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.