Archives for May 2017

May 30 2017

When Bitcoin Volatility Is Your Friend

How ya holdin’ up there, kiddo? Enjoying the markets? Did you find the thrill ride known as Bitcoin to be exciting? Are you still in okay shape?

Still doing okay? (And if you’re still new to all this, hop on over here to this post and learn all about how to get started.)

Your mood might depend upon a few variables. First of all, whether you believe long-term in Bitcoin (which we’ll use in this post as the catch-all currency) and what it means for the economy. If you do believe, you may have bought in at lower numbers than what’s above. And, if you did, you probably didn’t look to sell at the first opportunity.

Another mood enhancer may be whether or not you tried to buy the dips. BTC at close to $2700 (above chart from Poloniex, so your experience and trading platform may vary) wouldn’t have given you a dip opportunity, but BTC dropping into the $1900s, then $1800s, then below? Any of those would have been buying opportunities for the long-term trader.

If you think Bitcoin is going to $5000 this year, then $2000 is a buying opportunity. $1538 is a golden buying opportunity.

Finally, again here’s our magic word: “Fundamentals.” The fundamentals of Bitcoin are strong, in our opinion here at Metacoin (that link is to our Facebook account and we would love your “likes”), so we’re bound to look at these moves as means of testing our hypotheses. Is Bitcoin strong enough to weather a drop into the $1500s? Does the volatility actually work in our favor – weeding out “panic sellers,” and bringing in long-term investors?

If there were a “State of the Union” for Bitcoin, we think that moving from a May 1 price of $1435 to today’s price of $2200 or so means that the state of Bitcoin is strong. Volatile, sure…but strong.

Leveraging Volatility Through Bitconnect

One more thing about volatility, and this last part is an Affiliate Link; since this whole site is a learning experience, we’re planning on…learning together.

We’ve just signed up at Bitconnect, and it’s a rather unique program. You lend Bitcoin through their platform, they trade it, using highly specialized bots and algorithms to use volatility to your advantage. The interest rates are compelling as heck – compounding daily at a half a percent can mean that money starts to add up quickly.

You can sign up for free – use the link above so this site gets credit, and we’ll get a bonus for your signup, should you eventually lend some of your hard-earned Bitcoin.

Our plan is to start lending in the next several days, then kick back and track the results. It could get pretty interesting – and we’ll share our results, warts and all.

Til then, stay strong.

May 25 2017

3 Ways to Get Started with Bitcoin Today

I get quite a few questions about this Bitcoin stuff. Like, “How does it work, this digital currency?” Or “How is it more than two thousand bucks for one coin?” Or “How is there so much value placed in something that you can’t even hold on to?”

More recently, I get some other questions. Like, “What the heck are you talking about?” Or “Dude, slow it down just a little.”

There’s a bit of a “rabbit hole” element to this cryptocurrency space – it’s a rabbit hole that I went down last year and really haven’t totally came back up from. And it’s a rabbit hole that got me to make this video:

Yes, it might be over some folks’ heads. Sorry about that.

So, since we all gotta start somewhere, I give you this, the quickest of quick-start guides out there:

3 Ways to Get Started with Bitcoin Today

(1) Thing one is to actually get some of the currency. You can get Bitcoin – that’s the gold standard thing that started this whole space – or one of the other main currencies.

We recommend starting at Coinbase, and we especially recommend using this AFFILIATE LINK to get some. (In this case, the affiliate link will actually give YOU a bonus of $10 worth of Bitcoin if you buy $100 worth of any of the three currencies they offer, which are Bitcoin (it goes by the symbol “BTC”), Ethereum (ETH), or Litecoin (LTC).)

What’s beautiful is that you can get started with a tiny, tiny amount. Got ten bucks? Use the $10 bucks to dip your toes in the water. You will pay a small transaction fee, but, if you were to try to spend $10 on some stock through your online broker, you’d spend probably that much per trade.

(2) Spread yourself out at least a little. (This is not trading advice, consult your investment professional, not responsible for gains or losses.) A recommended approach is to split your initial investment between two coins – Bitcoin and Ethereum – or three coins, adding Litecoin to the mix.

When I started, I started with just BTC and ETH. What I did next is what I’ll recommend for you:

(3) Hang out and watch the space. This means not just reading blogs like this one, CoinTelegraph, and Bitcoin.com, but also looking at the numbers sites and trading platforms to understand what is going on.

Numbers sites? Coinmarketcap.com is our favorite. Coindesk.com is another. These sites cover the numbers of the whole space, and will give you a sense of which coins are trending up or down, as well as the all-important “market capitalization” of each coin.

(You will hear about ICOs, and Smith and Crown does a really good job of tracking those – but you may not be looking for that much granular detail just yet.)

The trading sites make it easy for you to get started actually trading – almost TOO easy, perhaps. Suggestion: go to Poloniex, Kraken, or Bitfinex to take a look at what’s happening. See what’s moving, what isn’t, what’s being traded, and how much it’s trading for.

You may be tempted to play around and do some trading, but you’ll probably want to understand the space much more before you try to make money at it. (Trust us on this one.)

There it is. A 3-Step Plan.

That’s how we suggest you get started. Once you’re ready for the next step, then you can dive much deeper. But if you’re a newbie – and remember, even the experts started somewhere – this will help you get acclimated to the wonderful – crazy, scary, thrilling, but, yes, wonderful – world of cryptocurrency. And Bitcoin.

May 25 2017

BRED Update (Or, How’s Your Bitcoin?)

Cryptocurrency traders are a special lot. They are, after all, a new breed, and the markets they trade in don’t totally act like the stock markets, nor do they totally act like the forex markets.

And the “buy and hold” folks seem to be in the minority, at least if you trust the chat rooms on places like Poloniex.

To wit, the activity the past 24 hours or so shows some serious red numbers. Dropping like flies, those “altcoins.” The sky, she’s a fallin’.

Now what? You moved your hard-earned Bitcoins into something like Ripple’s XRP token and you’ve seen it “plummet” 26 percent in the past 24 hours.

You could be like the guy on this all-too-real Reddit post from yesterday.

I have been a BTC hodler for about 3 years now. Things were good and I believe in bitcoin a lot. When the price was dropping and dropping I kept on buying and buying, for the simple reason that I believe in Bitcoin.

Enter a few days ago: Ripple was on the rise. I thought I could increase my BTC-stack a bit by following the ripple trend. I was stupid and went all in… I should never have gone all in on anything. I’m not all in on bitcoin, so why would I put all my hard earned btc in something I do know little to nothing about, right? Well… enter the greed I thought I had left behind me a long time ago.”

Let’s just say it didn’t end well. A cautionary tale for the day traders and trend riders. And those who don’t hedge. And those who don’t buy and hold. And…

Enough Already: Get to the Headline

Oh yeah, that. The headline today asks “How’s Your Bitcoin?” because that has been the dominant news this week. Yes, even above some of those other coins that seemed to come out of nowhere and jump up by 2x or 3x – I’m looking at you, ZCash – Bitcoin’s rise to above $2,500 each is rather thrilling. Cool, yes, unsettling, maybe.

The BRED Portfolio, which we started tracking on April 1 (it’s ONLY been two months? Really?), takes four of the currencies – Bitcoin, Ripple, Ethereum, Dash – and puts them in equal parts into a basket, with an initial investment of $10,000. (We went back to January 1 so we could look at this from a YTD standpoint, and we’ll give further updates on the 1st of each month.) Its growth has been staggering – but the growth has actually been mostly due to non-BTC assets.

Meaning that Bitcoin is back in the spotlight at the expense of some gains in the portfolio.

So, even with the attention on Bitcoin, the BRED Portfolio is still dominated by the growth of XRP, which is still more than half of the overall $195,821.24.

Is there a lesson here?

Maybe: diversification is good. Riding the waves isn’t. Buying and holding, probably also good – unless this entire portfolio and the crypto universe turns out to be a house of cards, in which case we’re all spinning our wheels.

A broader point, though, is one that we should make: Bitcoin is still “dominant” (this gets tracked – Bitcoin as a percentage of the overall cryptocurrency marketplace, which, according to Coinmarketcap.com, has fallen to 49.3%) AND is still the gateway currency. If you’re getting started, or if you’re trading for the first time, the odds are that you’re trading Bitcoins for whatever you end up with.

Bitcoin is the gold standard, or the world’s reserve cryptocurrency.

Whether it will remain that way for a while? That we’ll wait on.

May 23 2017

Bitcoin Millions

Bitcoin, and the world of cryptocurrency, is filled with predictions that will cause the whipsaw effect: “You Said WHAT???” And, with the #Consensus17 hashtag trending as the largest industry event enters day two, the whipsaw effect might be turned up to 11.

Probably the most outlandish prediction to date comes from this Quartz article, which talks about what Wences Casares had to say at a private dinner event – one of the dozens taking place at Consensus – just last night.

Long story short, Casares suggests taking 1% of your net worth and parking it in Bitcoin, then ignoring it for several years, up to a decade.

Casares pretty much says that he’s either betting on complete failure of the Bitcoin ecosystem – odds he puts at “20%” – or a runaway success that makes each Bitcoin worth…well…here’s his quote:

If it fails, it will be worthless,” he says. “If it succeeds, in five to seven years it [one bitcoin] will be worth more than a million dollars.” He puts the chances of success at greater than 50%.

Orders of Magnitude

On the one hand, that’s a darn outlandish prediction.

But, on the other hand…

A couple months ago, Bitcoin was trading at around $1,000 per coin. Today, it’s in the $2,200 range, more than doubling in a month. And due for a pullback, right?

Contrast this with the growth of Ripple’s XRP token, which has gone from a half a penny to 30-plus cents each so far this year, and Bitcoin looks like a laggard. But talk about the network value (or market capitalization) of Bitcoin, which is right now at just $37 billion, and compare BTC to…what, the market cap of Facebook? That would mean an order of magnitude growth for Bitcoin – and then some – to get to Facebook’s market cap of $400-plus billion.

Once you start making comparisons and looking at the growth of the network, the potential is certainly there.

Of course, we could also see Bitcoin fall flat on its face, take the altcoins with it, and we’re talking about a whole host of ones and zeros that are worth rather close to zero.

About that 1%

So if Mr Cesares says to invest 1% of your net worth, and we take an average figure of…$100,000 (I’m ballparking – yours could be much higher, but think about the average American and this seems like about an average figure), then we’re looking at your investing in 1/2 of a Bitcoin, roughly.

Might take more than $1,000,000 per Bitcoin for the average American to be a millionaire here.

Did we tell you there would be hyperbole at Consensus? We did.

May 22 2017

Signal to Noise Ratio: Be on the Lookout

It was a busy weekend for cryptocurrency. And, with Consensus – the largest event in the Bitcoin, blockchain, and cryptocurrency industry – getting started this week, you might be in for a crazy ride of hype, more hype, and even more, uh, hype.

Today, we’re going to talk about the “signal to noise ratio” – expected to be heavily weighted this week in the direction of NOISE – as well as what to potentially look for coming out of the event.

Weekend Headline #1: BTC and ETH

First, Bitcoin and Ethereum jumped over psychological hurdles ($2000 for BTC, $120 for ETH), then pole vaulted over the same hurdles, with prices for each reaching all-time highs that might have seemed folly just a couple of weeks earlier.

In fact, we looked at our own screenshot from April 26, where we saw that Ethereum was in the 50s and we thought…WHAT?

This is not unexpected, however: for every case out there that “Bitcoin is overvalued” or “Ether is just a me, too technology,” there seem to be dozens of stratospheric projections – some based on math! – that both coins are only scratching the surface.

Weekend Headline #2 – Altcoin Roulette

Meanwhile, the “Altcoins” – those non-BTC coins that are highly volatile – were also doing some rather odd things in the markets. Take two of the more interesting cases from one of our hypothetical portfolios: Digibyte and Dogecoin.

Here’s a screenshot from our “Hedge Portfolio,” with the three-week growth of those two coins highlighted.

Anyone else think this all looks eerily like the late 90s? Instead of a high-flying Internet stock tip, it’s a high-flying cryptocurrency bet that could go from, in the case of Digibyte, $1,000 to $15,304.77?

The flipside of the late-90s argument is the “how are these used in the wild?” argument. Digibyte went “Segwit” before the other mainstream coins. Doge is called by some “the world’s tip jar.” With real use cases and actual nine-digit market caps for both coins, it’s not that you’re betting on cocktail-napkin business plans.

Signal to Noise

We’ve talked for the past several weeks about things like “fundamentals,” and business plans, and use cases, and white papers. And, the fact that we spent so many years in financial services and fintech marketing and communications means, frankly, that we can see through a lot of the BS that accompanies any launch.

This week, as the industry gathers in NYC for Consensus, we invite you to be on the lookout for BS. For hype. For marketing double-speak – which, it should be no surprise, exists in the blockchain and crypto universe, too.

Honestly, and this is not trading advice and you should of course seek your own counsel, fundamentals are what attracted us to investments such as Bitcoin, Ethereum, Digibyte, and Dogecoin in the first place. Sure, each has its fanboys and fangirls on the various chat boards, but the reality here is that each has the fundamental potential to make serious noise in this emerging industry.

We invite you to do the same: watch for the “check out this COIN, bro!” posts vs. the announcements of actual news from the businesses. See what looks like an engaged, active community online vs. a coin with lots of questions but very few answers.

And as always, stay grounded. Do your research. Don’t dive in with more than you can handle.

Have a Great Week!

PS: two things we recommend here, and these are AFFILIATE LINKS, so we may be compensated if you make a purchases using them. But we’d recommend them even without the affiliate relationship.

Thing one: Coinbase. It’s the easiest way to get started and, if you want to dip your toes in the water – a distinct advantage of cryptocurrency investment vs. stocks, bonds, or mutual funds – you can buy a little bit. Like $20. Seriously.

Thing two: Trezor. You don’t want to mess around with storage solutions that might fail you. Trezor is the only hardware we trust. We break it down on the site, and this is the best deal we’ve seen to date on it.