Bitcoin

Jul 28 2017

One Billionaire on Bitcoin: “It’s a Pyramid Scheme”

Oh no.

It was bound to happen, the cries of “pyramid scheme” applied to Bitcoin. In this case, it’s billionaire investor Howard Marks, who, in an investor letter circulating earlier this week (and reported on by CNBC here), suggests that there’s a bubble afoot.

And this is from a guy who, according to CNBC, “is famous for his prescient investment memos, which predicted the financial crisis and the dotcom bubble implosion.”

Cue the comments about Tulip Mania!

But…But…But…

Much consternation ensued – people were peeved – over on the Bitcoin and cryptocurrency chatrooms. And rightly so: one rich billionaire dude does have the power to sway other billionaires and, in turn, cause more than just a ripple-effect.

The response from this site, though, is a heck of a lot more calm. If Mr Marks is correct, then why are hedge fund investors quietly getting involved in the space?

The Store of Value

Is it possible, though, that Mr Marks is simply misguided?

Bitcoin’s value is somewhere in the neighborhood of $46 Billion. The cryptocurrency economy – factoring Bitcoin, Ethereum, Ripple and the hundreds of other coins and tokens that make up the digital currency universe – is worth around $90 Billion. (Figures from Coinmarketcap.com.)

Gold? Estimates are that all the gold in the world would be worth somewhere in the neighborhood of $10 Trillion.

The US Debt? Twice that.

Marks is misguided, in our opinion because he doesn’t understand how the value is created and stored with Bitcoin and its ilk. Similar to gold, it has to be mined, created, manufactured. (Some ICOs are “pre-mining” their coins or tokens, and that’s a different subject.) Something exists that’s of value – but the value is stored and unlocked through lines of code and cryptographic puzzles to ensure that the code is what it says it is.

Yes, They’re Speculative, Too

Note that Marks says these are highly speculative assets – and we agree with that assessment, to a point. ICOs appear to be everywhere, and that might be part of the tulip comparison in his mind. You could, conceivably, launch a token sale today and unlock some value from the crypto economy.

Speculative investments, though, abounded after the bubbles that Marks predicted popped. Dot-com value was created after 1999; Facebook spawned a whole host of competitors (not just social media sites) after its IPO, which happened after the toxic mortgage/asset bubble popped in 2008.

What to Make of All This?

Back to those old saws:

Don’t put all your eggs in one basket
Don’t invest more than you can afford to lose
Watch the space closely
Diversify
Seek advice from a few places
Do your own research
Talk to a tax advisor, a lawyer, an accountant

Certainly, value the opinion of someone who has made billions. But seek out other opinions, too.

Maybe these Bitcoin things aren’t tulips after all?

Jul 15 2017

Get Your Crypto Bingo Card!

I mean, really…would any sort of industry be complete without a BINGO card? We’re talking about all the lingo that’s out there – and, especially for the next two weeks or so, with the Bitcoin fork/not a fork/SegWit discussion…

Anyway, feel free to download this Crypto Bingo card. And use it carefully.

Jul 13 2017

DIY: Your Bitcoin Hedge Fund

It’s time to update our Bitcoin Hedge Fund, which we told you about back in May. Before we do that, though, this reminder: we DO have a Facebook page, we ARE on Twitter, and we’ve been spending a ton of time over on Steemit. We’d love to have you join in on the conversation in any or all of the three.

And away we go…

Hedge Fund Background

First of all, the typical standard disclaimer: do your own research. We’re not responsible for gains or losses. Get legal, tax, and accounting advice. Don’t invest more than you can lose. These are volatile-as-f markets, y’all. Really volatile, especially the past several days, where there was at least a little bloodletting and panic.

Anyway, our original post said we’d park a small amount – in our hypothetical fund, we chose a guy named “Herbie” and his hedge fund (“Herbie’s Hedge Fund”) had $10,000 to invest. We chose this amount as ten percent of his investment capital. Is that a good amount? A bad amount? Too high? Too low?

Heck, that’s for you to decide. If you’re Wences Cesares, you’d put 1% of your net worth in Bitcoin and leave it there for several years. That may turn out to be good advice, or it may turn out to completely fizzle.

What We Started With

Our hedge fund had a nice mix of established coins – the BRED portfolio, of course – as well as some emerging coins and a recent ICO. Here’s what it looked like then:

If you have more than a passing understanding of the markets we’re in, you might think every one of those coins has gone up since May 1. And you’d be almost 100% right: using today’s prices, grabbed from CoinMarketCap.com, here’s what you’d have:

Some notes on what we see here:

Bitcoin: Holding Steady

Bitcoin is doing well enough, and it started as 30% of the portfolio – for reasons detailed in May, but, if it’s becoming the reserve cryptocurrency, then yeah, you want a good chunk of it.

What will be interesting, though, is where it goes in the next 20 days or so. Hard Fork, Soft Fork, stuff that even we admit we’re paying attention to but not studying THAT closely – the August 1 deadline date for Segwit-related movement on the part of the BTC-hemoth will mean movement in price not only of BTC, but perhaps of others in the BRED portfolio…and LTC, too.

Timing on LTC, DGB, XRP: Not Bad!

From the “blind squirrel” department, all three have done well. Litecoin was, indeed, a defensive play – you could argue that it belonged in our BRED portfolio – some folks have told us so – but it’s (in our eyes) a bit like Bitcoin and a bit like Dash. But it’s also seen as a Bitcoin alternative, so that’s why it’s here. And it has nearly doubled in the past five weeks.

And some of our success is a little bit of luck – we thought we could be too late to get into Ripple’s XRP token, but it turns out that quadrupled for us.

Digibyte went on a tear, then pulled back and is now back down to Earth – if Earth is an 11x growth in its price.

And, About Our Laggard

Win some, lose some. WeTrust is still a good product/coin/token/system/platform. And we’ll keep it here because we do think that it has tremendous potential.

But two things do jump out at us here at Metacoin HQ:

We picked the wrong ICO.
We are also missing out on a number of these ICOs because we’re in the USA.

A Word on ICOs

Initial Coin Offerings used to be all the rage a couple weeks ago. Then Ethereum pulled back and cries of bubble were everywhere.

THEY’RE BACK.

Tezos $XTZ pic.twitter.com/zswITrHUiY

— BambouClub (@BambouClub) July 13, 2017

That’s one we missed out on entirely because we’re in the USA and these will not let Americans get involved. You have to wait until they are traded on an exchange…

That could actually be a good thing – if an ICO is oversold, overblown, and overhyped, it will more than likely fizzle once it hits the markets, creating a buying opportunity for mere mortals, er, Americans.

But, and this is a message for Congress as they look at tax reform, and maybe, too, a message for the SEC: as long as there’s a ton of caveat emptor attached, what really *IS* the problem with these ICOs being open to American investors? How are they any different from, say, my deciding that Blue Apron is awesome and I want to bet my IRA on the Blue Apron IPO?

Food for thought.

Two More Things

One – our hedge fund actually looks a bit different today than it did on July 1.

Yeah, $7,000 down since July 1. This is why we updated the numbers on July 13 – it’s a more accurate picture of what’s happened over the past 12 days.

Two – your own hedge fund. We told you before that this is a hypothetical experiment and you can use this as a guide for creating your own. However, we like the basic principles here: some big coins, some smaller coins, maybe an ICO or post-ICO coin or token or two. The general idea, as always, with a hedge fund is that you want to hedge your bets.

Overall markets – stocks, bonds, mutual funds, precious metals, pork bellies – those could tank tomorrow, or explode tomorrow, or trudge along. If you have all of your eggs in one basket, you’re likely going to have trouble someday. And if you have all of eggs in the wrong basket, that could spell trouble, too.

Love to hear your ideas! Tell us on Twitter, or in the comments below.

Oh, if you HAVEN’T gotten some coins to get started, pop on over to Coinbase, use this Affiliate Link, and you’ll get a Bitcoin Bonus with a qualifying purchase.

Jul 11 2017

How to Catch a Falling Knife

Timing is everything in just about everything everywhere.

Case in point: the cryptocurrency markets of the past 48 hours. A bloodletting of epic proportions? Or just a slight pullback?

If your timing was such that you bought into the BRED Portfolio at the beginning of the year, and you didn’t sell, you would still be up 1718%.

So, if you did do that – and congratulations to you for doing that – you would not have paid any attention to the numbers from July 1.

Just ten days ago. The ones we link to in the blog post above.

These numbers.

Perspective, playas. One person’s OMG is another person’s $63,000 pullback.

Which brings us to the point of this post – as well as a music video.

Catch Me, I’m Falling

One man’s overrated pop tune from 1987 is another’s evocative trip down memory lane.

Pretty Poison was the band, and I don’t think they did much after this (and, considering I’m in the 99th percentile when it comes to 80s pop music knowledge, it’s a safe bet your trip to Wikipedia for the Pretty Poison discography won’t yield anything of note).

Story time: I worked at a mall clothing store, back when both were things, in the late 80s. I was successful enough to keep the job for most of a year, and I think part of the reason was that I kept things moving. I also kept the Top 40 station on and, during the holiday rush, that helped a ton. Dance-ish poppy music played on 2-hour rotation started to stick in your head, so even the bad songs became okay.

We kept busy because we had customers and there was merchandise that had to be moved and because the manager liked to joke “If you’ve got time to lean, you’ve got time to clean.”

There was one point, though, when…whatever you were doing at the time, you had to stop doing and pretend to scratch a record like a DJ. That point was at 2:21 of this song.

I queued it up for you there.

To this day, hearing that song takes me back, and the 2:21 mark gets me pretending to scratch records.

Timing is Everything

I’m watching the markets closely because I’m ready to move in at such a point where I think it might be safe. But I won’t know exactly – and neither will you, and neither will the experts.

So all you can really do is guess, right?

Yes, and no.

Yes, you’re guessing that whatever coin you’re going in on won’t continue falling – the proverbial attempt to catch a falling knife. If you catch the handle, you’re okay, but anywhere else and you start bleeding.

Some picks – DYOR*

So we went live with a few potential bargains the other day and…they’re all still bargains. Even moreso than they were when we posted.

Siacoin is up 3x and then some this year, but it has dropped precipitously over the past couple weeks. Floor may have been 253 Satoshis yesterday. We actually took some coins back. But we’re still HODLers.*

Stratis dropped a bit, too, and it’s below the “hey you should buy up to 200k Sat” level that we talked about – let’s be honest, it’s WELL BELOW that number, and sitting at 130k Sats. (HODLing that coin, too.)

We’re long on those two, but we took back SC – actually made a profit, if you believe that – and moved that into Bitconnect. It’s a lending platform coin thing and we’re watching it rather closely – even if our coins/funds are locked up for a whole ten months. [THAT’S AN AFFILIATE LINK. So if you try it out, we might get compensated. To be honest, we set up an account there two months ago, and kept watching the action. Yesterday was when we pulled the trigger.]

* DYOR = Do Your Own Research; HODL = Hold On (for) Dear Life. A HODLer is one who exhibits HODL-type behavior.

Next?

Well, that’s the other point – we don’t know what’s next, really. We keep watching ICOs, we take a look at some of those coins we invested in that we’re waiting to see trade – like Exscudo, for instance – and we’ve got one eye on the August 1 Segwit hubbub that we honestly don’t totally understand.

This knife-catching stuff is tough.

And this market? Well, it’s like…pretty poison.

Jul 09 2017

Five Coins for Bargain Hunters

Happy weekend, party people!

Oh, not the happiest of weekends? Red numbers got you down? Been watching the crypto markets a little too closely? Afraid of becoming a bagholder?

Fret not, we’re here with an idea or two (or five): coins that might fall into bargain hunter territory.

First up, though, a word or two (or fifty) on some of the big boys and their performance during the past week.

Bitcoin, Ethereum, Litecoin Holding Their Own

It’s been interesting to watch the scuttlebutt and listen to the pontificators asking about what August 1 – when Bitcoin’s big Segwit situation gets sorted out – will do to the BTC price. And it’s also been interesting to hear what the thinking is on Ethereum and the ICO marketplace and the fact that tons of coins seem to be getting tons of money out of nowhere, all built, it seems, on the Ethereum platform or raising money in Ether. And whether Litecoin does anything huge in the interim.

BUT…all three seem fine.

While BTC has stabilized in price at around 2500, we should note that, while both LTC and ETH are also stable, there’s a bit of a difference in where ETH is relative to its 2-week range.

BTC: High of 2720, Low of 2168. It’s a range up/down of 552. Its current price is right around 58% of its range. Close to that Fibonacci level of 61.8%.
LTC: High of 55.40, Low of 32.37. Range up/down is 22 bucks, and its current price is at 68% of its range. Sticking around there for a little while, maybe…
ETH, however: High of 318, Low of 204. Range up/down is 114. Right now, it’s at around 31% of its range. Key Fibonacci levels are 23.6% and 38.2% – 31% is right at the middle.

UPSHOT: WATCH THE ETH PRICE. Watch for support either above or below those percentages: 230.79 on the low end, 247.75 on the way up. These could be good levels to buy on the way up, or to sell on the way down.

Now, let’s return to the regular programming.

Five Coins for Bargain Hunters

1. Library Credits – LBC

Open source YouTube competitor? Democratized payouts? Sounds just a little like Steemit to me.

But I’m game on the product – if you want to sign up on the wait list, you can use this referral link to do so, and we might move up in the line. But then again, you’ll get your own referral link and you might move up in the line, too.

From an *INVESTMENT* standpoint, though, this one, we think, has some serious potential. Here’s why:

It launched in July of 2016 at north of 120,000 Sats. Then it popped – heading to 280,000 Sats before coming back to Earth. Then it stuck around in the four-digit Satoshi level until May of this year, and flirted with 25,000 Satoshis until recently.

The reason for its climb of late: it’s starting to come into its own as an actual site with merit – not just as a coin that could have potential. In other words, past its growing pains as a startup, it’s now ready for prime time.

You can get LBC for around 17-18,000 Sats. Anywhere below 20,000 might be good to accumulate.

2. Steem – STEEM

Steem is the coin. Steemit is the platform. Steem can be converted to Steem Dollars, too.

I’m on this platform daily and, to be honest, I don’t totally “get” it yet. HOWEVER, I see it moving northward from here, and I’ll give you three reasons why:

Controlled, stable growth. Despite the fact that the site is adding around 5000 users a day of late, the site still only has somewhere in the neighborhood of 250,000 users worldwide.
Active community that gets paid for content. I haven’t profited much from the site just yet, but, to be honest, that’s not why I’m there yet. I’m there because it feels a lot like the early days of Twitter to me. Less negativity, and more content to sink your teeth into.
Bagholders that need the site to come back. Yes, I said that out loud – quite a few people are there because they were on the site early, had tons of coins when they were worth 500-650,000 Satoshis each. They now trade at 60,000 or so – with recent highs of 80,000 Sats.

60-80,000 Satoshis would still be a bargain when compared to last year’s prices. The question is whether it will get busy enough to head into 100K territory and beyond.

BTW, sign up for an account now. Go to Steemit for more details.

3. Stratis – STRAT

How could a coin that has gone up from 7300 to 171,000 be a bargain?

Well, this coin’s team has hit pretty much every development milestone. In fact, 171,000 is today’s price; 435,000 was the price just six weeks ago.

We think the recent pullback is mostly because of the overall market pullback.

It’s also an “enterprise platform coin” – in other words, the coin/token fuels the platform for corporate and enterprise clients. So those big corporates looking to get into the blockchain can – and do – call up the Stratis people and say yo.

Say yo yourself at somewhere below 200,000 Sats.

4. Antshares – ANS

It’s the Chinese Bitcoin.

Full stop.

It has gone from 15,000 Sats to 367,000 Sats – 24x – before pulling back to 285,000 or so today.

If there’s one project that could potentially have another 24x up its sleeve before the end of the year, this one may be it.

5. Bitshares – BTS

This is a mysterious platform – to me at least – and it has been around for nearly three years. Most mysterious: the price now is around what the price was in late Summer 2014.

This looks a little like Stratis and a little like Ripple and a little like…well, it’s kinda sorta an enterprise blockchain thing meets a trading platform.

That price, tho: 13,000 Sats a couple months ago, 6000-range now.

Considering we’re now below where the coin was in September of 2014, you might consider accumulating up to 8000 Sats.

Final Thoughts:

Remember, do your own research. We’re not responsible for any gains or losses. Seek professional counsel for things like legal and tax ramifications. Stay woke.