The Week To Be In Crypto [01/28/2019]
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Market Overview
A down week but still operating in the range we have been in for the past couple weeks. The question now becomes — Is the next move going to be like the last time we were in a range for a long time (BTC ~6550) which was a pretty dramatic ~50% drop or something different. It feels like anything in the $2,000s would trigger a lot of people to buy in pretty aggressively so I have a hard time ever seeing BTC visit under 2,000. How crowded it gets if there is a drop under $3,000 will determine how low it goes. I still think it is just a matter of time (I would say >50% chance this year) till we see a move at least into the 6–8k range so any capital that is waiting around to be deployed can be done in the low 3k range with a reasonable level of confidence.
Despite the drama that ensued afterwards I found this to be an interesting discussion point.
It is rooted in the issue with looking at “MarketCap” which is generally considered to be circulating supply * price. When quickly comparing different tokens/coins its the easiest/fastest to try and put them on the same footing and not just say one is “cheaper” because one unit costs less in dollar terms. MktCap became a heavily relied upon metric int he cryptosphere in my opinion because it was the easiest and there isn’t the same access to data there is in the traditional markets. Messari is trying to improve the data quality in crypto and from their perspective the XRP that Ripple has locked up should not count towards circulating supply. To be clear, all this did was change one number on one website but many in the XRP community took it as an attack and MktCap is often used for “ranking” coins/tokens and its natural to want to be on top. Two takeaways for me
- Market Cap reeeeaaaaaallly doesn’t matter — This just means you really need to look into the tokenomics and historical price action for each project you evaluate, which is hard. The best bet is to find good people to follow which do it professionally or publish their personal findings
- Cryptoeconomic systems provide new paradigms that we don’t have metrics for. How do you represent locked or staked tokens and not all locking (multi-sig, timelock, etc) or staking (unable to unstake till time X, unstake delay, immediate unstake, etc). Its going to be a long time till the maturity of the data and understanding of the community catches up.
TL;DR There is still a lot of work till we get to a point of reasonable mutual understanding of the value of cryptoeconomic networks.
What I’m Buying
Just putting this out there
- Maker (MKR) now holds ~2% of ETH locked up in CDPs.
- Multi-Collateral CDPs will be out this quarter (I think)
- wBTC will be made available this week
- Placeholder VC (10 yr investment timeline) is invested
- a16z recently bought 6% of all MKR
- Venture Capitalists dont like losing money
I think MKR has earned a seat next to BTC and ETH as a nice addition to the core position of diversified crypto portfolio. When all else fails, follow the money.
Recommended Media
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From the Slack
A collection of content from The Bitcoin Podcast slack group the past week
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