(ETH) Archives

Avoid Solana Like the Plague

The eighth biggest crypto by market cap and once hyped to the stars, Solana’s (SOL) repeated run-ins with bots, outages, and frustrated traders during the recent market crash could turn off many potential investors.

Emerging crypto are suffering more than Bitcoin (BTC) and Ethereum (ETH) in the recent selloff while Bitcoin is down 50% over this period, many of these smaller cryptos are down 50% in a week.

Then adding gas on the fire, structural bottlenecks have arisen.

Solano suffered its sixth serious outage of more than eight hours this month over the weekend, which a notice on its website attributed to excessive duplicate transactions causing a high level of network congestion.

It’s not shocking that these smaller networks can’t handle the trade flow.

Many are cobbled together on a shoestring budget.

Solana Labs co-founder Anatoly Yakovenko also pointed to an explanation on Twitter that cited market volatility as causing downtime, as bots rushed to earn bounties on leveraged positions eligible for liquidation.

Citing volatility as to why your product is down is an excuse because other networks were going through the same headwinds and managed gracefully.

A 10% decline in the Nasdaq won’t shut it down and this doesn’t help the naysayers who say that crypto is a bush-league operation.

To an extent, many of the smaller currencies are amateur and heightened volatility in an ecosystem that is already flooded with high volatility cannot be used as a reason for failure.

To not be able to absorb the volatility in stride augurs poorly for Solano and I would tell investors to avoid these crypto’s who can’t crack the top 5 or can’t stay online!

There will be growing pains and avoid them until they can figure out how to run a platform.

During these periods of network instability, crypto traders are often left unable to sell off their positions as transactions fail to complete on Solana’s network, yet another sign of how unreliable this emerging technology can be during times of stress.

When combined with a market-wide crash in crypto prices, investors rushed to offload their tokens are left to figure out other routes while their portfolios rapidly decline.

Remember that these networks don’t have a customer service number and you are sitting in your office chair pondering how to get access to your assets.

That’s exactly what you don’t want your investors to feel.

The founders of the currency attributed the structural issues to a “function of Solana’s success.”

However, I would say that the inability to anticipate higher data loads during selloffs doesn’t help these non-Bitcoin currencies.

Bitcoin certainly didn’t have problems handling the recent volatility.

Having so many transactions meaning it’s an attractive platform for developers and users isn’t the right way to look at it, because a certain level of functionality needs to happen otherwise this attractiveness reverses into a minus.

The bodes poorly for Solano to combat future problems because of the lack of vision at the management level.

An all-time peak of $259 recorded in November represented growth of almost 14,000% since the start of 2021—but following its continued issues, Solano retraced 4,800%.

Rival coins promising to reinvent the capabilities of blockchain technology are also targeting Solano. The value of Terraform Labs’ Luna token, which runs on the Terra protocol for algorithmic, fiat-pegged stable coins, has skyrocketed in the last year, rising more than 7,000% in value over the last 12 months.

I believe we will shortly see Solano developer activity and transaction activity significantly slowing with another haircut in price.

I don’t believe now is the time to call for a crypto “winter.”

Once crypto can elbow through a higher rate paradigm and that becomes priced into the asset class, the debasement of currency among other factors will take crypto higher.

January 25, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 25, 2022
Fiat Lux

Featured Trade:

(SELL THE SHORT TERM RALLIES)
(BTC), (ETH), (SHIB), (DOGE), (ADA)

Sell the Short Term Rallies

Bitcoin Letter

Bitcoin must be treated as a sell-the-rally asset at this point.

I am not giving up on crypto, but I must acknowledge what is happening in the markets.

Suffering from a broad-based risk aversion move with investors dumping literally everything is something that happens when investors need to meet margin calls.

It’s not about Bitcoin at this point, it’s just caught up in the wash, as asset prices around the world readjust to the new Central Bank policies.

The market is looking through the tailwinds crypto possesses from store of value, inflation hedge, limited supply, and an alternative asset to the US dollar.

It doesn’t matter in the heat of the battle and when everything sells off.

Bitcoin hitting the very lower limit of $30,000 means that investors aren’t ready to ditch the dollar for this high-flying digital currency.

In fact, the US dollar has held up quite strongly in the face of trillions of debt issuance.

Look around the globe and the US dollar has absorbed the Fed’s action in stride reflecting little depreciation stemming from the decision to pump massive amounts of liquidity into the system.

The dollars’ strength means that the transition into digital currencies will take longer than first estimated.

Bitcoin won’t take over in one day, but it will experience a gradual adoption phase with the bruises to show for it.

With Russia's move to ban crypto assets lighting the fuse of the latest plunge, Bitcoin's price moves have become closely linked to technology shares, which have slumped on rate hike fears.

The culmination of Netflix warnings of sagging growth triggered another wave of risk aversion in the markets hitting crypto again to knock it down deep into the lower $30,000 range.

In the short term, traders need to play Bitcoin from the $40,000 level and sell rallies until conditions change.

Ethereum, one of the hottest digital coin trades that have soared in popularity thanks to the non-fungible token (NFT) boom, has halved down to the mid-$2,000 level.

Bitcoin, even with its massive underperformance, is still outperforming the minnows of cryptocurrency.

On the horizon, sadly, plans of 4 rates hikes is generally going to cause more pain for risk-on assets, and especially crypto as investors have been conditioned to sell crypto at the first sight of trouble.

On the derivatives side, about 200,000 positions were liquidated in the last 24 hours, totaling more than $800 million in losses and growing according to Coinglass.

Forced liquidations enhanced the selloff and there have been few dip buyers who are waiting out for healthier macro signaling.

For the past two weeks, most of the funding rates in crypto futures have leaned to the short-seller side according to data from The Block Research.

Many retail traders that got into Bitcoin at the peak are now rushing to sell everything and even institutional money are looking at raising cash through the sale of Bitcoin.

I do believe that Bitcoin is still in the midst of a secular bull market, but sentiment and conditions must settle before we reignite the bull case.

Inflation is still a secular tailwind for Bitcoin and other crypto’s, but not in an environment of a panicking Fed who has made a policy misstep.

The altcoin picture is gloomy with Ethereum sidechain Polygon’s (MATIC) token down 36% and Cardano’s (ADA) token is down 61% since their all-time highs in September, when the latter project announced the launch of their smart contracts.

Altcoins suffered drawdowns as steep as 90-99% during the 2017-2018 crypto cycle and the same could happen as investors rush to safer assets.

Naturally, the biggest category of altcoin losers is meme coins.

Dogecoin (DOGE) is now nearly 80% down from its all-time high last May, despite a recent tweet from Tesla CEO Elon Musk that temporarily sent DOGE up as much as 33%.

Shiba Inu (SHIB), another dog-themed coin that gained 1,607% last year, is down 71% from its all-time high.

Sell the rallies at $40,000.

January 13, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 13, 2022
Fiat Lux

Featured Trade:

(THE TURKISH LIRA AND THE DEATH CROSS COME INTO PLAY)
(BTC), (LIRA), (ETH), (USD)

The Turkish Lira and the Death Cross Come Into Play

Bitcoin Letter

The infamous Death Cross is just around the corner again staring us in the face as another potential liquidity event could drive us lower or higher.

Even if you don’t fancy dealing with this phenomenon, algorithms lap it up and these technical events signal short-term price momentum and the direction of it.

To get even more exact, the death cross is the situation in which an asset's average price over the last 50 days drops below that of its 200-day moving average, an indication that its momentum is toast.

And this event is even more scrutinized after Bitcoin’s disgusting start to the year that has left it languishing in the lower $40,000s.

Not exactly the start we wanted and lots of complaints about the dufus called Fed Chair Jerome Powell and his handling of monetary policy.

Now, we should zone in on the big whales — the ones that hold massive amounts of Bitcoin and by that, I don’t mean 1 BTC or 1.2333 BTC.

All eyes are on them, many have said they will hold until infinity, but that’s easier when you bought BTC 10 years ago and not at $60,000 per unit which is what many retail traders did last year.

As we inch towards the vaunted death cross, will this trigger a 10% escape hatch that deadens the asset?

So far in 2022, Bitcoin has outperformed for just a few days and has been under relentless selling pressure.

To make matters worse, Ethereum appears to be forming a death cross as well.

The macro turning putrid has had a meaningful effect on the drop of Bitcoin prices, and if BTC can get through this death cross quagmire by holding onto the $40,000 level, then that could signal greener pastures ahead in the mid-term.

Speculative investments like Bitcoin are being abandoned under such aggressive tightening. Reports show only 5% of the clients surveyed by JPMorgan Chase expect Bitcoin to reach $100,000 per piece by the end of 2022.

Although the "death cross" is a bearish indicator, Bitcoin's historical record surrounding the indicator remains unclear. When the metric appeared last June, Bitcoin’s performance was dismal. But when the metric appeared last March, Bitcoin’s performance was strong. The emergence of this indicator in November 2019 sent Bitcoin lower.

As the U.S. economy is grappling with rip-roaring inflationary prices searing through the consumer prices to home prices, emerging countries are doing so bad with inflation that some are already completely giving up their own fiat currency.

Sure, El Salvador sucked up all the headlines for nationalizing Bitcoin as the de-facto medium of exchange for their citizens, but Turkey and its massive population of 84 million straddling the European continent have comprehensively pivoted towards Bitcoin as hyperinflation wrecks the purchasing power of the Turkish Lira.

The situation in Turkey is what crypto fanatics want to happen in the United States and it also represents what could unfold if the US Federal Reserve neglect doing their job.

Luckily, we are nowhere near that yet.

The Turkish lira has become so unpredictable that bakeries are closing down by the thousands citing a local currency that has lost most of its value.

In Turkey, cryptocurrency trading volumes using the lira exploded to an average of $1.8 billion a day across three exchanges, according to blockchain analytics firm Chainalysis.

Turks favor stable coin tether, whose value is pegged to the dollar.

The rise of cryptocurrencies in recent years has presented a unique tool kit in which to store wealth, albeit far more volatile, and the shortage of US dollars circulating has forced the hand of the average Turk.

The Turkish lira has lost 40% of its value against the U.S. dollar in the past 5 months.

In the capital Istanbul, on the ground level, the local bazaars are accepting Bitcoin as standard currency over their own Turkish Lira.

This trend could mirror the future for some of these marginal economies that are run into the ground by renegade dictators.

Although the U.S. Federal Reserve has been irresponsible, the degree of policy mistake in Washington is nowhere near as atrocious as the events in Turkey.

There are numerous countries whose population could resort to crypto as a store of wealth including every ex-Soviet republic, big swaths of the Middle East, and major areas of Central and South America along with all of Africa.

My guess is that over time Bitcoin gets elevated as the de facto third currency behind the U.S. dollar and Euro. At this point, Bitcoin is too big to fail and too big to get rid of.

In a time of desperate need and no access to dollars and euros, Bitcoin is giving hope to large parts of the world as the pandemic and omicron inches closer to their shores.

Wait out this sideways correction then we march higher.

January 6, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 6, 2022
Fiat Lux

Featured Trade:

(THE US FED MOVES FRONT AND CENTER)
(BTC), (ETH)

The US Fed Moves Front and Center

Bitcoin Letter

The US Central Bank has confirmed our biggest fears — they plan to move faster than expected to head off hyperinflation that is crushing the cost of living in the United States.

Bitcoin has never been through this type of scenario before and the bad news for us is that Bitcoin is negatively correlated with the yield of US 10-year interest rate.

The price of crypto isn’t looking past the secular drivers of inflation, mass adoption, and store of wealth at this point because the Fed has usurped the narrative and is front and center.

The Fed is the driving force now of every asset class in the world from fiat currency to housing prices to tech stocks, yes, they are that influential.

I don’t want to sound like a broken record but until there is some sort of solution or handoff creating an easing in the accelerating interest rate expectation, Bitcoin and other cryptocurrencies are capped to the upside and exposed to the capriciousness of rate fluctuations.

The price movement tells the story of the digital gold dropping to the lowest level since its December flash crash as the first month of trading appears to have generated the conditions for unimpressive performance.

I say that because in the world of cryptocurrencies, conditions can turn on a dime, but in the short term, cryptocurrencies of all flavors will have a hard time re-accelerating.

If you had to choose one crypto to hang out in, I would choose Ethereum (ETH) because it will outperform relative to bitcoin in the long run.

This weakness won’t be the case forever. We simply need an event to greenlight the movement into crypto and that will happen sooner than later.

Bitcoin has surged by about 500% since the end of 2019 in the wake of stimulus measures put in place during the Covid-19 pandemic.

Tokens of popular DeFi applications including Uniswap and Aave are also down.

Certainly, this won’t be a buy-and-hold type of year where the price goes in one direction.

The knee-jerk reaction came out of nowhere and buyers of crypto must reload their bullets for when the time comes.

The weakness has really been in all subsectors such as bitcoin mining stocks which took a beating as analysts reconsider their outlooks after a record-breaking year.

Bitcoin had climbed to a record of almost $69,000 in early November after U.S. regulators allowed Bitcoin futures-based exchange-traded funds.

A secondary reason for today’s weakness is the geopolitical flare-ups in Kazakhstan.

The internet shutdown all over the country due to protests against inflationary pricing meaning mining computers are down.

Why does this matter?

Kazakhstan is the second-largest country for Bitcoin mining, with 18% of Bitcoin’s computing power, so the internet shutdown caused a 12% drop in Bitcoin’s hash rate within a few hours.

The hash rate is not directly correlated to the price of Bitcoin, but it gives an indication of the network’s security, a drop might scare investors in the short term.

Kazakh miners are still offline and it’s yet to see how the situation shakes out in the small Central Asian country.

The reason for these protests were inflationary prices which is a common theme all over the world and particularly higher energy prices will hurt the Kazakh bitcoin mining sector in the long run and could shift them to other jurisdictions.

December 30, 2021

Bitcoin Letter

Mad Hedge Bitcoin Letter
December 30, 2021
Fiat Lux

Featured Trade:

(CRYPTO PASSIVE INCOME THE RIGHT WAY)
(CELSIUS NETWORK), (BTC), (ETH), (SNX), (CEL), (LINK), (UNI), (AAVE)

Crypto Passive Income the Right Way

Bitcoin Letter

So global yields are in the toilet today?

Savings accounts don’t do what they used to do, do they?

How about we try out a certificate of deposit (CD) to harvest some cash?

Are there simply no other interest-bearing vehicles one can park capital in and gain a healthy return?

I would say you are right, but then I would be the fool here and I am certainly not in that line of work.

I will tell you — there is an elixir to the anathema!

Enter Celsius.

Celsius is a crypto-based financial service hoping to disrupt traditional financial services.

They offer cryptocurrency savings accounts that yield high annual interest rates up to 17% annually. They do this by lending cryptocurrency out to institutional and retail traders who seek to leverage their positions.

Since these platforms require collateral to receive a loan, investors can be sure that the loan will be paid back one way or another.

While these rates are floating interest rates, meaning they can change with the market, they’re relatively stable month-over-month.

These loans are over-collateralized, which means the risk of default is lower than it would be for a standard loan. To this day there has never been a default for any coin on this specific cryptocurrency lending platform.

How Do Celsius Make Money?

Celsius primarily generates revenue through its crypto lending service. The company lends assets to users at a higher interest rate than it pays them for storing their assets on the platform.

Celsius has more cryptocurrencies available for interest-bearing accounts, including BTC, ETH, SNX, CEL, LINK, UNI, and AAVE to name a few.

Payouts and Withdrawals

Celsius users can withdraw their funds at any time without incurring additional fees. Those who wish to withdraw over $50,000 with a single transaction need to wait 24 to 48 hours for it to process. The company makes its weekly interest payments on Mondays.

Let the compound interest payments pile up all while exposed to minimal market risk.

Celsius confirms its holdings of $20,366,621,718 in cryptocurrency assets as of August 13, 2021.

In less than one year, Celsius has grown its total asset holdings from $1 billion to over $20 billion.

Do you want to be part of this 20X growth story?

As part of its Proof of Community (POC) and rewards explorer, Celsius provides real-time data about its assets, loans, users, and rewards paid.

This asset growth trajectory is parabolic with Celsius confirming it is adding close to $1B a month in new assets, as the company trends towards the number one position in total asset holdings in the crypto industry.

For years the traditional banking business has conditioned us naïve folk to accept steep fees and no yield earnings on holdings as the status quo.

I will tell you right now that it’s a load of garbage and nobody should accept these pitiful offers from dinosaur banks.

There is so much more out there that we can access now because of crypto.

With that failing model ripe for disruption, Celsius was built to give consumers what banks never could — a community-oriented platform that provides income and financial independence and it delivers it with a bang.

At the start, Celsius had set a goal to bring the next 100 million people into crypto. Today, they have over 950,000 users worldwide.

Celsius has even just launched its crypto-backed lending service in California following regulatory approval.

The California expansion enables the firm to enlarge its footprint in one of the fintech capitals of the world — California.

The firm claims that it now is "one of the most accessible and affordable lenders in California."

The loans can be issued in both United States dollars and stable coins, the minimum loan value is $500, the process is instant, does not need proof of income or credit check.

You are not dreaming — this is the real deal.

Wake up to fresh crypto interest payment receivables on Monday morning easily convertible into fiat currency.

Participate in one of the most unique crypto deals in the world.

To check out this deal of a lifetime, click here to visit their website.

(https://celsius.network/)