Ethereum

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 07 2017

A Five-Month Buy-and-Hold Strategy to 10x Your Money

It’s been a crazy weekend on the cryptocurrency front. If you checked in on the markets on Poloniex, as we did earlier today (around 11:30 a.m. Central Time in the US), you would have seen something that looked like this:

This snapshot (from the BTC “pairs,” so the prices of, say, XRP are calculated in BTC) tells us that you could have done well on a 24-hour period taking the list of 25 of the top “altcoins” and throwing a dart at their names, buying some and then selling 24 hours later. (The obscured 93.76% gain was from STR – “Stellar,” and the 100% gain near the arrow in the picture is BCN – “Bytecoin.”)

But What About…A More “Strategic” Approach?

Oh, that. The BRED Portfolio. The one we seem to be prattle on and on about. The one that involves a $10,000 investment, spread equally between four of the biggest coins – Bitcoin, Ripple, Ethereum, and Dash – and invested on January 1, 2017.

That one.

How is it doing?

Sweet Mother of Zeus!

$10,000 invested in the BRED Portfolio on January 1, 2017 would have grown to $106,909.51 on May 7, 2017.

Okay, so there’s some hyperbole involved here. Actually, quite a bit of hyperbole: this is a hypothetical case. If anyone out there actually did this AND wants to talk about it, the floor is yours.

Because, let’s face it, investments come with inherent risks, and with that thing called “human nature.”

Story Time

I remember back in the first dot-com boom, and specifically a stock that I owned in my IRA that was poised to change the world. For a while, it did – acquiring others in its nascent space, growing like the proverbial weed. My memory is deliberately a little fuzzy on the exact numbers, and I have since shredded all records of my transactions.

But suffice it to say I may have bought into this stock at around 3 bucks a share, and it went to around 78 a share.

And I held – “HODL” is the acronym that could have best described what I was doing with this one – until the last possible moment.

PSINet was the company. Yeah, that was a learning experience for me.

It Comes Down to ONE WORD:

Fundamentals.

You can certainly believe that Bitcoin, Ripple, Ethereum, and Dash all have the potential to change the world. It is quite possible that they could. It is quite possible that we’ll watch them grow by another order of magnitude. It is quite possible that they’ll continue growing like this, and the ramifications for the global economy could, indeed, be huge.

On the other hand, it is quite possible that we’re watching a bubble that’s about to pop. That Bitcoin is as overpriced as some say, or that there’s too much XRP being circulated.

Our advice: check the fundamentals. Spread your investments around – which is why we say “BRED Portfolio” and not just Bitcoin. Consider the Hedge Fund approach we talk about here.

Due your due diligence, too. Seek advice from places beyond just this site – you’re doing that, right? – and talk to investment advisors and professionals.

Could the trend continue? Could these coins come back to earth? We’ll all find out soon enough.

May 03 2017

5 Reasons Why This Should Be in Your Portfolio

Imagine investing in Apple ages ago. Or what if you had gotten in really early at Facebook.

What if you were a co-founder of a venture-funded startup that ended up IPOing.

There are certain assets where the timing is just right – and even if you missed the first wave, the second, third, and even fourth waves can still be potentially insanely profitable.

Today, we’re going to recommend one particular asset – it’s a coin, it’s a technology, some might say it’s the best mainstream movement right now in the cryptocurrency, distributed ledger, and blockchain universe – that we think has the potential to make for insane gains in your portfolio.

First, the Caveats

Disclosures:

We are long on this particular asset
Past performance is not indicative of future results
We do not provide individualized investment advice. Do your own due diligence, read up as much as possible on anything before investing
Seek professional guidance for legal and tax implications of anything you invest in or trade
You use this advice at your own risk.

Now, the Background

We want to keep you guessing as long as possible, because that’s what makes for good content…right? Consider an asset that did the following:

Started the year in single digits – hovering around 8 bucks a coin
Kept climbing and climbing each month, from 8, to 10, to 15, to 49, then into the low 80s
And has a steady stream of banks getting on board with its technology.

If you haven’t figured it out yet, it’s Ethereum, it’s up 938% so far in 2017. And it may just be getting started.

Here then are the five reasons you should take a look at this coin.

1. If Bitcoin is Myspace, Ethereum is Facebook

First mover advantage is sometimes overrated. In fact, the first mover often does the hard work to shift the paradigm, and ends up with a close-knit community, but might ostracize those who aren’t immediately on board.

Myspace was the first social network to gain mainstream adoption – but Facebook watched what happened with Myspace and aimed to avoid repeating its mistakes. Facebook also got the right sorts of investment partners to make its stratospheric growth happen.

We see parallels between Bitcoin – which, if you ask the average Joe on the street might still be an underground movement – and Ethereum – which is also underground, sure, but is where the corporate money is flowing. Bringing us to our next point:

2. The Banks…

Actually, it’s more than just banks. The Ethereum Enterprise Alliance has some serious firepower in its roster of Launch Members. If you’ve spent any time at all in a Fortune 500 organization, you know how difficult it can be to get corporate buy-in on large projects; the fact that banks, financial services organizations, and other financial businesses such as BBVA, BNY Mellon, CME Group, Credit Suisse, ING, J.P. Morgan, Santander, and UBS are all on board is quite the accomplishment.

3. Coin + Technology

Simply put, Ether is the token, or coin, Ethereum is the technology. “Ether is the crypto-fuel for the Ethereum network,” according to the Ethereum website.

In addition to organizations building decentralized apps – “dapps” – on top of the Ethereum technology, quite a few coins/tokens have grown as “assets” on top of the Ethereum platform.

The question, when you’re buying ETH, is whether you’re buying a coin that represents the overall value of the ecosystem, or just the coin itself. And the answer is…both.

4. Coinbase – Really…

At this writing, Coinbase STILL only has two coins you can buy, sell, and trade on its platform: BTC and ETH. (DISCLOSURE: That’s an affiliate link over there; if you’re looking to get started and score some ETH, use that link and, with a qualifying purchase, you can get a bonus.)

We think that provides a unique, mainstream advantage – since Coinbase has a Silicon Valley feel to it, and has substantial investments in its platform. Coinbase is not going away. And, to the extent that the coins traded on Coinbase are still limited, it is less of a trading hub, and more of a buy-and-hold platform for getting started in the crypto economy.

5. The ETF

We wrote about the potential for an Exchange-traded Fund, or “ETF,” here last week. Whether or not it gets approved might be beside the point: the fact that only two coins are currently being considered for an ETF makes us think that only two coins are being seriously considered as the unavoidable infrastructure underpinning the digital currency movement.

If it’s approved, expect money to flow into ETH rather rapidly.

If it’s denied – which is what happened to the Bitcoin ETF a month ago – expect the price to drop immediately, then inch its way back up. (BTC fell from around 1200 to around 900, and was back where it was before the denial in a few weeks).

Where Could Ethereum Go?

We don’t want to get into price projections here – that could get us into trouble, and it also isn’t wise, in our opinion, to start saying “ETH could go to…” and inserting a number.

But we will say that these five reasons can serve as a guide that Ethereum is certainly going places. And maybe there’s room for it in your portfolio.

May 02 2017

Your Own Bitcoin Hedge Fund

If you look around the internet, you can find quite a few investment funds that aim to capitalize on Bitcoin and emerging blockchain technologies. However, it’s awfully tough to get into them: you’ve either got VC (venture capital) funds that rely on high-net worth investors for their capital, or you have hedge funds that are out of the reach of most mere mortals. (And they don’t really invest in Bitcoin and altcoins yet; thanks in part to the US SEC requirements around funds.)

Then there are the ETFs that we keep waiting for the SEC to approve, as well as the mutual fund industry: do you think they’ll jump into the pool yet? Probably not.

So, what’s an investor to do?

Easy: start your own Bitcoin Hedge Fund.

Okay, a few caveats first: we’re not investment advisors, we’re not registered with the SEC or FINRA. This is not individual investment advice. Use and follow at your own risk. Seek legal, accounting, and other individualized assistance before investing.

Now that that’s out of the way, let’s begin.

It’s not REALLY a “Hedge Fund”

That’s right…we’re not actually advocating starting your own “Hedge Fund.” We are advocating starting a fund that “hedges” against ebbs and flows in the overall markets.

This is akin to the precious metals people – the “gold bugs” – who claim that you should have somewhere between 90 and 100% of your money in gold. (That’s a joke: some experts, though, will tell you that you’ll miss out on the potential for explosive growth unless you have 10-20% of your money in gold, silver, and other tangible assets.)

AND the other important part of this equation, which the gold bugs will tell you over and over again, is that you want something outside of the US Dollar in case things hit the fan.

Bitcoin and cryptocurrencies might help you there, too: since they’re outside the US Dollar, they’re also a tremendous way to avoid having to worry about whether the dollar fares well against the Japanese Yen or the Euro.

Your Own Hedge – Gold, Crypto, Whatever – How Much?

Now we get into your own soul searching. You need to figure out what makes you comfortable. (We realize that a good chunk of this is counterculture stuff – if you walk into your investment advisor’s office and say “I want to put 10% of my retirement in Bitcoin,” they may look at you as if you have three heads.)

So we’re going to create a hypothetical character – “Herbie Hedge,” who, though conjured out of thin air, does not have three heads – and we’ll manage a hypothetical fund on Herbie’s behalf.

Hypothetical Investments

To make it easy, we’re going to say Herbie has $100,000 to invest, and the OLD Herbie – as of twenty minutes ago, before he read this post and decided to create his hedge fund – had his liquid-ish investments (stocks, bonds, mutual funds and cash – since they’re between ordinary investment accounts and IRAs, 401(k)s and the like, we’re calling them “liquid-ish”) distributed like this:

50% S&P 500, DJIA Index funds (or, 50% in an overall stock portfolio that looks like the overall market)
20% Growth, international, value, and the like
20% Bonds
5% Gold, silver, precious metals
5% Cash and cash equivalents.

Pretty simple, right? And he was planning on leaving it there. But now that he’s taken a look around this site, and maybe he’s learned a little bit about the “BRED Portfolio” and the “Coins that May Quadruple,” he’s ready to re-consider what he’s doing long-term. Plus, there’s FOMO to worry about: what if this Bitcoin or these other altcoins or cryptocurrencies really do take off?

Speaking of FOMO, didja see what the BRED Portfolio did over the first four months of the year? Whoa.

Herbie’s Hedge Fund

First up, let’s re-distribute his portfolio, the $100,000 he has to invest.

Let’s say Herbie is still a believer in the overall market, might think he can lessen his reliance on bonds, and wants to keep a little in gold and precious metals. BUT he’s also ready to jump in with both feet – to a certain extent – and invest in Bitcoin and its ilk.

We’ll redistribute his (hypothetical) portfolio like so:

40% S&P 500, etc.
20% Growth, etc.
20% Bonds
10% Herbie’s Hedge Fund
5% Gold, etc.
5% Cash, etc.

Voila, Herbie is ready to invest $10,000 in his very own hedge fund.

A Visual “Map” of Herbie’s Hedge Fund

The way we’d propose setting up this “hedge” fund shouldn’t be a surprise to readers of this space.

Bitcoin is there because, well, duh. It is the centerpiece of this new economy. It’s the one that started it all. And, not only do we recommend it in our BRED Portfolio, we also recommend it as one of those four coins that could quadruple. (Yes, we like linking to our own content multiple times in the same post.)

The next 30% is comprised of the other three coins in the BRED portfolio: Ripple (XRP), Ethereum (ETH) and Dash (DASH). To keep it simple, let’s do 10% of our 10K in each.

Following along, let’s aim for the mid-tier: semi-established coins with semi-large market caps. 10% each in Litecoin and Dogecoin.

Finally, there needs to be at least a little that aims to take part in the explosive growth of (some) ICOs and brand-new or new-ish coins. We’re setting aside 10% for two of those: Digibyte and Trustcoin.

Here’s the result:

We grabbed the values from Coinmarketcap, it’s denominated in US Dollars, and of course its value will fluctuate. Heck, as of this writing, Bitcoin was on a mini-tear and was trading – depending upon the market – between $1450 and $1600.

What if I don’t like these individual coins?

Here’s where we go back to the old saw that we don’t provide individual investment advice, trust the professionals in your circle, and past performance isn’t indicative of future results.

But again, let’s go back to why hedge funds were created: the market ebbs, and your hedge fund flows. And vice versa. You’re going to see results that run counter to the results in the overall market – within reason – and that’s okay. Also, within the individual fund, you will see some altcoins do well and others not so much. So if you don’t want to hedge your bets with Digibyte (which I’ll admit didn’t pop like I thought it would after the Segwit rumors and Segwit news), research another coin.

The goal is to spread your risk overall – remember, only 10% of our liquid-ish portfolio is in this fund – and to spread your risk within the fund itself.

What if I don’t have $10,000?

No problem – actually, the beauty of Bitcoin and cryptocurrency investment is that you can get started with very little. (This is a great time to remind you that you can get started over at Coinbase, and if you use this link and make a qualifying purchase, you get extra Bitcoin…and so do we. So yes, that’s an ADVERTISEMENT.)

So you can borrow liberally from our approach with whatever amount you think makes sense. $1000? $100? Test it out over time, see what happens.

What we’ll do here…

We plan on tracking the results of Herbie’s Hedge Fund over time. We’re curious to see how it does against our BRED Portfolio, and we’re also interested in how it does against the overall stock market.

Apr 27 2017

ETF News: Ethereum, or Bitcoin, or Both?

The cryptocurrency chatrooms and websites were abuzz yesterday with a double whammy of potentially good news: the SEC (the US Securities and Exchange Commission) was considering two separate exchange-traded fund (ETF) applications, one for Ether (Ethereum) and one for Bitcoin.

You can read more about it – and you may want to bookmark these sites, too – as other sites that cover the space were discussing the implications for the crypto community, blockchain developers, and traders as well:

Zero Hedge on the Ethereum (ETH) price surge
Coin Telegraph on the possibilities for both ETH and Bitcoin (BTC)
Coin Desk says the original ETH ETF application was filed in July 2016.

What happened last time?

Funny how the crypto space moves lightning fast. While it may seem like “way back when” that the SEC ruled against the Bitcoin ETF, it was actually only on March 10, 2017. That’s not quite seven weeks ago.

The price of Bitcoin did some crazy things in the weeks leading up to the announcement (“buy the rumor, sell the news,” though the rumor was that there was a chance of it being approved), then saw a precipitous drop once the news was announced.

Coidesk Chart — Thanks, Coindesk. March 1 through March 13, 2017 BTC price.

Reading the trading tea leaves

You don’t have to be a wizard to see that this type of rumor – and the subsequent news – can drive prices north. Here’s a 24-hour chart (from Poloniex) detailing what’s up with ETH:

Bitcoin has moved up, too – though not at a double-digit rate over the past day – and now trades on Poloniex at a shade above $1400. (This, too, can change in an instant.)

These things take time, though: rumors of a BTC ETF were rampant for months before the announcement, and you would expect the SEC to take its time on the ETH ruling. (You can also read the SEC’s document, from January 13, here: SEC notice.)

Long-term implications

Really, price speculations in any market are nothing new. For every cry of “bubble,” there’s someone else with a lofty prediction that might seem preposterous.

And the Bitcoin and Ether markets really aren’t any different in that regard to the gold market: Warren Buffett supposedly hates gold, while speculator Doug Casey thinks gold could double this year.

Of course, we’ll be watching this very closely. Our bet, though, is that FOMO will win big once either, or both, ETFs get approved. The flow of legitimate capital into a market that is perceived to be part of the underground is just the beginning.