Blockchain and Crypto Investment Thesis July 2019
The current state of the Crypto Investment Landscape.
In the late 1990's, the equity markets in the US, especially in the Nasdaq market saw an interesting transformation taking place. Among the macro economic headlines were several currency devaluations, govt debt defaults and Long Term Capital failure. Backdropping was of the dawn of the internet and the Dot Com bubble. AOL bid for Time Warner, Yahoo created Mark Cuban et. al. During this time, it was common to find a small cap stock who had been relatively silent and low volume, with low float that would suddenly PR some connection to the internet and see the stock move 1000% in 2 days. We see the same thing happening today with the ecoin markets.
As we moved into Y2K and then 911, the SRO community reacted and built protections to help market makers manage order flow. Small cap stocks which used to move 1/4 US dollar at a rung, suddenly only moved by a penny.. so the rips basically died. It required more capital (margin) to equal the same type of gains, creating more risk for trading capital. This is a type of friction that we see recreated in a different way in the mature ecoin markets today.
Drawing on years of trading many markets in many timelines, we want to share some key points about what we see happening with this new market of crypto and alt coins.
1. The time frame of performance of crypto markets today is unlike the traditional markets, unless you have trading experience in low liquidity markets. For every 1% of bullish gain created from holding crypto over X period of time, its takes an average of 10X for retracement. It is important when your in Crypto to have a roadmap of sell zones on rips to take profits. Sometimes this is impossible to forecast, so we use a percentage gain in order to predict future values and use open orders to liquidate positions. We typically get out of crypto positions 10x faster then it took for us to build a position.
2. The "maturity" of the marketplace is moving very fast and the derivative wall street product offerings and leverage coming from market makers and exchanges actually create and introduce less price elasticity and more friction for an already low liquidity market (as compared to equities or forex) Essentially this means that there is more control on price action on a macro prospective. This creates smaller % rips that create compressed high ROI trades. As a trading room, we become less interested in this type of market as it leaves less chance of parabolic rips.
3. Our macro view of crypto markets based on the above observation lead us to conclude a few assumptions. The tradition economy and banking system cannot allow a coin like BTC to rip to the moon. Every percentage gain BTC creates vs FOREX Central Bank paper broadcasts the underlying economic fault lines in fractional zirp economic realty. We see derivative instruments and wall street futures products et. al as devices to short circuit any future rips from happening. It also keeps the flow of capital from completely leaving traditional markets and forex and flooding the crypto markets. Its money flow is impossible to stop as most fund managers need to find ROI, and the only place we see this happening worldwide moving forward is in the crypto space.
4. BTC with leverage is now the best way to range trade the macro crypto markets. Both long and short. But our focus is on small new projects offering new tokens or coins. And an accumulation of a portfolio of these coins for future rips. We define a rip as a multi day to multi week gain of 200% to 5000% return where we eventually liquidate 90% of the position and use the proceeds to repeat the cycle with a new project. While most commentators believe that Bitcoin BTC will go to the moon, we dont agree with the forecast and find it much easier to create total ROI from new coins that rip.
5. At some point BTC market cap will be eclipsed by a new coin or project. Google was the search engine #21 and so on. It might seem impossible at this point in time.. but history is on the side of the innovator. BTC has the first mover advantage and the wall street product offerings to become a money market for crypto space but we feel it won't hold its lead in some future. Most of the top 15 alt coins will become stable coins.. even those considered stores of value. BTC exposure should always be part of a crypto strategy but hunting the next innovation is the most important and the hardest part of investing.
6. There will be a rush of coins and tokens from private and public sector entities in the coming months and years being announced, slowly eating away at the base of banking notes and assets. We see these as competitive to the liquidity pool of speculative investments in alt coin projects that can produce new and innovative technology solutions.
BCCG
In the late 1990's, the equity markets in the US, especially in the Nasdaq market saw an interesting transformation taking place. Among the macro economic headlines were several currency devaluations, govt debt defaults and Long Term Capital failure. Backdropping was of the dawn of the internet and the Dot Com bubble. AOL bid for Time Warner, Yahoo created Mark Cuban et. al. During this time, it was common to find a small cap stock who had been relatively silent and low volume, with low float that would suddenly PR some connection to the internet and see the stock move 1000% in 2 days. We see the same thing happening today with the ecoin markets.
As we moved into Y2K and then 911, the SRO community reacted and built protections to help market makers manage order flow. Small cap stocks which used to move 1/4 US dollar at a rung, suddenly only moved by a penny.. so the rips basically died. It required more capital (margin) to equal the same type of gains, creating more risk for trading capital. This is a type of friction that we see recreated in a different way in the mature ecoin markets today.
Drawing on years of trading many markets in many timelines, we want to share some key points about what we see happening with this new market of crypto and alt coins.
1. The time frame of performance of crypto markets today is unlike the traditional markets, unless you have trading experience in low liquidity markets. For every 1% of bullish gain created from holding crypto over X period of time, its takes an average of 10X for retracement. It is important when your in Crypto to have a roadmap of sell zones on rips to take profits. Sometimes this is impossible to forecast, so we use a percentage gain in order to predict future values and use open orders to liquidate positions. We typically get out of crypto positions 10x faster then it took for us to build a position.
2. The "maturity" of the marketplace is moving very fast and the derivative wall street product offerings and leverage coming from market makers and exchanges actually create and introduce less price elasticity and more friction for an already low liquidity market (as compared to equities or forex) Essentially this means that there is more control on price action on a macro prospective. This creates smaller % rips that create compressed high ROI trades. As a trading room, we become less interested in this type of market as it leaves less chance of parabolic rips.
3. Our macro view of crypto markets based on the above observation lead us to conclude a few assumptions. The tradition economy and banking system cannot allow a coin like BTC to rip to the moon. Every percentage gain BTC creates vs FOREX Central Bank paper broadcasts the underlying economic fault lines in fractional zirp economic realty. We see derivative instruments and wall street futures products et. al as devices to short circuit any future rips from happening. It also keeps the flow of capital from completely leaving traditional markets and forex and flooding the crypto markets. Its money flow is impossible to stop as most fund managers need to find ROI, and the only place we see this happening worldwide moving forward is in the crypto space.
4. BTC with leverage is now the best way to range trade the macro crypto markets. Both long and short. But our focus is on small new projects offering new tokens or coins. And an accumulation of a portfolio of these coins for future rips. We define a rip as a multi day to multi week gain of 200% to 5000% return where we eventually liquidate 90% of the position and use the proceeds to repeat the cycle with a new project. While most commentators believe that Bitcoin BTC will go to the moon, we dont agree with the forecast and find it much easier to create total ROI from new coins that rip.
5. At some point BTC market cap will be eclipsed by a new coin or project. Google was the search engine #21 and so on. It might seem impossible at this point in time.. but history is on the side of the innovator. BTC has the first mover advantage and the wall street product offerings to become a money market for crypto space but we feel it won't hold its lead in some future. Most of the top 15 alt coins will become stable coins.. even those considered stores of value. BTC exposure should always be part of a crypto strategy but hunting the next innovation is the most important and the hardest part of investing.
6. There will be a rush of coins and tokens from private and public sector entities in the coming months and years being announced, slowly eating away at the base of banking notes and assets. We see these as competitive to the liquidity pool of speculative investments in alt coin projects that can produce new and innovative technology solutions.
BCCG
