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No, It’s Not Just You. Crypto Funds are Also Seeing Red

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Crypto Fund Losses

While your cryptocurrency holdings may be severely underwater, at least you do not have to publicly disclose it.

It is coming to that time of year that all of the cryptocurrency funds have to report the quarterly numbers, and they are not looking pretty. They are all coming to grips with the impact of previous record quarters and the subsequent falls.

I’m going to take a look into some of these funds and what the falls in their portfolios means for the broader crypto fund ecosystem.

Quarterly Reckoning

While many of the crypto funds are private and will try and keep their returns out of the public eye, we have insight into two very prominent funds in the space.

These are Galaxy Digital and Pantera capital.

Galaxy Digital

For those who do not know, Galaxy digital is run by Wall Street veteran Mike Novogratz. He is a celebrity in the cryptocurrency ecosystem who has brought a great deal of interest from Wall Street into crypto.

Unfortunately, Galaxy Digital has had a rough last few quarters.

Given that the company is listed on the TSX Venture Exchange (TSXV), they are required to release these quarterly results. On the 29th of November they released their 3rd quarter results as well as the results for the 9 months ended 30th September 2018.

Galaxy lost $76 million in the third quarter of the year which made up the the bulk of the $175m loss that occurred over the first nine months of the year. This is also pretty unfortunate given that Mike called a bottom in the crypto market in the middle of September.

While the call came just before a short uplift in the price, it fell right back down again. After the disclosure of the numbers, Galaxy digital’s share price fell by over 10% and the TSX had to suspend trading.

Unfortunately, these numbers will not have captured the losses that have most likely occurred over the past month in November. Short of a miracle rally in the next few weeks, the fourth quarter and indeed the whole year are likely to be much more bleak.

Mike Novogratz was pretty open about the challenges that Crypto funds had been facing throughout the year. In an interview that he held with the Financial times in late November he said:

[But] this year has been challenging. It sucks to build a business in a bear market

All of us believers can agree Mike, it really does suck!

Pantera Capital

Unlike Galaxy digital, Pantera is not a listed company. This means that they do not have to publicly disclose their earnings to the broader market.

However, according to a letter to its clients, the billion dollar fund has also had a tough year.

pantera fund losses
Disclosed Losses in Pantera Presentation. Source: Twitter

As you can see, the fund reported a 72.7% loss in the year till the end of August. They even reported a 40.8% loss in the fund since December 2017 (prior to bull run). These numbers are only up until August so like the above example with Galaxy, they have not captured the recent sell off that we have witnessed.

Despite this though, Dan Morehead (Pantera’s founder), is still long term bullish on the price of Bitcoin. In an interview with Bloomberg he said that

Six or eight years ago there was probably a million people on earth using it, now there are 50 million people that use it… I think in a decade it’s going to be billions of people using it…

As long as Pantera’s investors are as convinced in the long term trajectory of Bitcoin and cryptocurrency, Dan can stick it out for the long term.

It’s not Just the Funds

While the cryptocurrency funds are the most present example of businesses that are feeling the heat from the crypto crash, they are most certainly not the only example.

Cryptocurrency miners are another business that is heavily exposed to prices. They don’t only sell an asset that is falling in value but they have to meet monthly expenses such as electricity (not to mention return on capital equipment).

There have been rumors for some time now that Bitmain, the largest mining operation, is having trouble with their upcoming IPO. For example, there were concerns with the IPO given the amount of Bitcoin cash they had on their books.

Moreover, the SCMP reports that Bitmain and other mining equipment manufacturers are likely to suffer collateral damage as a result of a potential trade war between the USA and China.

Then you also have the impact that the fall in cryptocurrency trading activity is likely to have on the exchanges.

While exchanges are not public and are unlikely to report their earnings, you can get a pretty good idea of how well they are doing by their traffic stats as well as their public 24 hour volumes.

Coinbase alexa ranking fall
Fall in rankings of Coinbase.com on Alexa. Source: Alexa

As you can see from the above image, there has been a fall in the Alexa rank of coinbase.com continuously since the beginning of the year. The Alexa ranking is one of the most accurate metrics of how a site stacks up in terms of their rankings.

Bittrex Volume fall
Drop in Bittrex Trading Volume. Source: Coinmarketcap

Taking a look at the above image, we have the 24 hour volume of the Bittrex exchange from the 2nd of January on the left and the 9th of December on the right. As you can see, the volume over the past 24 hours now is a mere 1% of the volume that it had at the height of the bull market.

Exchanges make money on fees. Lower volume => Lower fees => No Christmas Bonuses.

Where to Now?

While these numbers are indeed quite depressing, how things are likely to progress really depends on what view the company or fund takes.

Much like how you view your own crypto portfolio, these CEOs and managers are likely to take a cold hard look at their operations, assets and long term vision. Do they fall for the FUD and leave the game or do they adapt and become more nimble / selective?

Some big players have chosen the latter. For example, Joe Lubin (co-founder of Ethereum) sent a letter to his Consensys employees around how the company will adapt to the new market conditions.

In terms of the funds that we have examined above, they are likely to stick it out. Mike Novogratz and Dan Moorhead are adherents to the power of blockchain technology and cryptocurrencies. They seem to be in it for the long game and have strong investors behind them.

For further green shoots of a potential recovery, you need look no further than where other institutional investors are entering the market. Money managers, high frequency trading firms and investment banks are taking the leap into the digital asset world.

So, while you are not alone in your large crypto losses, you are also not alone in your beliefs of a brighter crypto future.

Featured Image via Fotolia

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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5 stars on average, based on 10 rated postsNic is an ex Investment Banker and current crypto enthusiast. When he is not sitting behind six screens trading Bitcoin, he is maintaining his numerous mining rigs. Twitter: @nicrypto




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Analysis

Crypto Update: Sideways Drift Continues but Sellers Still in Control

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While the bounce on Monday gave some hope to crypto bulls that last week’s plunge was just a correction in an ongoing broader counter-trend move, so far, we haven’t seen meaningful follow-through. That means that the bearish short- and long-term trends are still dominant in the segment and sellers are clearly in control of every major top coin.

Also, while volatility is relatively low, correlations are still elevated, and volume patterns are bearish as well, so our trend model remains on sell signals with regards to the overwhelming majority of coin on all time-frames. Traders and investors are still advised to stay away from entering new positions, as we have no evidence the bear market is over, and at least the test of the lows is likely in the coming months.

That said, a quick recovery above the primary resistance levels would be a positive sign here, but until we see signs of technical strength, the defensive approach is warranted as bearish risks remain very high here.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability is still the only positive sign among the top coins, but BTC also lacks bullish momentum and it failed to leave the close vicinity of the key $3600 support level. The $3850 resistance is out of reach, for now, and given the clearly bearish long-term setup, traders and investors shouldn’t enter positions here.

A move above that level would be a positive sign for bulls, with further zones between $4000 and $4050, and near $4450, but we still expect a move towards the support levels near $3250 and $3000 in the coming weeks, even if a broader bottoming process might already be underway.

ETH/USD, 4-Hour Chart Analysis

While Ethereum spiked higher again towards the $130 resistance level today, the move failed again and bulls failed to make technical progress, with the recent low still being in danger. A sustained push above $130 could still signal a failed break-down pattern, but the lack of bullish momentum points to a continuation of the decline.  Key support is found near $120 and between $95 and $100, while further resistance is ahead at $145, $160, and near $180.

Altcoins Unchanged and Bearish After Choppy Day

LTC/USD, 4-Hour Chart Analysis

The volatility compression continued in all of the major altcoins as well, but the broad selling pressure is still apparent in the segment. Litecoin failed to get close to the primary resistance zone near $34.50 despite the early-week rally attempt, and it continues to threaten with a move below the key $30-$30.50 support zone.

A breach of support would likely trigger a move towards the $26 level, with the oversold short-term momentum readings now being cleared in the market of LTC. Further strong resistance is ahead near $38 and $44 and with support found near $23, and traders and investors still shouldn’t enter positions here.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been showing signs of relative weakness again today, after the brief period of stability and the technical picture continues to be negative on all time-frames, and our trend model is also on short- and long-term sell signals. The $0.32 price level is still in focus, and we still expect a move below $0.30, with strong support found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

DASH/USD, 4-Hour Chart Analysis

Dash remained among the relatively weaker majors as well, and it still hovering around the $70 price level after bottoming out close to $67.50. A test of the bear market low near $56 seems very likely in the coming weeks, and only a move above the strong resistance zone between $76.50 and $80 would change the short-term outlook for the coin.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 442 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

STEEM Coin on the Move While Steemit Loses 20 Million Visitors in Six Months

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One of the three currencies which fuel the Steemit blockchain-based social media site, Steem (STEEM) gained 22% in the previous two days. Despite the increased price movement in January, monthly visitors and unique account creations continue to plumb new yearly lows on the Steemit social media website.

STEEM Price

STEEM’s recovery has been slow in coming – the coin gained 43% from December into January, however most of that came in the last forty-eight hours. Compare that to major and mid-cap altcoins such as Tron (TRX), Zilliqa (ZIL) and Augur (REP) which gained over 100% in that time, and you see a major discrepancy.

From Monday through to Wednesday STEEM went on a 22% run which carried the coin price from $0.249836 up to $0.306033. Trades against Korean won on the Upbit exchange accounted for more than 40% of the day’s trades, or around $1.2 million of the $2.7 million daily total.

Steemit Cools Down

After suffering the indignity of laying off a majority of its staff back in November, Steemit continues to hold on despite plummeting numbers.

Remarkably, the Steemit social media site lost almost 20 million monthly visitors in the last six months – a 61% drop off from the 30.8 million visitors in July, to the current 11.9 monthly visitors according to SimilarWeb. New account creations are also down 83% in the last six days alone, however statistics show that new users tend to flood in whenever the coin price pumps – even if just for a brief time.

CCN reported back in May of 2018 that Steemit had surpassed one million accounts created on the blockchain. This was a startling figure at the time, and grabbed a lot of headlines. However, Steemit statistics from the time suggest the number of unique users was actually much less – closer to 150,000 according to this chart from Steemit’s @arcange.

Follow the Money

The same chart shows that January of 2018 remains Steemit’s most successful month. The site gained close to 120,000 new users in the sixty days leading up to January’s all-time high, when the coin price climbed as high as $8.57.

As the coin fell to a twenty-month low in December, unique accounts on the blockchain also fell to eighteen-month lows in the process. A major increase to new account creations was seen on January 9th, as STEEM went on a similar 23% price spike, and 4,108 new users flocked to Steemit in one day.

Stats courtesy of Steemit’s @penguinpablo

By six days later, new registrations had fallen back to 695 per day, as STEEM’s gains from the previous few days were wiped out.

Steemit launched back in early 2016, and has divided opinion since its inception. Check out this recent primer for an up to date summary of Steemit and its features.

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 123 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Cryptocurrencies

Perpetual Tron (TRX) Trading Goes Live on OKEx… With a Warning!

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It’s been a busy twenty-four hours for the Tron ecosystem. First the ABCC Exchange became the first to list Tron’s TRC10-standard token, then OKCoin unveiled a batch of new crypto and fiat pairs for TRX, including the Argentine peso, the U.S dollar, as well as a host of major altcoins.

By Wednesday morning news was making the rounds that the OKEx exchange had added TRX to its Perpetual Swap contracts. Unlike Futures Contracts offered by OKEx, perpetual swaps don’t expire, and allow for daily settlements at a regular set time. However, they demand daily interest payments, and carry increased risk.

OKEx even saw reason to calculate TRX’s risk differently from other digital currencies, owing to its increased volatility. Wednesday’s announcement warned users:

“Risk Warning: Tron (TRX) is more volatile comparing to other digital assets. Please make sure that you understand the risk involved when trading TRX swaps.”

OKEx Adds Perpetual TRX

That claim about Tron being more volatile is true enough. After declining by more than 50% last week alone, TRX is still up more than 129% since late November – such is the extent of its volatility.

Tron founder and CEO tweeted out the OKEx news on Wednesday morning, accompanied by a blog post explaining the fees for perpetual swaps on the exchange. OKEx processed just over half a billion dollars worth of trades in the previous day, with TRX/USDT, TRX/BTC and TRX/ETH making up 5% of Tron’s total daily changeover.

For more on perpetual swap contracts, check out OKEx’s own twelve-step guide – an ironic number given that’s the same amount of steps it’ll take to wean you off them later.

Tron Price – TRX/USD

Volatility has been more difficult to come this week. TRX traded between $0.024 and $0.026 fairly predictably since Monday. By Wednesday morning TRX was down 1.3% according to CoinMarketCap, while trade volume had sunk to $0.2 million, after hitting $1.1 million just the week before.

Tron has had first mover advantage during market rebounds for some time now, however we all know how the market loves a good correction. Despite a positively stellar month for TRX, tech analysts still fear steep fall for the coin in the near future.

More Tron News…

It’s been full steam ahead for Tron recently, despite a sudden bout of bad publicity stoked by former BitTorrent chief, Simon Morris.

In addition to the coin listings already mentioned, TRX was added to CoinGate – a crypto payment processing service which allows users to spend their coins via thousands of online stores. TRX is now a ‘native currency’ on CoinGate:

“Any user of the TRON blockchain can now shop at thousands of stores using CoinGate.”

Meanwhile, the Tron community is counting down the hours until the Tron NiTRON Summit, held in San Francisco on the 17th and 18th of January. Major updates about the future of the BitTorrent Token (BTT) are expected to be unveiled.

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 123 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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