In these volatile, but markedly bullish markets, it's easy to think that you are a trading genius as you collect profits. However, are you actually outperforming the market?
The T&C 20 Index is based on market capitalization, and is calculated using the same methodology as the S&P 500Ⓡ. The altcoins included in the T&C 20 were chosen to track value of the overall altcoin sector. The selected altcoins are leading development and/or application in data storage, anonymity, social media platform, gaming, and token economy. Altcoins currently included in the T&C 20 Index are Monero, Dash, Steem, MaidSafeCoin, NEM, Waves, DigixDAO, Factom, Stellar Lumens, Lisk, Bitshares, Emercoin, Storjcoin X, NXT, Counterparty, SiaCoin, Synereo, Stratis and GameCredits.
Weekly, the T&C 20 team meets and reviews the top 50 altcoins according to coinmarketcap.com for possible inclusion in the index. Alternatively, any altcoins in the T&C 20 that fail to meet the minimum criteria below for an extended period of time are removed from the index.
Any changes to the index are announced 1 week in advance on the homepage of www.altindex.io. The last alteration to the index was made on January 16th, 2017, with the addition of GameCredits and Stratis. Of note, Bitcoin and Ethereum are not included in the T&C 20, as they are large currencies which are not reflective of the altcoin sector.
Calculation is in real time with the index updated every 5 minutes with market data obtained by accessing the coinmarketcap.com API. Calculation currency is USD.
The T&C 20 team consists of four professionals with backgrounds in finance, trading, computer science, engineering and medicine. Our creation of T&C 20 is to provide both an updated index that tracks value in the altcoin sector, as well as provide updated analysis, research and news on cryptocurrency developments from an investor’s view.
While trading our personal portfolios, we often found it difficult to determine if the altcoin sector was functioning as a zero-sum game or if “new money” (i.e. fiat, bitcoin, ethereum) was entering. We discovered that this knowledge is critical in making trading decisions. The T&C 20 Index provides this information. Since its inception in early 2016, I have used the T&C 20 Index as an analytic tool in my personal fund, the “Icarus Fund”, and have successfully traded with increasingly greater profits. It is our hope that you may find it as useful as we did.
In these volatile, but markedly bullish markets, it's easy to think that you are a trading genius as you collect profits. However, are you actually outperforming the market?
January 26, 2017, USA: Introducing the T&C 20 Index for standardizing and tracking altcoin performance.
In a bull market, altcoins achieve profit gains over 1,000%, far surpassing Bitcoin's trough to peak gain of 217% this year. In a bear market, however, losses can be devastating. Recognizing when the altcoin sector is in a bull or bear market is challenging without a standardized index. Our solution to this problem is the T&C 20 Index, which is the first public index dedicated to tracking altcoin performance.
At its current price of $913.39, Bitcoin has had a phenomenal year. New money is flowing into Bitcoin, and few would argue to the contrary. Are altcoins seeing a similar trend though? Many investors and speculators claim not, describing the altcoin market as a "dog eat dog world" or a "zero sum game."
Altcoin prices are extremely volatile. Ethereum, Monero, NEM, Steem and Siacoin all saw trough to peak gains over 1,000% this past year, but only to lose much of these gains shortly thereafter. This volatility results from markets that are not nearly as liquid as that of Bitcoin. If even a small percentage of Bitcoin investors enter the altcoin markets, the opportunity for extreme price gains is possible. The key is recognizing whether altcoins are in a bear or bull market. In a bear market, the most experienced trader is fighting an uphill battle. Alternatively, in an altcoin bull market, even a novice trader can see substantial profits.
In traditional stock markets, there are well recognized indices, such as the S&P 500, Dow 30 and Nasdaq. For altcoins, however, no such index exists. The digital currency indices that do already exist are heavily weighted toward Bitcoin and Ethereum, which render the indices useless in tracking altcoins. Bitcoin and Ethereum are two digital currencies that have reached a level of market capitalization and mainstream recognition such that their prices are not correlated with the altcoin market. Actually, oftentimes altcoins and Bitcoin trade opposite to one another as money flows from the altcoins into Bitcoin, or vice versa.
In a collaborative private group, I've been trading altcoins and Bitcoin successfully for the past few years. One tool that we developed to assist in our trades is the T&C 20 Index, which is a live chart that tracks the altcoin market. We are now making this index public with charts tracking value back to April 3, 2016. The T&C 20 Index is based on market capitalization, and is calculated using the same methodology used in the S&P 500. Live charts and additional details on the methodology can be found at www.altindex.io.
(Image courtesy of T&C 20 at www.altindex.io)
In the chart above, the T&C 20 Index demonstrates that altcoins are beginning to gain momentum again since their decline in Q3 2016. New money has been entering the altcoin market over the past couple of months. Be prepared to see many altcoins reach profit gains of 500% to 1,000% in the near future.
As of today, GameCredits and Stratis are now included in the T&C 20 Index. In similar methodology as the S&P 500, the T&C 20 divisor was altered with the addition of Stratis and GameCredits to ensure that the T&C 20 Index value maintained its integrity.
The decision to add GameCredits and Stratis was made after extensive market analysis. In addition to fulfilling the minimum criteria to be added to the T&C 20 Index, both altcoins demonstrate the potential to be innovators within cryptocurrency in both the near and distant future. This is not a prediction that GameCredits and/or Stratis will necessarily increase in value in the near future. Our research does indicate though that these altcoins are likely to be of long lasting value within the altcoin sector.
The T&C 20 Index now consists of the following altcoins: Monero, Dash, Steem, MaidSafeCoin, NEM, Waves, DigixDAO, Factom, Stellar Lumens, Lisk, Bitshares, Emercoin, Storjcoin X, NXT, Counterparty, SiaCoin, Synereo, Stratis and GameCredits.
China's role in the bitcoin industry is at the same time both widely discussed and deeply misunderstood. Reporting on the topic is mostly to blame.
This article is the first part of a series of posts that attempt to correct this misunderstanding. In the series I will be explaining why:
1. China's trade volume is misleading
2. China's dominance in bitcoin mining does not translate to control
3. Thinking in terms of nation states doesn't work when it comes to bitcoin. This is legacy thinking...
As altcoins begin to see astronomic growth over the next few weeks, it will be important to be aware of altcoins with major technological releases and/or updates in the imminent future. Below are some of the major announcements in altcoins scheduled for Q1 2017.
January or February 2017: Waves DEX and Fiat Gateways in the lite wallet. This will allow instant trading of Waves Community Tokens and other assets in the lite wallet, with unparalleled speed and simplicity compared to NXT, Bitshares, Counterparty and other versions of decentralized exchanges. Fiat gateways will allow easy purchase of Waves, WCTs and other assets with fiat transfer in the lite wallet. This overcomes the burden of buying bitcoin, transferring it to another exchange in order to trade for another altcoin prior to sending said altcoin to your private wallet.
February 5th, 2017: Dash releases Version 12.1 "Sentinel Release" of its core software. This is the biggest Dash update in over a year, which will be the core version of the software prior to the release of Dash's much anticipated Evolution in early 2018.
January or February 2017: MaidSafeCoin will likely release further public tests of its Vaults in their decentralized internet. The last public test of the Vaults took place over 3 months ago in October 2016. As this project has been ongoing in the development of a decentralized internet for over 10 years, even seemingly tedious development updates tend to drive price increases.
January and February 2017: Factom announced the release of Federation (M2) on December 20th, 2016, and began rolling out the new platform on December 31st, which is still currently underway. Federation (M2) has been under development for over a year, and is the second major release of the Factom software. Features will include a more robust network, transaction times in seconds instead of minutes, support for multiple blockchains including bitcoin and ethereum, and new tools in its development suite/public test net. Foundation light and Exodus wallets will then be released afterwards in February 2017.
January 2017: Minebox will be released, which will be an external hard drive that can farm Siacoin while storing users' files both locally and on the Sia network. This could increase the reliability of storing data on the Sia network.
January or February 2017: Stratis will likely release their full nodes (nStratis) and Stratis cloud at or prior to one of the Blockchain conferences in Q1 2017. Some dates to keep in mind are January 23rd and 24th, which is the Blockchain Expo in London, and February 9th, which is the Blockchain Event in Fort Lauderdale, FL. The Stratis team is attending both conferences. It is possible that announcements of Stratis full nodes and/or Stratis Cloud will occur around or on these dates.
March to May 2017: Syscoin will release their Blockmarket, which will function as a decentralized version of eBay with payment in bitcoin, syscoin or ZCash for better anonymity. Although they say the release will occur in Q1 2017, I expect delays possibly into Q2 2017 for a project of this undertaking.
When it comes to trading cryptocurrency, what goes up quickly, often falls quickly. After seeing a bitcoin bull run up of 24% from $960 on New Year's day to its local peak at $1190 on January 5th, bitcoin crashed 30% to low $800s by January 7th on word that the Yuan had its strongest 2 day performance and that the People's Bank of China (PBOC) met with the Chinese bitcoin exchanges regarding regulation and practices.
My suspicion is that the crash in price was probably triggered by the strengthening of the Yuan and the regulatory meeting with Chinese exchanges, but was probably amplified by shorts and insider trading in China. As 90% of exchange trading takes place in China, any word from China regarding the valuation of the Yuan or regulation on Chinese exchanges is sure to affect the price, as it has on virtually every occasion to date over the past 3 to 4 years. Furthermore, as insider trading cryptocurrency is not illegal, I highly suspect that short positions were made and profits taken on the expected outcome of these announcements. This probably resulted in the accelerated rate at which bitcoin lost its prior 2 weeks of gains in just 2 days. Nevertheless, most cryptocurrency traders, agree that both technical analysis and macro analysis indicate that bitcoin is overall still in a bull run. The fundamentals have not changed. The PBOC has made no indication that they plan on imposing any further regulation on Chinese exchanges to curb capital outflow, and they have failed to impose any regulation during prior meetings as well over the years. Although the Chinese government took measures that temporarily strengthened the Yuan, it is unlikely that they stopped its overall bearish trend. I suspect bitcoin will continue to rise after this correction which could last days or weeks.
Regardless though, with bitcoin's presence in the headlines over the past few weeks, there has been a renewed interest in cryptocurrency with new money entering the market. As bitcoin began to reach its peak in the weeks leading up to January 5th, we saw the T&C Alt 20 Index begin to accelerate upward with bitcoin, breaking the previous months' trend where altcoins suffered losses as bitcoin continued to ascend.
In summary, we believe that altcoins will soon see the bull market that we've been patiently waiting months to see. When the T&C Alt 20 Index shows some semblance of bottoming out after this bitcoin correction, we will continue to buy into altcoins, focusing our purchases on the altcoins with development updates and announcements in January and February of 2017. In the upcoming days, I will begin regular updates regarding pending announcements, rumors and technological developments for many of the altcoins.
After careful deliberation, we have decided to add Stratis and GameCredits to the T&C Alt 20 Index, which will take place next week. Both coins have active development, market caps well over $1 million, and have been actively traded for months with daily volumes far exceeding $5,000. Moreover, we believe that these coins have long-term potential and are representative of the altcoin sector. Of note, this decision was not taken lightly as the last altcoin added to the index was Waves back in July 2016.
Using similar methodology as the S&P 500, the divisor will be updated appropriately to ensure that the value of the T&C Alt 20 Index maintains its integrity upon the addition of Stratis and GameCredits.
T&C Alt 20 Team
We are now back from Christmas and New Year's celebrations. There has obviously been an abundant amount of excitement as bitcoin surged past $1,000 yesterday on January 1st, 2017. As our fund, Icarus Fund, has been mostly invested in bitcoin for the past couple of months, Q4 has been very profitable for us. For Q3 2016, our strategy was to take profits upon exiting the altcoins and retreat into bitcoin as we had expected money to shift from altcoins to the steadily rising bitcoin. Our prediction was accurate as we saw the T&C 20 Altcoin Index decline from its peak value of 255.19 in July 2016 to 130.19 in October 2016, nearly halving in value. As the T&C Index is representative of the overall altcoin market, it is no surprise that we saw a number of altcoins lose a considerable amount of value during this time. A few notable examples are Steem from $4.35 to $0.14, the rise and then fall of Monero from $15.04 to $4.60, MaidSafeCoin from $0.12 to $0.07 and Factom from $3.84 to $1.92. While dodging these and many other catastrophic altcoin depreciations during that time, we also managed to make over 25% on bitcoin profits in Q4.
Since the trough of the T&C index in the end of October though, the index has stabilized for some time. That is, until the past month when it began to steadily rise in value and begin to break out at an accelerated pace in the past couple of weeks leading up to the New Year. We think this is an indicator that new money is now beginning to flow from bitcoin into the altcoins. This is where the real money will be made by investors. Indeed, there is a good chance bitcoin will continue to be profitable in the near future, possibly rising to $1200 per coin in the next month. Staying in bitcoin on this prediction may result in 20% profits. However, with new money entering the relatively illiquid altcoin markets, we expect to see some big price movements in the altcoins. That is, price increases in the vicinity of 3 to 5 fold over the next couple of months. Monero is the beginning of this wave, chart shown below.
Monero has nearly doubled in value over the past month from a market cap of $100 million to $185 million likely secondary to the hype surrounding the release of their brand new GUI wallet. Other altcoins will begin to follow suit, except with much larger gains as their market caps are much lower and daily volumes less liquid. Two altcoins that stand out as good investments right now are Siacoin and Waves. Both of these coins seem to have bottomed out in their charts and have not seen the gains correlated with the T&C 20 Index. We suspect they are undervalued, at prices of $0.22 for Waves and $0.00022 for Siacoin. Furthermore, with Siacoin's affiliation with Minebox to be released this month, and Waves release of its Waves Community Token in January as well as DEX and Fiat Gateways likely in February, both of these coins have potential for hype that could drive dramatic price increases. Moreover, Waves is a large market cap coin that is primarily traded on the Bittrex exchange, and not on the Poloniex exchange. Bittrex is far less liquid than Poloniex, and if Waves experiences a surge of interest, we could see dramatic price increases quickly. The last large market cap coin to see a 20 fold increase in value in just a week's time in July 2016 was Steem, which similarly was only on the relatively illiquid Bittrex exchange, chart shown below. It is possible that the Waves price may soon behave similarly.
In summary, after months of waiting, money is now beginning to flow from bitcoin into the illiquid markets of the altcoins. We suspect large price increases in altcoins over the next couple of months. Two coins that stand out as good purchases right now are Siacoin and Waves.
In June 2016, the Waves ICO was the second largest in cryptocurrency history, raising about 30,000 bitcoin which was equivalent to about $16 million in June 2016 and is now worth $24 million. It still stands as the 7th largest crowdfunded project in the world and is 3rd largest in cryptocurrency, only behind the DAO—$160 million—and Ethereum—$18 million. Today, Waves has been all but forgotten about by most of the cryptocurrency community. The current Waves price of $0.24 or 0.00031 BTC is just above its USD ICO price of $0.19 per Wave and is actually below its bitcoin ICO price which averaged 0.00035 BTC per Wave during the ICO.
Looking at the chart reproduced above, a recent local high can be seen when the price reached $0.39 in anticipation of the release of the full nodes. However, the price promptly retraced to nearly its pre–pump value which is roughly where it is now. Despite the lack of attention and press, Waves has made great strides in its development. In addition to an easy–to–use Chrome app lite client, Waves is now truly decentralized with a stable network of independent full nodes. Moreover, they have added token creation within their Chrome app lite client. This is incredibly easy to use, and anyone can create a token within literally 30 seconds. This is a simple yet powerful application of cryptocurrency technology that is underappreciated. The cryptocurrency community and outsiders continue to harp on how cryptocurrency has not found a good application; however it has been sitting right in front of us for over a year. Over $200 million was raised in ICOs this past year alone. For the first time ever, the public is able to invest like a venture capitalist. We are able to research a company and idea, and with cryptocurrency, invest with hopes of making a large profit from getting in on ground floor. This is currently one of the most impactful applications of cryptocurrency.
To date, most cryptocurrency startup companies have either started their own blockchain or utilized Ethereum's platform to distribute ICO tokens. This means that a startup company has to create a secure, reliable, and scalable blockchain, which is no easy task. Alternatively, if utilizing Ethereum's platform, the company must be competent enough with programming to utilize Ethereum's smart contracts to do this, which I think is overkill for simple token creation. Of note, Counterparty has also been utilized for token creation and received some fleeting attention with this application in their IndieSquare wallet; however, confirmation times are slow and the project lacks funding for a robust marketing campaign. For further reading on why token creation also known as "custom application tokens" or CATs are the next wave in cryptocurrency, please read the article I linked below.
Waves has made it their goal to make token creation and distribution as easy as possible. With the introduction of fiat gateways and a decentralized exchange only months away, I could see Waves becoming the most popular platform for token creation. They have an abundant amount of funding to make this possible. I foresee the Waves price going much higher over the next 3 months.
This is the first post to the T&C 20 Blog. It is my hope that this blog will provide trading and investing insights for both day traders and position traders. The frequency of my written blog posts will likely be on a weekly or biweekly schedule. In the interim between my written blog posts, I will provide a stream of relevant articles on important cryptocurrency developments.
Now, let us jump right into it.
Bitcoin. Over the past 2 years, journalists, Wall Street bankers and tech enthusiasts repeatedly tout that the "blockchain" is the future. The blockchain can be used for data storage, smart contracts and social media. The blockchain can revolutionize trading on Wall Street. Yada yada yada. When bitcoin is mentioned, it is merely to introduce the origin of the blockchain technology, and then is quickly dismissed. Despite this steady stream of negative press, bitcoin price continues to rise. It has risen over 90% in the past year, from $457 to its current price of $791. Furthermore, it has been steadily climbing for the past 3 months, now up 30%. The number of transactions per day continues to grow. Many arguments can be made for this sustained growth. "Bitcoin is its own asset class." "It has the most powerful and secure network." "It has first mover advantage." "It has enough liquidity for real world use." Or in relation to the global economy, "the price increase is due to financial controls in China or India," or "it is due to the declining value of the Yuan." While it is difficult to identify the exact causal factor, what we do know is that there is a steadily greater demand for bitcoin. Importantly, this does not seem to be due to any hype as most attention from the media is guarded or negative. What I mean is this does not seem to be a product of pure speculation as was the case in the meteoric price rise in November 2013, where bitcoin price increased from $200 to $1200 in less than a month. I believe that bitcoin is growing and will continue to increase in value over the next few months until it experiences a new wave of investors who succumb to crazed speculation. When this occurs, an exit strategy can then be employed prior to a dramatic correction. We will be here when that time comes.
So bitcoin will increase in value over the next months, but is it a good time to buy now at $790? In my experience, I have found it difficult to predict the price movements of bitcoin on a day to day basis, and will often refrain from making day trading predictions. Nevertheless, I am leaning toward the likelihood of a continued price rise for the following reason. The price of $780 seems to mark a point of resistance as this was the previous high just prior to the bitcoin halving in June 2016. From June until just last week, this point of resistance was not met—despite the bitcoin price steadily growing closer. This critical point of resistance was just surpassed last week, marking a new price high in over 34 months. From here, the likelihood of continued price rise seems greater than the downside risk, especially when considering the proposition of a dramatic price increase over the next months. In summary, if you are already holding bitcoin from earlier prices, then you have been doing great and will likely see more good things. If not, then now might be a good time to buy.
Finally, it is important to keep an eye on the T&C Alt 20 Index. Utilizing this index, I was able to accurately predict that the altcoins were in a bear market months ago. It was at that time that I took profits from the altcoins and moved back into bitcoin, hence avoiding the massive losses some altcoins experienced while at the same time profiting in the bitcoin bull market. Over the next weeks, we will keep an eye in the T&C Alt 20 for a solid trend reversal. When we see a trend reversal whereby both bitcoin and the T&C Alt 20 are rising together, this is a good indicator that new money is moving into cryptocurrency. Moreover, altcoins tend to have dramatic price gains shortly after a bitcoin pump as new money diffuses from bitcoin into the illiquid altcoin markets. For now though, I would take caution in investing in altcoins, with the exception of Waves...to be discussed in the next post.