18 (CME Futures). Nasdaq has yet to give a solid date on when its futures contract will go live.
Altcoins traditionally are tied to bitcoin. Although this is usually expressed as an inverse relationship, altcoins have been moving in the same direction as bitcoin as of late. However, in the current environment, what seems to be happening is veteran bitcoin and altcoin investors taking profit as BTC rises before flooding the more solid altcoins. The newer investors are starting to prop up bitcoin for the long-term and allow experienced altcoin investors to use those profits to diversify.
For the long-term, here is a suggested strategy:
- 60% bitcoin (BTC)
- 20% solid large cap altcoins, such as Ethereum (ETH), Litecoin (LTC), Monero (XMR), NEO (NEO) and EOS (EOS)
- 20% ICO investing and more speculative altcoins
A successful, albeit riskier strategy employed by various traders, include using bitcoin (BTC) as the primary trading cryptocurrency when trading altcoins. Ethereum has more bots and less volume, which often makes it less advantageous as bitcoin for accessing the altcoin universe.
With ICOs being launched on the daily, there is plenty of opportunities to speculate on unproven altcoins.
With this risker strategy, 100% is invested in ICOs and speculative altcoins. This strategy involves buying into ICOs and trading altcoins in order to increase your position in bitcoin. The goal of this strategy is to trade and outperform BTC. When an altcoins start to tank, move cash back to BTC. ICO investing is a topic all on its own. The best ICO investing strategy is to buy in the presale or get a token bonus of some sort during the early ICO crowdsale. A lot of the successful ICOs allow investors to exit with at 2x-3x return on investment (ROI). You could also cash out your initial investment from an ICO and then leave the profit in the coin for the long term.
Featured image courtesy of Shutterstock.
Futures Trading – Bullish or Bearish for Bitcoin?
Writing anything against the price rise in bitcoin is like keeping your head in a guillotine and expecting it to be unhurt. However, at times, one’s got to do what one’s got to do. So, at the risk of ruffling a few feathers among the bitcoin enthusiasts and staunch supporters, I will put forth my two cents on why the latest rally in bitcoin is looking bubbly. Only time will tell whether my argument proves to be correct or falls flat on its face, similar to the ones proclaimed by the legendary investors.
- Bitcoin’s rally is looking like a bubble
- Futures trading will pit the bulls and the short sellers against one another
- Introduction of Nikkei futures trading turned out to be bearish for the Japanese stock market
- Sell 50% bitcoin holdings at the current levels and stay in cash
We had recently warned that bitcoin is topping out in the short-term. While bitcoin fell after our article, the dip was more of a buying opportunity rather than the indication of a top that we were referring to. Whoa, there goes my forecasting capability out of the window.
However, does the rise above $16000 and a market capitalization of above $300 billion make us change our view? Not really. I now believe that we are about to make an intermediate top.
The common gripe among the cryptocurrency enthusiasts is that being a new asset class, bitcoin is not understood by many traditional investors (include me also in this list) who keep questioning its incessant rally. On the other hand, the traditional investors point that the price has gone well ahead of its fundamentals.
There is going to be a big clash between these two school of thoughts with the launch of bitcoin futures.
What can happen after the launch of bitcoin futures trading?
I will try to explain how things will play out according to my opinion.
The launch of bitcoin futures trading will provide an opportunity to the institutional investors to diversify their investments into a new asset class. Nevertheless, it is difficult to fathom how many will buy, especially when the cryptocurrency has risen more than 16 times this year.
Until now, most of the money used to be on the long side of the trade. Some of the sharp falls were a result of profit booking or due to investors not stepping in to buy at lower levels due to the negative news flow. There was never an overhang of short sellers on bitcoin prices, which is going to change from December 10 and December 18.
So, with every part of the rally, there will be an equally bearish short seller who will see an opportunity to benefit from the fall in bitcoin prices. Money will be made both on the way up and the way down.
Will the short sellers jump into the fray at once?
Difficult to say, but my anticipation is that the short sellers are unlikely to jump in to sell bitcoin futures aggressively, especially since bitcoin is backed by a strong upward momentum. Large short sellers are likely to dip their feet with small short positions and watch.
As now we have traders willing to take both sides of the trade, we expect the pace of the ascent to slow down and short positions to start accumulating on every rise. Volatility is also likely to increase in the short-term.
Introduction of futures trading is not always bullish
Though we don’t have an apples to apples comparison for cryptocurrencies, we can look at how the Japanese stock markets were affected by the introduction of Nikkei futures trading in Osaka Securities Exchange.
The Japanese stock market was riding high on the back of a bubble in asset prices, which also boosted the prices of Nikkei stock exchange. The index rose 10 times from 1975 to 1990.
Nikkei futures trading started in Osaka Securities Exchange in 1988 and the Nikkei stock average peaked in end-1989. The descent was equally sharp as the ascent.
Some may point that the crash in Nikkei happened only two years after the futures trading started. However, one must keep in mind that it took 15 years for the Nikkei to rise 10 times while bitcoin has risen 16 times this year itself. Therefore, the fall is also going to be equally vicious.
Signs of excesses in bitcoin
- Almost every cryptocurrency trader(other than hacked.com subscribers) believes that this time it is different and one can make tons of money within a short span of trading in cryptocurrencies. After all, the Winklevoss twins have become billionaires by starting with just $11 million four years back. There is a firm belief that bitcoin is the future, hence, every fall will only rally higher than the previous one. See, all the analysts’ targets.
- Analysts are beating one another in announcing targets on bitcoin. I believe the maximum is $1 million by 2020, by John McAfee. Let’s see if there is any analyst brave enough to top this one, especially in the medium-term time frame of 2-3 years.
- A vertical rally. 16 times increase in value within a year is evidence enough that the rally is overheated. Expecting the same pace of rally in the future is like asking Usain Bolt to complete the marathon with the same speed that he runs the 100 metres race.
- The institutional investors will be eager to jump in to buy bitcoins and once those billions start pouring in, there is no end to the rally. This is not true because the large institutional investors are hugely risk averse. Their money is made in compounding about 15%-25% consistently over the years. It is unlikely that most will enter the fray until bitcoin’s volatility reduces considerably.
- Consider the world’s population of 6 billion and the fact that there will only be 21 million bitcoins mined. Additionally, out of that, millions are either lost or are locked away with only a few millions in circulation. So, the price rise is justified. Well, if Leonardo da Vinci had a few hundred thousand paintings in the market place, his paintings wouldn’t have fetched millions. So, this argument of only 21 million bitcoins that will ever be mined doesn’t hold ground.
OK, so if bitcoin is in a bubble, what should one do with it?
For people who don’t own bitcoin currently, please stay away from it, until you see a large correction.
For the others who own bitcoins, 50% of the positions should be closed right away, above $16,000 levels before the futures trading starts. The other 50% of the position should be held. This can be sold when bearish patterns develop on bitcoin because no one can point the top in a bubble.
Likely scenarios to play out if bitcoin falls
There are two possible scenarios that I believe can happen.
- Bitcoin falls and drags the sentiment down for the whole cryptocurrency universe. It doesn’t take a long time for the sentiment to get sour. In such a case, people who have been hoping that altcoins will rally when bitcoin falls will be in for a rude shock.
- The second scenario is that the current investors in bitcoin will face a stiff resistance from the short sellers. When the existing whales are unable to influence bitcoin prices like before, they are likely to jump to the altcoins because they don’t have to counter short sellers there. In this case, the altcoins recover sharply.
The best way is to cash your bitcoins into dollars and sit out. Once the dust settles down, there will be many opportunities to earn money because cryptocurrencies, as an asset class is here to stay.
Featured image courtesy of Shutterstock.
Can Stellar Become the Next Major ICO Platform?
If you’ve been paying attention to ICOs, you’ve probably noticed a consistent trend: the vast majority of token raises are built on Ethereum. The protocol has quickly emerged as one of the blockchain community’s undisputed leaders. And just like that, of cryptocurrencies were born.
Although there’s little evidence to suggest that startups are thinking about abandoning the ether platform, a new kid on the block is proving just as worthy of consideration.
Stellar Payment Network
Stellar actually isn’t all that new. It was founded in 2014 as an open platform for developing financial products. Though largely flying under the radar amid the latest crypto boom, Stellar has earned a market cap of nearly $3 billion. That’s enough for 11th spot on the CoinMarketCap chart of leading cryptocurrencies.
Stellar made headlines last month after Smartlands became the first company to launch a token on the payment platform. Smartlands, which markets itself as the platform for agriculture, touted Stellar’s superior transaction protocol and massive reach. Proceeds from the ICO will fund the development of the company’s Asset Based Tokens, which are offered on the Smartlands platform.
With Smartlands latching on to Stellar, market participants are curious to see whether more ICOs will follow suite. As it turns out, Stellar has a number of unique advantages that could make it the ideal platform for future token raises.
Stellar for ICOs: The Rationale
ICOs have raised $3.5 billion and counting this year. Although most token raises continue to be delivered through Ethereum, there is a strong case to be made for Stellar.
1. Cheaper and faster
One of Stellar’s most defining attributes is its ability to avoid the gas problem facing Ethereum and other cryptocurrencies. As ether prices march toward $500, transactions are becoming more expensive. Stellar does not need gas to execute programs and has a miniscule transaction fee (i.e., fraction of a penny). The Stellar network is also able to process 1,000 transactions per second, making it ideal for token raises with a strong transaction component.
As we’ve mentioned before, there’s no shortage of industries represented in the ICO market. Projects are diverse in scale and nature, making customization an essential feature of the underlying infrastructure. Stellar allows token issuers to customize their accounts, payments, tokens and special offers.
3. Decentralized Exchange
As the number of cryptocurrencies continues to rise, a platform that enables efficient trading will be viewed more favorably by the investing public. As Lindsay Lin describes on the Stellar blog, any token created on the platform can be bought and sold via Stellar’s decentralized exchange. Companies that launch their ICOs on the Stellar network do not need a third-party cryptocurrency exchange to make their token available. This is an extremely attractive value proposition at a time when crypto-market liquidity is going through the roof.
4. Security Features
The Stellar system doesn’t offer the same breadth of features as Ethereum. This was done on purpose to limit risk and keep the bad actors from exploiting the program. As an added layer of security, token issuers can choose which nodes are allowed to validate their transactions. Security often comes at a cost, but Stellar has taken a reasonable approach to protecting its infrastructure.
5. The Team
Stellar is backed by one of the strongest teams in the industry, with co-founder Jed McCaleb already building two cryptocurrency companies. For those who are unfamiliar with McCaleb, he created Mt Gox, the now defunct exchange that at one point handled nearly three-quarters of global bitcoin transactions. After the Mt Gox debacle, he went on to found what would eventually become Ripple. The Stellar team currently consists of 12 employees, four board members and eight advisers. It’s advisory group is, shall we say, stellar. It includes the founders of Y Combinator, AngelList, WordPress and Apache Software. The chief scientist of White Ops is also involved in the project.
Of course, none of these attributes diminishes Ethereum’s capabilities as a superior programming platform. Its smart contract applications continue to be a major draw for prospective token raises. As the ICO Ratings page clearly shows, Ethereum remains very much in the driver’s seat.
That being said, keep your eye on the Stellar network. We wouldn’t be surprised if more ICOs are launched on this platform in 2018.
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.
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