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Analysis

The Raiden Network: Is Now A Good Time To Invest In RDN?

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It seems like we have talked about the need for speed whenever the topic of blockchains and cryptocurrencies are mentioned.  These days, transactions are consuming huge amounts of energy and still only perking along at 10-15 per second. If there is a crypto future this rate isn’t going to get us there.  As we all know, Mastercard and Visa work with a system supposedly doing 100,000 per second.

Who knows if that number is absolutely accurate of some smoke but one thing we know: 10-15 per second is pathetic.  Bitcoin’s potential savor is The Lightning Network. The latest version was released within the last few weeks. Along with about everybody else, we will be watching closely to get a read on TLN.

A Savior For Ether Investors?

The Raiden Network could save Ethereum from techno irrelevance.  The important word here is could. That is because there is lots of Ethereum envy out there.  There are folks such as Cardano and NEO that have their own blockchain platforms complete with smart contracts.  Then there is Liquidity.Network, the recently announced Ethereum focused competitor to Raiden.

Creating A Separate Coin For Investors

Raiden Network completed its ICO last November, raising $32.8 million.  Rather than simply creating a fork of ether, developers created the opportunity for investors to directly participate in a solution that could save the day for Ethereum and investors in ether.  

I do not own any RDN.  A small amount of ETH has my name on it, so I am eager to find the protocol that can protect my measly holdings.  Here is what gets me interested in Raiden.

Well Along In The Development Process

RDN has been around for about the same amount of time as Ethereum dating to 2015. That is about 21 in dog years and practically a millennium in crypto time.  But the development team strikes me as the most interesting part.

RDN is being developed by BrainBot Technologies AG.  This is not a smattering of amateurs but a company with a deep bench of developers and a history of successful projects.  Check them out at brainbot.com.

Last November, Brainbot demonstrated the high throughput and low latency of the Raiden Network with a demonstration of Micro Raiden applied in real-time, showcasing the great potential for products that require the type of high speed transactions involved with the Ethereum blockchain.

Off The Blockchain

Technical reports describe The Raiden Network as an open source, trustless, fast, inexpensive and scalable off-chain payment solution for the Ethereum blockchain. This means it functions smoothly with the Ethereum platform. The Raiden Network provides bidirectional payment channels for low scale value exchanges of ERC20 compliant tokens to users within the Raiden Network. These bidirectional payment channels may interlock to create a system of channels between infinite parties in a hive.

Translated into comprehensible english, Radien promises almost instantaneous transactions with fees low enough to attract low value transactions. At less than $0.01 per transaction, a $5 latte fits.  Ethereum fees at the peak last year were more $4.15. So the potential for Raiden is really big.

In fairness it should be mentioned that Ethereum is considering options such as sharding and that would reduce the singular importance of Raiden. So perhaps the role of savior is a bit extreme.  But sharding is not likely to be a preemptive force. Raiden development is that much further along.

Speaking Out

Members of the Raiden development team are taking their show on the road having made presentations recently in Tokyo.  The next event is scheduled for Toronto this coming week on May 4th. The presentation is being billed as an opportunity to give an update on the progress in deploying the network.  This is a date to put in your digital calendar if you own ETH or have an interest in RDN.

Aside from the obvious reasons, here is why.  Like about every other crypto, RDN peaked in price in early January around $8.65 before taking a plunge to less than $1.20 by April.  This drop of 87% made RDN one of the worst performers in the recent crash. In addition to all the crypto market woes, there were delays in the network deployment.  That is enough to disappoint anyone.

Since early April RDN’s price has rebounded to about the $2.00 level.  Even so this is a long way from the good old days of 2017. Logic dictates that a good showing in Toronto might translate into investors taking notice.   By good showing we are talking about favorable news about Raiden deployment.

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 97 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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4 Comments

4 Comments

  1. Constantin

    April 26, 2018 at 9:06 pm

    Info and an idea for a trade. That’s EXACTLY what I expect from Hacked. Good one again James!

  2. James Waggoner

    April 26, 2018 at 9:54 pm

    Hello Constantin, So glad you are enjoying Hacked.com. We will keep trying to come up with useful stuff. best James

  3. andrewmayne1

    April 27, 2018 at 10:02 am

    Hi James, thanks for the trade idea. I did have some skin in RDN, but while it looks like a promising technology, I got rid of my share because another analyst wasn’t convinced about the token economics.

    To be a good long term investment I think a project needs to have a good team, have a good technology, and there has to be a compelling reason for the token to be needed for the network to grow in value as usage increases. Do you think this is the case for Raiden?

  4. James Waggoner

    April 27, 2018 at 5:43 pm

    Hi Andrew, Thanks so much for your comments. Investing in any technology is a roll of the dice. This is where diversification can help because changes in technology take place so fast. With Raiden, I am placing a lot of weight on the development team and then on the amount of time already invested in the project. Several questions have been asked about the need for a separate RDN currency. I am not worried about that. I believe it relates to the corporate culture of Bainbot. In some ways it is similar to Ripple. Thanks again, best James

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Analysis

Ethereum’s Tumble:  ICOs Aren’t The Problem

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Trying to come up with a rational explanation for crypto price movements is a thankless task. Sure, there are several attempts being made by quant jocks to develop a model for valuing coins and tokens.  Most of these that I have reviewed suggest that prices undervalue both the underlying asset or the eventual demand.

In other words, crypto prices are cheap: what a surprise.

This bit of wisdom may be of some comfort to committed long term investors, but it hasn’t translated into higher market prices. A good example of this is Ether. Over the past six months, while Bitcoin has been treading water (down 7%), the price of Ether has been cut in half.  This altcoin was the topic of one of my recent articles called: Has Ethereum Lost It’s Cache?

The essence of this article was to point out how Ethereum, the platform preferred by 75%-80% of all ICOs, was suffering from investor indifference.  When you measure the activity of the top 100 tokens according to CoinMarketCap.com, the US dollar value of 9 of the top 10 most actively traded amounted to an average of $14,000 over the previous 24 hours.  Please keep in mind, trading activity in ETH over the same 24 hour period amounted to $1.8 billion USD.

Bloomberg Speak

One of the more interesting contradictions to my research into Ethereum’s plight comes from an article originating from a highly respected source: Bloomberg News.  The headline reads: “Ether Tumbles as Concern Increases That ICOs Are Cashing Out”.  It is totally defies the data to believe that every ICO cashing out when there is almost no volume to confirm this claim.

Quoting from an August 13th article:

Initial coin offerings using the Ethereum blockchain are seen as one of the main catalysts for sending Ether’s price surging last year. Now they’re being blamed for its decline.

It is quite true that initial coin offerings using the Ethereum blockchain was a catalyst for sending Ether’s price surging last year. It gave investors a reason to buy Ether even if they didn’t tell an ICO from a UFO. But are ICOs the real blame for both the good and the bad of Ethereum price?  I will step aside and let you be the judge.

For starters it is important to remember that ICOs raised $2.4 billion last year while ETH value appreciated almost $70 billion. The concept of ICOs may have fueled blind speculation but the math tells us that real demand was much less.

As for taking the blame for falling ETH prices, consider this notion. At its peak in January ETH was valued at $133 billion.  Currently that value is $100 billion+ lower than just eights months ago.

Using the data from ICOWatchList.com, since the beginning of 2017 ICOs have raised a total of $8.5 billion.  The statistical experts claim the Ethereum platform was used by between 80%-83% of all ICOs, thus reducing the $8.5 billion number to $5.7 billion.  

There is no question that ICOs influenced ETH speculators but that doesn’t begin to explain the more than $600 billion in aggregate losses for all crypto assets.   

Criticism Of Startup Managements

Critics claim that ICOs give startups the ability to raise lots of capital but they are proving weak in management on the funds once they are in their crypto wallet.  There is a certain validity to this since the number of founders with deep experience as CEOs and CFOs is pretty limited. But how can anyone separate insider selling activity from all other volume?

Research website Santiment, which compiles a selection of Ethereum-based projects, estimates startups have spent over 110,000 Ether in the past 30 days. At current prices that amounts to about $33 million.  For sake of discussion, let’s assume this high rate of token liquidation took place each and every month this year. Then use and average ETH price of $700 and that brings the total to $616 million.

There is no question that ICO sellers have contributed to the decline in ETH.  It would even be fair to call it a catalyst that created fear of losing all (FOLA).  Now if we could only quantify fear with an index like the VIX used by stock investors, we would see the major cause of the decline.

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 97 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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Analysis

Commodity Update: Wheat Not Yet Out of the Woods

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Wheat (WHEAT/USD) is up 29.12% year-to-date as the market came to life early this year. The successful defense of a key support level attracted investors who were staying on the sidelines for years while waiting for a tradeable bottom. This ignited a powerful rally that saw the pair generate volume that’s never been seen in over 15 years. As a result, many investors believe that Wheat may have finally reversed its trend.

In the midst of the bullish rally, it appears that bears are pulling the biggest trick that’s up their sleeve. In this article, we explore why Wheat is not yet out of the woods.

Premature Reversal for Wheat

A quick look at the daily and weekly charts reveals that the commodity appears to have broken out of a cup and handle pattern. From a short-term perspective, the market registered a higher low of $3.908 in December 2017. This gave bulls the confidence to stage a massive rally. The rally eradicated resistance of $5.00 in July 2018 with colossal volume.

Weekly chart of Wheat

The price action has led many to believe that the multi-year downtrend is over. But what if it isn’t?    

Major Roadblocks Ahead

A long-term view of the commodity reveals that it’s still in a downtrend. The market’s inability to close above $5.50 on the weekly and monthly charts is a signal that bears are not yet ready to hand over the keys to the kingdom. They are fighting back and so far, it seems that they have the upper hand.

Monthly chart of Wheat

Wheat is not reversing the trend as long as it respects the long-term resistance. This trendline has existed for 10 years and it is responsible for the commodity’s multi-year downtrend. From this perspective, it is easy to see that the pair continues to post lower highs and a lower low, which is the textbook definition of a downtrend.

Wheat still in a downtrend

Projected Movements

It’s not gloom and doom for bulls however. Even though a major resistance is staring down at them, they might still be able to come out on top. Keep in mind, bulls posted a record-shattering volume in July when Wheat went above $5.00. That means $5.00 has now become a key support level. It might just be strong enough to ignite a new rally and finally take out the long-term resistance.

Possible movements of Wheat

Otherwise, the record-breaking volume would work against bulls. All of those who bought above $5.00 are most likely using the support as a stop loss. Breach of this support would ignite a selling frenzy that can drive the market to even lower levels.

It is very possible that Wheat could capitulate during this plummet. When it does, there will be a long-term support where bulls can stage a rally to break out of the large falling wedge on the monthly chart.

Bottom Line

Wheat’s recent move above $5.00 with massive volume has attracted a lot of investors. The market may look bullish but in reality, it needs to deal with a long-term resistance before it can reverse its trend. In other words, Wheat is not yet out of the woods.

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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3.6 stars on average, based on 224 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

Pre-Market: Turkey Back in the Crosshairs Amid Sanction Threats

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The “red-bar-green-bar-madness” continues in global stock markets, as after yesterday’s rally, today the major markets are all in the red once again. Emerging market woes are still feeding the bearish narrative, with the Turkish Lira being back in the center of attention. The currency which enjoyed a three-day relief rally slid lower following threats regarding further retaliatory US sanctions, should turkey keep Pastor Brunson in custody.

USD/TRY, 4-Hour Chart Analysis

The diplomatic troubles only add to the problems of the country, while also helping the rhetoric of the Turkish leadership that focuses on a western “attack” on the nation. With the vague budget plans in mind, the endgame for the Lira still seems ugly, even as at the current levels, strong Turkish companies can offer great bargains for a long-term investment portfolio.

DAX Index, 4-Hour Chart Analysis

The divergence between the US and the rest of the world seems to be getting wider by the day, as the Shanghai Composite closed on a fresh bear market low, while most of Asia is also stuck in short-term downtrends, while Europe is looking wounded too from a technical perspective. The main US indices, on the other hand, are still near their all-time highs, and today’s selloff is also just a small blip in the ongoing uptrend.

S&P 500, 4-Hour Chart Analysis

On a slightly negative note, the Nasdaq has been underperforming the broader market ever since Tencent’s earnings miss on Wednesday, and today, it’s also the worst performing benchmark on Wall Street in the wake of Nvidia’s (NVDA) lackluster guidance that came out yesterday after the closing bell.

Today’ session could still go either way in the US, as the overnight losses are moderate, and yesterday’s trade war optimism could still fuel a recovery in the worlds strongest stock market, even amid the deepening emerging market crisis.

Forex Markets Stable As Dollar Consolidates

Dollar Index (DXY), 4-Hour Chart Analysis

The Dollar is consolidating just below its recent 13-month highs, with the EUR/USD pair rebounding to 1.14, and the broader Dollar index settling down near 96.5. The reserve currency is still clearly in a rising trend, and as the short-term overbought momentum readings are almost cleared, the rally could soon continue, especially if risk-off sentiment remains dominant outside of the US.

Copper Futures, 4-Hour Chart Analysis

Commodities are virtually unchanged before the US open, with gold still hovering just above its 17-month low near the $1185 level, crude oil being stuck near $65 per barrel regarding the WTI contract, while copper trying to hold its ground after the recent key breakdown.

Dr. Copper is still signaling troubles ahead for China and the global economy, as although the commodity outperformed today, it’s clearly below the break-down level near $2.7, and the downtrend will likely continue in the coming weeks.

Featured image from 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 321 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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