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Friday thoughts

Friday thoughts

Overvalued?

There are a lot of dubious projects in the top 25 which have recently seen huge pumps that feel irrational to me. Leaving aside the likes of Ripple and IOTA, Cardano has pumped to nearly $6bn on no real news and with release a while away (although it actually looks a solid project, I think the valuation is presumptuous at present), EOS is in a similar position and over $4bn, Ethereum Classic ($3bn), BitConnect ($2bn, ponzi scheme) and Tron (I invested for an easy flip in the ICO but that is not a project deserving of its current valuation) are the standouts but I would be very cautious holding most of that top 25 long term, aside from Bitcoin and Ethereum. I would be particularly averse to holding the projects which have no real news coming for 2-3 months - which in crypto terms might as well be a lifetime away. These recent big pumps of the largest market caps is almost unprecedented, and I don't think it is sustainable. 

BTC begins to flow back into alts?

Is this the beginning of the BTC:ALT reversal? 

  • July - December 2015: Money moved away from altcoins into BTC (dominance went from 80%-90%)
  • January - June 2016: BTC dominance went from 90-just under 80%
  • July - December 2016: BTC dominance rose back to around 90%
  • January - June 2017: BTC dominance slid to around 40%
  • July - Present: BTC rose to just over 60% 

Bitcoin feels overvalued compared to the rest of the index at present which may explain some of these recent moves across altcoins as a whole. It is the reason why I am resisting buying Bitcoin - it feels like the wrong time to be getting in at this stage. 

OMG!

OmiseGo (OMG) looks relatively undervalued compared to some of the other projects previously mentioned. It has roadmap deliverables coming shortly (Wallet SDK in Q1, the OMG network in Q1/2). The ratio is weak against both BTC (down 5x since September) and ETH (down 2.5x). It remains a solid project and is 'only' up 33% this month - which in the crypto world means it's basically dead to its owners. One of the things that turned me off OMG originally was the propensity of the team to shill their own token and provide content for people to speculate about. That seems to have died down of late and makes me more comfortable entering at this stage. I am tempted to wait a little longer, given we will have to wait until the end of Q1 for the deliverables, but the lack of any pump this month may be a reason to enter now. 

On the downside, it does come from the team that wrote this which is one of the most bizarre roadmaps I have ever seen. 

Have a plan

Set target goals for withdrawing. If you're new then you might think that this relentless march upwards is normal for crypto. It has a different and even more irrational feel to it than I have previously experienced. Crypto has always been valued speculatively, against what it could be in the future, but with a $540bn market cap it feels like that future potential is already very much priced in. Vitalik Buterin posed the question on Twitter "So total cryptocoin market cap just hit $0.5T today. But have we *earned* it?". Earning is subjective, but whether or not $540bn worth of value has been created is not - no, we have not. The only thing that has changed in recent weeks is that more people have become aware of it and the services have improved to a degree which allows people to buy in easily. 

Importance of hype

The top 100 on CoinMarketCap are now almost exclusively $100m minimum. It can be tempting to look at some of the 101-300 as cheap and thus ripe for an inevitable rise - just be careful to choose a project still capable of drawing attention and hype. The immediate deliverables, ideas and the team's ability to draw attention are all crucial for a project to gain momentum. There are some very solid looking projects (Aragon for example) that will likely continue to underperform because they just aren't particularly sexy ideas. The space as a whole needs these projects, but that doesn't mean they'll provide good returns. 

The future

The future

A needless wait

A needless wait

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