- After recent SEC actions, the ICO party may be over
- Major Swiss Exchange to list world’s first crypto-based ETP
- Bitcoin may bottom out in Q2 2019; bearish short-term outlook
- 5 types of coins to hold for a well-diversified cryptocurrency portfolio
- EOS: decentralization optional?
- Bitcoin Cash ABC adds a controversial ‘checkpoint’: Is it centralized?
Week 3, November 2018
If you spent last week under a rock and are wondering why crypto markets are in the dumps, you have the following events to thank:
- That messy Bitcoin Cash hard fork probably started everything (we covered this contentious hard fork in last week’s Highlights)
- The resulting market-wide sell-off shattered key price support levels
- The SEC’s ominous announcement regarding ICOs added extra fuel (more on this below)
But next week will be filled with optimism and renewed hopes of ‘moons’ and ‘lambos’!
Well… maybe not quite.
Let’s start with the wonderful world of ICOs…
After recent SEC actions, the ICO party may be over
On 17 November 2018, the U.S. Securities and Exchange Commission (SEC) ordered CarrierEQ, Inc. and Paragon Coin, Inc. to register their digital tokens as securities. This follows the recent series of orders from SEC that signaled its seriousness in regulating initial coin offerings (ICO), crypto exchanges and other platforms facilitating token transactions.
The SEC expressed that even when issuers have conducted “illegal unregistered offering” of digital securities, they can still take action to comply with federal securities laws.
Regardless, crypto observers are starting to believe that this might spell an end to ICOs as we know it.
But there is some good news!
Major Swiss Exchange to list world’s first crypto-based ETP
The Financial Times has reported that Switzerland’s SIX Swiss Exchange will list the Amun ETP Index next week – the world’s first crypto-based Exchange Traded Product (ETP).
According to the report, it will be listed under the index name HODL, and will track Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP). BTC will make up half of the ETP’s assets. The ETP will be organized and regulated by the same standards required for traditional ETPs and will be managed by German investment management firm VanEck.
ETPs are a derivatively-priced security that trades intraday. Its value can be based on the performance of other investment instruments such as commodities, currencies, share prices, or interest rates, according to Investopedia.
Wait, did I say good news?…
According to crypto analyst Willy Woo, founder of Woobull.com, Bitcoin might reach its lowest point in Q2 2019. Woo’s analysis of macro market indicators points to a bearish short-term trend, indicating a sell signal. Woo’s indicators depend on fundamental pieces of data that pertain to activity on the Bitcoin blockchain, rather than just price and exchange volumes.
For all you eternal optimists, he adds there may be a possibility of Bitcoin bouncing back in the short term and surpassing the $7,000 mark. However, market trends have shown that Bitcoin already had a difficult time breaking out of the $6,800 mark in the past three months. It might be difficult for Bitcoin to break out above $7,000 given that it is currently languishing in the $4,500 zone.
So how do we know what cryptocurrencies to hold in this bear-mauled market? The simple and obvious answer is to construct a diversified portfolio. Here is one way you can do it:
5 types of coins to hold for a well-diversified cryptocurrency portfolio
Source: Invest in Blockchain
I know what you’re thinking, it’s hard to pick winners when everything is drowning in a sea of red and when most crypto is so closely correlated with Bitcoin.
Now, this article was written back in September before the current market, um, troubles. But the advice and framework mentioned here are logical and may hold up in the long run, even if you decide to pick different coins than the article suggests.
There are the 5 coins the article suggests you should hold.
- The market leader – Bitcoin (BTC): Any true crypto bull run involves Bitcoin. Mainstream crypto adoption could probably start with Bitcoin.
- The stable coin – USD Tether (USDT): You can choose to maintain a healthy stockpile of USDT during a bull market and use it to buy up cheap coins during bear markets
- The passive income token – NEO: in NEO’s 2-coin system, gas fees for transactions are paid in a token called GAS. NEO coin holders are paid passive income in GAS for simply holding NEO. A good way to make gains in flat markets.
- The trading hedge – Binance Coin (BNB): Exchange coins are less likely to be affected by general crypto sentiment, making it a good diversification tool.
- The future speculation – ICON: this project focuses on the interoperability of blockchains. In a future with many blockchains, there will be a need for them to communicate. However, any promising project’s coin could be substituted into this category. This category may have the smallest weight in your portfolio.
BitPR Editor’s note: you may want to determine your own portfolio weights after this week’s mass sell-off. Maybe you believe that this is a good buying opportunity for BTC and speculative coins. Or perhaps you’d prefer to hold more USDT and stay on the sidelines while waiting for other coins to bottom out. Your portfolio weights depend on your goals and risk tolerance.
EOS: decentralization optional?
EOS’ governance model was harshly critiqued by firm believers of decentralization when it surfaced that some confirmed transactions were reversed.
A small group or moderator having the power to reverse previously-confirmed transactions goes against the core of decentralization.
However, EOS does not even aim to be decentralized, according to its CTO Daniel Larimer, who asserts that EOS prioritizes anti-censorship and robustness against being shut down.
Finally, we end with Bitcoin Cash, one of the reasons why crypto has suffered so much this week.
Bitcoin Cash ABC adds a controversial ‘checkpoint’: Is it centralized?
You might have heard that Bitcoin Cash split into Bitcoin Cash ABC and Bitcoin Cash SV last week. Long story short, Bitcoin Cash ABC added a checkpoint that raised questions whether it was becoming centralized (a no-no for traditional Bitcoin advocates).
This sort of checkpoint is supposed to protect against ‘reorganization’ attacks on the blockchain, resulting in transaction delay, unreliability, or even reversal. What seems to have irritated some people is the location of this checkpoint on the tip blockchain in the newer blocks. They argue that this was done to protect the ABC client from a reorganization attack by Craig Wright’s BCH SV camp.
Despite the outrage, the offending ABC client has minimal adoption by users and businesses. Only around 2.3% of Bitcoin Cash nodes have upgraded to this client.
Check back next week for more bite-sized crypto and blockchain highlights!
Disclaimer: Investing in Initial Coin Offerings, cryptocurrencies, and digital tokens is highly risky and speculative. The material presented here is for information purposes only. This information presented here is not intended to provide any sort of investment advice, nor does it recommend any company, Initial Coin Offering, or digital token and should not be taken as the basis for any investment decision or strategy.