Jul 02 2017

Six Months In: The BRED Portfolio Continues Its Tear

You could actively manage cryptocurrency trades. You could chase ICOs. Or, you could just take a chunk of money, invest it equally in four of the biggest – yet also four diverse – coins, and see what happens.

In the case of the #BRED Portfolio, which we started tracking earlier this year, you would have done pretty well, thanks.

How It Works

Step one of our BRED Portfolio was to take four coins and invest $2,500 into each. The coins were selected, we’ll admit, with the value of hindsight and because they fit an acronym; but we also chose these because of their perceived diversity. You were getting a diversified portfolio because…

B is for Bitcoin – and let’s face it, the word “Flippening” hadn’t even entered the equation until last month;
R is for Ripple – sorry if the XRP ticker symbol would have made this “BXED,” but Ripple, the company behind the coin, is taking on SWIFT and has a shot at actually winning;
E is for Ethereum – “smart contracts” as an alternative network/platform onto which ICOs seem to be launched everywhere;
D is for Dash – we credit folks like Amanda B. Johnson for actually showcasing the consumer value AND the community value of Dash.

We “backtested” this portfolio in that we just went back to January 1 at midnight GMT and checked the USDT value of each coin. The result was a portfolio that started like this:

We decided early on that we weren’t going to rebalance the portfolio. We weren’t going to take profits, we weren’t going to cut losses.

Since it was a hypothetical portfolio, we can do that – we can also ignore things like psychology, ebbs and flows, actually need for income that people might have, etc.

We mentioned above the value of hindsight – note that we came up with this idea in early April; had we chosen a different date, Ripple may not have been on the collective radar just yet, and Dash wasn’t yet a top five coin (which it was when we launched the portfolio).

Nevertheless, our experiment was underway. Now that we’re six months in, let’s check the results.

Oh. My. Goodness.

So, you’re telling me, a “set it and forget it” portfolio, of just four coins, equally weighted and left alone, would have grown to 22 TIMES ITS ORIGINAL SIZE???

Yes. Yes it would have.

What if I waited and started April 1?

That portfolio would have looked a little different, obviously, but, if you started with equally weighted amounts of each coin on April 1 and left it alone, you’d be looking at the following:

In other words, had you waited until April 1, then invested and left your coins alone for three months, you would have gone 5x. FIVE TIMES YOUR MONEY.

What we can learn…

Not sure – all these coins have grown, some are more on fire than others, and the whole space remains all sorts of volatile.

What we’ll do in the days to come is this:

Keep watching these coins, sharing updates as we can over on Twitter (where you should totally follow us)
Share the results of the other hypothetical portfolio we’re tracking – our own “Hedge Fund” – and see how it is doing
And, of course, make changes to our own holdings as we see fit.

We’ll also encourage you, dear reader, to get in the game if you aren’t already: it’s easy and, if you use our Coinbase affiliate link, you can potentially get a bonus of $10 with a qualifying purchase.

Final Note!

Of course, your experience may vary. This is a hypothetical portfolio – making 24x your money is rather unprecedented.

In other words, invest in cryptocurrency at your own risk. And don’t invest more than you can afford to lose. You could end up with 24x returns, or your entire portfolio could get wiped out. Neither is out of the realm of possibility.

Jun 28 2017

It’s Not Too Late To Invest in Bitcoin, Ethereum, or…

Bitcoin, Ethereum, and the rest of the cryptocurrencies suffer from a real-world usage problem. Go up to the random person on the street and ask them if they have any Bitcoin. What do you think the percentage of “Yes” responses would be? 50%? 25? 10? 5?

If you read these pages and you follow the crypto space, you’d probably be inclined to think about the people in your bubble, and maybe you’d say the answer would be 50% or higher.

But if you really think about how far crypto has yet to go, then you think about the average person on the average street – I bet that number is way lower than 5%.

In fact, there are brand names out there that are much bigger, and have much more notoriety, than Big B and its Brethren.

Tesla Is Bigger Than Bitcoin

The market cap of Tesla – you’ve heard of them, right? – is around $58 Billion right now. Bitcoin’s market cap – measured by the number of coins in circulation times the price – is around $42 Billion.

Tesla, though, has the same thing going for it as Bitcoin: lots of name recognition but, in reality, not a lot of market penetration.

Or an untapped market.

Tesla delivered 76,230 vehicles in 2016.

Does that seem like a lot? In December of 2016, Toyota sold 240,000+ vehicles. In the US alone. Annual figures were 2.4 million vehicles.

Paradigms Don’t Shift Overnight

For one of the sites we manage, we wrote a post a couple years back that claimed that Tesla is the next Apple. Think about it – the slick marketing, the sexiness of it all; the forward-thinking, rockstar CEO.

But for all the headway that Tesla has made – when we wrote that post, the stock was at $236 a share, it’s now at $371 – it’s quite possible that they have yet to scratch the surface.

Powerwall. Shingles that capture the energy of the sun. And no doubt more to come.

And That Brings Us Back to Bitcoin

Total value of foreign currencies traded on the Forex exchanges, in one day: roughly $5 Trillion.

The folks at Blockchain say that roughly $700 million in Bitcoin was transacted yesterday. If you add in all of the cryptocurrencies traded on all the exchanges – quick math tells us that was something around an additional $5 billion – you’re still at roughly one tenth of one percent of Forex.

Agreed that we’re not talking about all of the other cryptos, too, in our transaction calculations above – but, still, you can say that we have a ways to go. QUITE a ways to go.

So, What Are You Waiting For?

We’ve shared the Coinbase link a dozen times here, and we’ll keep sharing it.

Doesn’t matter too much if you missed out on the little pullback – we think this whole space is a paradigm shift, and you’re best off getting into the game as soon as you can.

Use the Coinbase link and get a bonus – $10 bucks worth of Bitcoin with a qualifying purchase ($100) of any of the three currencies (BTC, Ethereum, or Litecoin) you can buy on the site. (DISCLOSURE – THAT’S AN AFFILIATE LINK. But you get a bonus too, so that’s cool)

It’s a marathon, not a sprint. The story will be told over the months and years to come. You don’t want to be on the sidelines.

Jun 28 2017

How Are Things? Did You Panic? Did You Buy?

Hi there, crypto trader. How are you. Doing okay? Keeping busy in this new new new market we’re in?

Oh, you panicked? Well, I understand. After all, panic is a natural reflex, especially when the sky is falling like it did for a few days.

I mean, look at this Bitcoin chart!

That’s kinda scary, right?

Buy The Failed Dip

Before we explain the concept, let’s look at an eerily similar chart from Ethereum.

The toughest part about Buying the Failed Dip is figuring out exactly when the dip has failed.

In fact, returning to the ETH chart above, it looks like there were four failed dips – four times where there’s a Fibonacci level that the price dropped below – and four comebacks.

The fourth appears to be happening this morning – welcome to the rapidly changing nature of cryptocurrency markets.

So…what’s the advice here?

Buy The Fundamentals, Dude

Yup. You can day trade or week trade or whatever kind of trade you want to do – that can be profitable, but you have to know what you’re doing. And, unless you are really good at following charts and seeing action, you might get burned.

Or you can Buy The Fundamentals, Dude. That’s right:

Bitcoin is the world’s reserve cryptocurrency, or the gateway to other altcoins.
Ethereum is the smart contract and ICO gateway.
And so on…Ripple cointinues (see what I did there?) making inroads in the world’s banks; Dash has an awesome community; Siacoin (LONG “i”) is likely to tackle Amazon Web Services SOON.

It’s Going to Continue Being Crazy…

Stick to fundamentals.

Jun 23 2017

Anatomy of an Overhyped ICO

EDITOR’S NOTE: June 23 – 2:51 pm – It has been pointed out by a kind soul that original investors of the ICO could have bought at 0.01 ETH – meaning a price of around $3.20 per Bancor token. Thus, even though Coinmarketcap.com lists a price for a week of around $20 per coin, the ICO investors are still in good shape.

The original premise, though, is one I’ll stick with – lockup might do some of these overhyped ICOs a bit of good.

The rest of the text remains unchanged.

If you’ve been watching this space for more than a few weeks, you know that there’s a good chunk of “froth” in the ICO (Initial Coin Offering) market. That froth was on display recently – JUST LAST WEEK – when Bancor launched its ICO and sold some crazy amount of Ethereum in a matter of moments. Read more here from NewsBTC.

And if you’ve been around the financial world for any amount of time, you know how IPOs (Initial Public Offerings) work – a heck of a lot differently, and the pricing is almost always done in a matter that, while shutting out the little guy initially, enables the price to be somewhat stable over the short- and medium-term.

Well, as of this morning, Bancor is back in the news – and it’s not for a good reason. Their tokens are already trading on the open market – and here’s a screenshot from Bittrex that might scare the heck out of you.

We’ve Entered New Territory

That’s right – we have now gone where no token has gone before – from the biggest ICO ever to the most precipitous drop in recent memory.

If you judge market cap based on ICO value alone, i.e. they raised $153m, and their price when they “went public” was $20/token, that means 7.65 million tokens in the ICO (pardon my math, I know there are a lot more variables here, such as how many coins are held by the company, locked up, used to stabilize the network, etc.).

This would also mean that the ICO value went from $153m to roughly $30.6m – given the price of $4.20 a share that CoinMarketCap.com has it trading at.

No matter how you slice it – this is not good for Bancor.

Why Lockup is So Vital

If you’ve ever been part of an IPO, you know there are tons of rules in place governing the sales of shares. In an IPO, there’s always a quiet period before shares are sold. Investment banks and market makers negotiate behind the scenes to ensure that the price and number of shares will meet market demand just enough so that it’s not over- or under-subscribed.

Then, once the shares go live, those who hold them – from executives on down to rank-and-file employees – have their shares locked up. They can’t buy, sell, trade, or any of that for what is usually a 90-day period.

The goal is to encourage some stability in the marketplace: if an executive of a company that went public decided to cash in immediately, what would that say about the confidence the executive has in the company? What would that do to the stock price?

Lockup is the most vital tool in the ICO toolkit.

That’s right – are you better off raising $153 million and then seeing the value drop like a stone once it trades? Or raising, say, $30 million, holding the coins for 90 days, and weeding out those who are just looking to dump and get out for the quick buck?

What’s Next?

We’ll have to watch the market and see what happens to Bancor. Does it rebound? Do tokenholders revolt? Is this the one that causes the SEC to weigh in on this new way of raising capital?

In any event, food for thought – overhype your ICO, then don’t lock up the tokens, and you might have a recipe for disaster.

Jun 22 2017

The $1000, 5-Coin Challenge

We’re back with what we think will be a fun post. We’re issuing a challenge – and we’ll track our own hypothetical results on this site. Think you can beat us? Share your ideas and comments below.

The $1000, 5-Coin Challenge

We’ve been doing a TON of research here – yes, we’re launching a couple products, so stay tuned for those – and we’re learning a whole bunch about some…let’s say…”emerging” coins. Below-the-radar picks that could take off – or could completely fizzle.

And, with all the attention given to ICOs and token launches, we bet that, once the dust settles, people will go back to “established” coins (post-ICO, or ones that launched a few years ago, or ones that have just been languishing a little) to try to give their portfolio a “pop.”

To participate in the challenge – which you can do with play money or real money, totally up to you – you must select one coin from each of the following categories:

CATEGORY A: 5-digit market cap (as measured by CoinMarketCap.com, we’ll use June 22 figures, but you can use them the day you start)
CATEGORY B: 6-digit market cap
CATEGORY C: 7-digit market cap
CATEGORY D: 8-digit market cap
CATEGORY E: 9-digit market cap – BUT must be UNDER $200,000,000.

You’ll “invest” or actually invest $200 in each.

See what we’re doing here? Trying to get out of our own comfort zone – and also trying to go after speculative and/or distressed assets.

Ready for our picks?

Category A: ERY – Eryllium

We told you we’ve learned a lot over the past few weeks – and Eryllium was a new one for us. TINY market cap – $75,000-ish – and it’s only trading at 700 or so Satoshis. They claim faster transactions, global capabilities, security, and lower fees.

The coin hasn’t cratered this year – it dropped from 1500 or so Satoshis at the beginning of the year, but it’s not in the double-digit Satoshi “danger zone” so that’s a good thing – and they have eight different wallets available. Trades on Cryptopia, among others.

Category B: TOR – Torcoin

Yes, that sounds like Tor the private browser platform thing…but it’s not technically affiliated with Tor the private browser platform thing. However, all the features of Torcoin sound like all the features of Tor the browser.

Market cap of somewhere around $115,000. It’s a bargain in the grand scheme – but, as with everything on this list, if you’re investing with real money, don’t invest more than you can afford to lose.

In other words, for us this is probably the most speculative of the five coins we’ll use in this challenge. Even more so than Eryllium. But there’s a chance that a renewed interest in privacy could cause this one to pop.

Trades on Cryptopia, among others.

Category C: CRB – Creditbit (or Credit 2.0)

Rebuilt on Ethereum at the beginning of the year, Creditbit has, in our view, real potential. 30,000 Satoshis is the recent price, trading at 1/5 of its level a couple months ago.

It’s a DAO – Decentralized Autonomous Organization – and there’s a bunch of interest in that concept, too – not just from the ETC/ETH split, but also from the success of Dash.

You can trade it on Bittrex and Livecoin – we have yet to use Livecoin, though, so can’t vouch for it yet.

Category D: GOLOS – Golos

I knew NOTHING about this – NOTHING – until I went to the Golos website.

We translated it from Russian – Thanks, Google! – but, we gotta tell ya…

Golos is the Russian Steemit.

Most of its volume is on Bittrex and it’s trading at about 4000 Satoshis. Russians appear to be adopting blockchain platforms rather quickly when compared to the rest of the world, so this one is worth a shot.

Category E: NXT – Nxt

We’ve owned Nxt before, and now we’ll get into it again. We think it looks enough like XRP that we’re jumping in at this level – even though it’s higher than where it was when we first bought it. Today, around 6700 Satoshis; but we owned it at 3000 (then sold because it wasn’t going anywhere).

Trades on all the major exchanges, including Poloniex.

And Here’s The Recap…

We welcome your feedback, and we’ll track this – warts and all – in the weeks and months to come.

Let us know in the comments what you think.