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Technical Analysis of Crypto Is Impossible

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With no disrespect to those folks that have successfully practiced the art of technical analysis and are making a bountiful living from it: Bravo.  Trying to figure what to do with a stock like General Electric where there is great uncertain about the business and just after the dividend has been cut, you don’t have much to rely on.  So things like investor sentiment that is the embodiment of  technical analysis can be very useful.  But technical analysis for cryptocurrencies, I beg your pardon.

There are plenty of believers in using the technique on crypto.  When you Google the topic, there are 775,000 stories offered.  We decided to dig into one in particular that will remain anonymous out of respect for having their own point of view.

Old School Techniques Work On Long History

The cornerstone of technical analysis is based on the century old Dow Theory.  The most important premise in the Dow Theory is the assumption of perfect knowledge. “All existing, prior and upcoming details have already been factored into the current price. In other words the existing price reflects fully informed and knowledgeable buyers and sellers.

In the case of General Electric where there are hundreds of analysts, portfolio managers, investment advisors and everyday investors watching CNBC or Bloomberg, this concept of perfect information may be valid.  In a world where well over half of the world still has heard the term blockchain and where it has been estimated that 70% of crypto buyers are pure speculators with little or no knowledge what they own, this is a long way from perfect knowledge.  

Everything Works In Theory

The next key to understand Dow Theory is buying into the notion that there is no such thing as random price movements.  This is where trend analysis is important and technical analysts have their own language.  The important thing is once a trend has begun, it is likely to continue.  This is the principle of inertia that says moving objects will continue until stopped or their direction is changed.  

In the real world, the force that stops or changes direction is never know.  The first month of trading Bitcoin futures contracts on the CME and CBOE is nearing and end.  The amount of open interest (a measure of volume) has turned out to be disappointing.  If there was a clear trend in Bitcoin prices, futures traders would have been big players.  Instead we will have to wait for more time to measure this gauge.  In other words, there is imperfect knowledge.

The real focus of technical analysis is on their  focus on supply and demand. That makes sense in the case of GE where robo traders can analyze supply versus demand in fractions of a nanosecond and react accordingly.  Thus far in the crypto world where supply is generally fixed (within certain limits) and demand is driven both by speculators and application platform demand, this is a meaningless measure.  

One Sided Crypto Markets

Supply and demand have meaning in a two way market where transactions can be processed by the millions every second.  Bitcoin speeds are around 7 per second while fast footed Ethereum is about twice as fast.  This well known shortcoming accentuates volatility.   

Technicians believe that history repeats itself.  True that Terminator II was a repeat of Terminator I.  Beyond that we won’t dispute the general idea that patterns from history can display similarities.  But in order for history to repeat itself, there at least has to be a history to start with.  If 2017 alone were deemed enough history for Bitcoin, the price by the end of this year will have gone up nearly 1200%.

The New Tax Laws Change The Math

If you disagree with the unflattering assessment that is fine.  We aren’t against using technical analysis where it is appropriate.  I used it in the past whenever making stock trading decisions.  But the new tax law ended my interest in trading.

Last year two things happened.  First the IRS declared cryptocurrencies to be securities not hard assets.  Secondly, the new tax bill put an end to 1031 trades and this encourages disciples of cryptocurrencies to be long term investors.   

Before this you could sell a $1 million of Bitcoin with a cost basis of $100,000 for example and buy the exact same amount of Ethereum, Bitcoin Cash, Litecoin or Ripple and not pay a penny to the IRS.  This is no longer possible, sorry.  So forget about the short term swings, the future is not so far off.

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 115 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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3 Comments

3 Comments

  1. letusallunite

    January 24, 2018 at 6:58 am

    Why the focus on US investors? There is a whole world beyond the US.

  2. Mister.Ticot

    January 24, 2018 at 6:39 pm

    While it’s true that Bitcoin network handle up to 7 transaction/second, it seems pretty obvious that a lot more than that happens on exchanges without any limitation.

  3. jksmith815

    January 26, 2018 at 1:54 am

    LOL… isn’t the majority of the content in Hacked.com some kind of technical analysis?

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Altcoins

60 Minutes Showcases Potential of DNA and Genetic Genealogy; Opportunity for Crypto Investors

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DNA Storage

Throughout the years, 60 Minutes has been responsible for reporting on some of the biggest stories in the world.  Many of the most memorable episodes have involved world leader interviews, stories on endangered animals, profiles of famous celebrities, and occasionally, segments on promising developments in business and science.  A week ago, 60 Minutes had a very interesting report on how the authorities used Genetic genealogy to solve the case of the Golden State Killer, and how the authorities plan to keep using this new field to solve more cold cases in the future.

On April 25, 2018, authorities in Sacramento announced that they had solved the notorious case of the Golden State Killer.  Authorities were able to use a promising new technique called Genetic genealogy to help identify 72-year-old former police officer, Joseph DeAngelo, as the suspected killer.

Genetic Genealogy

Genetic genealogy is a mixture of high-tech DNA analysis, high speed computer technology, and family genealogy.  The end goal is to determine the level and type of genetic relationship between individuals.

In the case of the Golden State Killer, DNA came into play because the killer had committed at least 12 murders, 50 rapes, and many home burglaries.  Investigators were able to obtain DNA from the killer at one of the reported crime scenes.  After many years of frustrating dead ends, a cold case investigator submitted the obtained DNA sample to GEDmatch.  GEDmatch is the largest public genealogy database in the world.  After uploading the sample, authorities were able to generate a handful of leads which eventually led to the front doors of Joseph DeAngelo.

In addition to the Golden State Killer case, authorities have used Genetic genealogy to make arrests in at least 11 other cold cases.  While the science appears to be sound, there is a legal question that has yet to be answered.  There is no doubt that attorneys for the accused will raise the question of privacy and whether using databases, thought to be private, should be legal.

Opportunity for Crypto Investors

While I’ve invested in equities and crypto for many years with varying degrees of success, I’ve never had the opportunity to invest at the beginning of a new frontier.  Fortunately, the opportunity has come.  Encrypgen (DNA) is a genomic blockchain network that provides customers and partners with best-in-class, next generation, blockchain security for protecting, sharing and re-marketing genomic data.  This creates a fair marketplace for a person’s DNA that can be stored private and sold (if a person wishes to do that).

Over the past few months, Encrypgen has been gaining attention in the mainstream media because of their revolutionary technology as well as the fact that their closest competition is still years away.

In August, Encrypgen released a beta version of its Gene-Chain.  The Gene-Chain allows consumers to upload their genetic profile and for researchers to purchase that genetic data.  Within the next 2 weeks, the company plans to release the full version of the Gene-Chain which will officially make them a new pioneer in the field of genomic blockchain security.

With the DNA token hovering at approximately 5 cents, the time is running out to accumulate at bargain basement prices.  I fully expect the token to achieve utility in the next several months which will cause a rocket-like explosion in the token price.  There is no looking back now, only forward, and I love what I see.

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

Fantom – The Next Big Thing?

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Fantom (FTM) is a a Directed Acrylic Graph (DAG) based smart contract platform in which the more nodes participate in the network, the greater the transactions per second. The project is aiming for 300,000 transactions per second, which would be applied to multiple industries such as food technology, financial services, telecom, logistics, etc. Fantom is designed to offer instant payments, near zero costs, and unlimited processing scalability. Like Ethereum, Fantom supports Smart Contracts but they run on the Fantom Virtual Machine vs the Ethereum Virtual Machine. Why is that important? Because the FVM will allow developers to write dApps that support smart contracts just like ethereum but run light-speed times faster.

A lot of new blockchain projects talk as if they will challenge the top blockchains and take over their spot. While this is speculation and mostly hot air spoken by many projects, Fantom has a great shot at taking off as one of the top blockchains. Andre Cronje, well respected in the ICO scene as a technical blockchain expert, was added as part of the technical team recently. Having a team and community as strong as Fantom does gives it the extra push needed to take off. While other projects are implementing directed acyclic graphs (DAGs), Fantom is the first to do this with smart contract support.

Fantom operates on a system called OPERA, which is divided into three layers:

  • OPERA CORE LAYER – processes transactions, maintains consensus across all nodes via the Lachesis Protocol
  • OPERA WARE LAYER – supports smart contracts, executes functions
  • OPERA APPLICATION LAYER – supports third-party applications, provides publicly available APIs for dApps

Partnerships with credible companies definitely help the legitimacy of an ICO and Fantom has already made numerous significant partnerships such as the Korea Food-Tech Association and Oracle that will significantly enhance their chance of success. The company, in collaboration with NEM Blockchain, has recently announced it’s expansion outside of Korea into Australia. Fantom has chosen Australia due to their innovative culture and supportive government. Fantom is committed to working with local communities and governments to utilize Fantom technology across multiple industries. They are focused on creating real-time use cases of their platform by on-boarding Australian businesses in the next twelve months. Australia has hundreds of merchants who already accept cryptocurrency including the first airport in the world to do so. Fantom has already been working behind the scenes engaging with payment providers about using Fantom token as they expand globally.

Multiple blockchain projects are claiming to be the fastest with the highest tps, but have not come through on their promises. Fantom has an excellent shot at actually accomplishing this and immediately becoming a major player surpassing those that have fallen short.

Unlike many recent ICOs, which are constantly delaying and postponing the release of their tokens due to current market conditions, Fantom is unlocking and listing on October 29th. The project recently released a recent Technical Whitepaper concerning the Lachesis Consensus Algorithm, making another version of the Technical Whitepaper detailing the Fantom Framework ready, and preparing a testnet demo video to be available soon.

With major funds invested for the long haul and markets such as the USA, China, and Korea unable to participate in the much-hyped ICO, there should be quite a bit of immediate interest and demand upon listing on exchanges. The last ICO with similar hype was QuarkChain which also did amazingly well in this market. Fantom had a hard cap of $39 MILLION at the time of ICO raise and is expected to perform well.

Diclaimer: The author has invested in Fantom.

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 53 rated postsKent Hamilton - Co-Founder of CryptoDayTrader.io, where we are building Pro Crypto Tools




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Why Investors Should Pay Attention to Blocknet

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Even in the “crypto winter” we are currently living in, the blockchain industry is still growing. This is a good thing for the industry in many ways, but all of these various networks have developed in a siloed and separated way.

Some companies have emerged that seek to help the various networks work together and harvest synergies. If blockchain was meant to be a new manifestation of the internet, these networks could be considered a new manifestation of blockchains. One such company is Blocknet.

Blocknet’s Mission

Blocknet is often referred to in the colloquial as “Block” and functions as a decentralized platform-as-a-service service. The basic goal is to connect the nodes of different blockchains to create a network of networks. The endgame here is to make it possible for applications to be developed on one blockchain but be used on another.

The network is composed of three key components: a node exchange, coin exchange, and data exchange. The XBridge is the blockchain router than connects nodes on different blockchains and makes it possible for them to communicate with each other.

The XBridge also enables cross-chain atomic swaps using a coin exchange protocol. We will go into more detail into this in a bit, but it is essentially a DEX. Finally, there is the inter-chain data transport that allows for feature sharing and smart contracts to be executed across chains.

Market Demand

Blocknet was founded in 2015 and finally launched their mainnet in September 2017. The market has been looking for a solution like this. There is competition from other networks like 0x, but they have already started to integrate their networks with Blocknet. By seeking to be a super-network, it is eliminating the idea of competition.

A big part of Blocknet is the decentralized exchange (DEX) that it runs. What makes it special and sets it apart from the competition is that it is more than just an exchange for ERC-20 tokens. It enables the trading of every coin that is integrated into the network.

The Blocknet DEX will be designed to enable an unlimited amount of trading pairs, and will enable complete anonymity for users. Additionally, by avoiding a central entity, you always retain complete control over your funds.

BLOCK Token

The token has two functions. First, they are used to pay trading fees and for the operation of applications on the network. Second, they are required to be staked as a service node or staking node. These are the nodes that distribute trade fees or confirm network transactions.

BLOCK trades on Bittrex, and in terms of recent performance, we have seen a heavy decline from the highs that BLOCK reached last year. However, it seems to have reached a bottom and found a support level. As we head in the last quarter of 2018, it could be time for a recovery, and BLOCK seems poised to take advantage of this.

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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