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.

May 19 2017

Bitcoin $2000, Ethereum $120

Quick post here, because most pundits will, IMHO, “Bury the Lead.”

(If you’re not familiar with that concept – “burying the lead” involves talking about everything but the biggest news first. Sorta like…”Hey, how ya doin? Did you hear that it’s supposed to rain today? Yeah, it’s been kinda cold, too. My dog is tired. The kids are okay. By the way, I won the lottery last night and now have a million dollars! Talk to you later.”)

And all the pundits will say “OMG, Bitcoin got up to $2000!” Which is great. A worthy accomplishment.

But, IMHO, the worthier accomplishment – and the “LEAD” in this story, is this: Ethereum is up to $120.

Ethereum All-Time High: Biggest News of the Week

Why?

Support over $100/coin. This is rather big, since ETH went over that figure overnight, stayed over that figure this morning and into the afternoon, and now leads Poloniex in volume (on the BTC-pairs portion of the exchange; screenshot above).
Ethereum is the business story – maybe moreso than Ripple. Yes, the XRP love was shown this week, and a pullback into the 17000-Satoshi range wasn’t unexpected. But where the action is going to be is not necessarily in payment processing and transactions between banks (which, don’t get me wrong, is vitally important), but in using Ethereum’s “smart contracts” to underpin just about every sort of insurance, banking, legal, and other kind of contract in the world.
That was a bold statement – and it’s one we talked about a little here. The ETH coin underneath the Ethereum technology has the potential to be more earth-shattering than Bitcoin itself, and more earth-shattering than Ripple’s XRP for sure.

And an ETH Investment YTD…

Here’s this afternoon’s BRED Portfolio chart. Sure, it’s no XRP, but your ETH investment would be would be A-OK.

OMG.

Happy trading!

BTW, if you haven’t gotten started with Bitcoin, Ethereum, or Litecoin yet, use this AFFILIATE link to check out Coinbase. You’ll get a $10 bonus (well, $10 worth of BTC) with your $100 purchase of any of the three coins. And we’ll get a $10 bonus for referring you.

May 10 2017

Why Bitcoin Gets a Gold Star Today…

Good boy, Bitcoin. Good boy.

This morning, when we checked the numbers, we saw that Bitcoin was nearing all time highs. And, lo and behold, that nice round figure – $1800 (US) – was achieved.

Seriously, if you need another reminder that the Bitcoin revolution is NOT going away, look no further than this morning’s price chart on Poloniex. We captured a screen shot at just the right moment, and now, as we write, it appears BTC/USDT is right at that level (give or take five bucks).

It’s actually rather staggering – we use that word a lot here, maybe we should be saying “breathtaking” instead – how quickly Bitcoin has gone from some crazy idea to a revolution.

It seems like ages ago – it was just March 10, so two months ago today – that the SEC said no to the ETF. Had you bought at the height (uh…we did) of that frenzy, you would have been in at $1300 a coin.

Then you could have watched BTC drop into the $900s (we bought again, but that’s because we’re in this for the long haul).

Ignore that second buy at $900 for a moment. The $1300-per-coin rate would have seen a 38.46% rise.

Bitcoin is the on-ramp

We’ve talked about this concept a few times: Bitcoin is, in effect, the on-ramp for cryptocurrency investment, and for cryptocurrency access.

Ignore for a second the fact that Coinbase (ADVERTISEMENT: YOU SHOULD TOTALLY USE THIS LINK TO GET YOUR BITCOIN THROUGH COINBASE) now has three coins/tokens that you can buy, sell, and put in your wallet (Bitcoin, Ethereum, and Litecoin). Bitcoin is still the Kleenex of cryptocurrency – it’s the first thing the masses think of. “Can you hand me a Kleenex?” “Do you accept Bitcoin?”

If an altcoin is going to be traded somewhere like Poloniex it’s most likely going to start trading as a pair with BTC first. Others might be added later.

And if you’re going to do some active trading, you are probably going to park your unused money in BTC while you figure out which pump-and-dump to chase next.

What does this mean???

A couple things. First of all, with a “market capitalization” of $28 Billion, Bitcoin (or, more accurately, its ecosystem, or network value) is one-half the market cap of a company like Tesla. While you could say Tesla is over-hyped, you also could say that the company is not going anywhere.

Same for Bitcoin – it’s a movement, ecosystem, network, whatever you want to call it.

So don’t bet against it.

What do I do now?

Two things, in our view. One: get some Bitcoin. Even at this valuation. Use the Coinbase link and we’ll get a little – but you’ll get a little, too, with a qualifying purchase.

Two: store that Bitcoin somewhere safe. We’ve joined the TREZOR Affiliate Program, and this is the best deal we’ve seen on TREZOR. It’s a storage solution we’d recommend even if we weren’t working with them – and you’ll be hearing more about that from us in the days to come.

Also, Hold On for Dear Life. This Bitcoin stuff could get really interesting.