Investing Through The Eyes Of A Crypto Trader

The last few years could rightfully be described as a rollercoaster when it comes to cryptocurrencies. Bitcoin became a household name overnight, and just as quickly, its bubble burst. Initial coin offerings (ICOs) enjoyed a boom but now their success is dwindling. Meanwhile, security token offerings (STOs) and other breakthroughs are vying to fill the void.

 

To navigate and understand where the cryptocurrency market is headed, I spoke to Anatoly Radchenko, the CEO of United Traders, which is an advanced investment and financial services company. At the age of 28, Radchenko was named the Best Private Investor twice and started a hedge fund. He has significant experience with financial markets in general, and a unique first-person perspective on trading cryptocurrencies.

Over the past year and a half, the crypto industry has become quite well-known. What happened?

“The period from 2016 to 2017 was the most interesting in the crypto market. ICOs appeared on the scene, and everyone had very high expectations. These prospects are still there today, but are much more grounded. In the beginning, expectations were too high, and were in a very short timeframe. That is why everyone quickly became disillusioned and the bubble burst—and why 2017 was very difficult for all traders. Even with top funds like Novograts and Pantera Capital, investors lost about the same amount as if they personally held bitcoin”.

Radchenko explains that in traditional markets, not all assets are correlated with the market—but with the crypto market, all assets fell alongside it. It was difficult to find a safe haven. So 2017 taught traders, especially new ones, that the markets are quite volatile. Many traders used leverage, which led to large losses and eventually to the elimination of all positions. They came with high expectations for a quick profit—and it did not quite pan out – he added.

Can we expect a rebound in the market?

“I think that the drop is a good thing, because a drop in value will ultimately lead to a decrease in volatility. When a large number of people have at least one bitcoin each, they press the button and the losses snowball. Now, though, most bitcoins will once again belong to large holders. This will reduce the circulation of bitcoins in the market, which in general should stabilize the markets a little bit. Such a strong drop also made investments possible for many serious players who were suddenly able to afford it”.

Radchenko is circumspect on what will happen next since, of course, everyone has different predictions about what will happen with cryptocurrencies—to the point that many experts are sick of being asked what they think at all. Wall Street’s main advisor has said he is tired of forecasting crypto, and recently wrote on Bloomberg that he is refusing to comment on the topic.

“We even decided to make a little joke out of it with a fun, quick quiz where anyone can predict what comes next”, Radchenko adds.

Do you think cryptocurrency prices were manipulated—and if so, by who and how?

“In principle, when the price was at $6,000, everyone understood that, okay, someone buys, someone sells. But with sharp movement from $6,000 to $3,000, many people got knocked off track. And it happened without any significant events. I do think Tether and Bitfinex, which are being probed by the Department of Justice, are at play here. I also think this may be some kind of manipulation by the same bitmix”.

Radchenko explains that a bitmix is an exchange which accepts only bitcoins. It is very easy to register. Most people—let’s call them gamblers—switched to this platform and there was high turnover. If you look at the volume on the bitmix, the total could reach 5 or 6 billion a day relative to the volume on the Binance and Bitfinex exchanges. So it turns out that we find ourselves in a situation widely talked about in classical markets: the volume of derivatives, which in one way or another indirectly affect the underlying asset, or spot price of the asset itself, is much higher. This holds true for gold and oil too. And with crypto, we do not have regulation or a central supplier, so prices differ everywhere. There is a lot of systemic and financial risk.

What are some rules for investing in crypto?

A great rule is to try to invest in large projects, because money tends to go toward money—that is, projects with good marketing. Another good rule is that there is no need to try to guess the bottom. It is better to allocate your assets evenly and in equal parts into different projects, because, once again, the price now does not reflect anything. As we recently saw, iOS just grew 30% in a day. Why did this happen? Nobody knows. And you will never guess whether it will start growing today or tomorrow. It is necessary to be patient and not try to look for the bottom.

With regard to the challenges traders faced in 2017, it’s hard to be happy when people lose money because of their inexperience. But the most important thing a trader must understand is that, even if he has been mistaken when it comes to his predictions and transactions, all is not lost. The market will be there tomorrow and the day after tomorrow and in a year. A trader must always have a margin of safety (or cash) in order to somehow correct a situation that has gone wrong. Do not go all-in and expect instant results. Gamblers get mowed down.

How do scam projects affect the industry and the value of currencies? Do a large number of them affect the cost of other cryptocurrencies?

Scam projects have always existed and will always exist. Most people try to focus on good projects, but there have always been both bad and good projects and novice investors might not be able to tell the difference. But I do not think most projects that failed were necessarily the result of organized criminal groups, for example. They did not intend for the funds to disappear. A lot of guys who raised money for ICOs had no background building businesses, and knew nothing about corporate culture or hiring staff, much less how to conduct B2B and B2C relations. They just had an idea, investors invested a lot of money in the idea, and the idea did not go anywhere. Plus, the crypto market fell. It was kind of a game, and they lost. I do not think most people wanted to throw their investors under the bus.

What trends await us in 2019? Maybe some that will be transferred from 2018 and so on?

The first is the development of various protocols, services, and chains for bitcoins, like Lightning. These are faster, reliable, simplified ways of banking and the user experience will only continue to improve in 2019. The second is the emergence, I hope, of the framework for security tokens. When companies collect money, they can only issue tokens a year later, so this year we will see how Telegram tokens, for example, will behave. Also, as services like Facebook have their own internal currencies (like it’s said to be creating for WhatsApp transfers) it will drive adoption so that people start to understand how, say, the Facebook cryptocurrency differs from Bitcoin, what decentralization is in general, and why it is needed. Finally, we will also see the use of blockchain technology by corporations.

Can you talk about how the ICO boom happened and whether it will happen again?

It can easily happen again, but it will just be called something else and have another mechanism. The rules will change a little bit, the names will change, the marketing will change, and the boom will repeat. I think security tokens will be the next boom.

And what is the importance of security tokens now for the industry?

The fact that your rights are described, and, roughly speaking, the company has some responsibility. These security tokens can have dividend distribution properties, they can have voting properties — that is, they can have properties like a security, but they can be stored and transmitted to each other like tokens.

With security tokens it is always clear how many there are, where they lie, who they lie with, how to find a buyer, seller, etc. It will help to make the market liquid and transparent. That is, it can lower the barriers for medium investors to invest during the earlier stage of a company. As a rule, all the best companies look at how they can attract Google Ventures, Andreessen Horowitz, Sequoia, and so on. But security tokens can also drive the democratization of investments in good companies.

How will current utility tokens, including security tokens, be regulated in the future?

This is actually, probably, one of the most difficult issues, and, in my opinion, no one knows, and everyone is waiting for that answer. I think the Security and Exchange Commission should listen to other regulators from other countries and figure it out. They cannot simply talk about how thing should be.


Source
Author: Gerald Fenech
Image Credit

Cryptocurrency Is Just One Of Seven Types Of Cryptoassets You Should Know

Two years ago, the entire cryptoasset market had a value of $9 billion. Had it been a public company, it would barely have cracked the S&P 500 index. Fewer than two years later, the cryptoasset market is $300 billion in size, roughly double the market capitalization of RBC, Canada’s largest lender.

The explosion (and recent pull-back) of value in cryptoassets like bitcoin and ether has captured the imagination of developers, and the attention of the media, governments, central banks, the investing public, and regulators. It has made enthusiasts euphoric, Nobel laureates skeptical, and old-school billionaires dyspeptic. Charlie Munger of Berkshire Hathaway went so far as to call bitcoin “noxious poison.” Is there any other kind of poison?



To be sure, there is a lot of hype in this market, and the industry must confront such implementation challenges as scaling technology and regulatory uncertainty. But beyond the hype and mania, something profound is happening—the creation of an entirely new digital asset class.

This new asset class will transform every industry in the economy, from financial services to pharmaceuticals, media to manufacturing. Existing assets like stocks and bonds will become digital assets and new yet unforeseen assets will emerge, enabling new decentralized business models based on collaboration and clever code. Understanding the various types of cryptoassets, and the different functions they serve, is crucial to thriving in this new decentralized digital economy.

In the updated version of Blockchain Revolution, we break them down into at least seven categories:

  • Cryptocurrencies like bitcoin, the granddaddy of all cryptoassets, are instruments of exchange, stores of value, and units of account. To wit, bitcoin today holds over $100 billion dollars and supports billions a day in global transactions. Banks are taking notice, going from “bitcoin bad, blockchain good,” to “bitcoin, yikes!” JPMorgan and Bank of America are speaking openly about the risks cryptocurrencies pose to their business, and Goldman Sachs and TMX Group’s Shorcan are moving swiftly to trade these assets.
  • Platform tokens like ether of the Ethereum blockchain, the $40 billion mega-unicorn and Canada’s most successful start-up ever, are designed to support decentralized applications that eliminate intermediaries in virtually every facet of the economy. Ethereum has also emerged as the leading platform for initial coin offerings (so-called ICOs), where a project can tap into global pools of capital. To date, over $7 billion has been raised through ICOs, 70% of them using Ethereum’s standard, ERC-20. Ethereum and its challengers, Cosmos, Aion, and ICON, will form the backbone of the next era of the internet.
  • Utility tokens are programmable blockchain assets that have utility in an application such as Golem, which aims to aggregate the power of the world’s smartphones into a decentralized supercomputer that anyone can use to run computations in exchange for golem tokens. Think Amazon Web Services without Amazon.

  • Security tokens are native digital bonds, equities, and other securities that trade peer to peer without financial intermediaries. Why should a stock trade settle T+3 when buyer and seller can trade directly and settle T+0 on a decentralized exchange? The Canadian Securities Exchange intends to get into this market. Others would be wise to follow. ICOs have already upended venture capital. Bay Street will be next.
  • Natural asset tokens represent tangible goods like gold, oil, or carbon in peer-to-peer markets with real-time settlement. For example, the Royal Mint partnered with the Chicago Mercantile exchange to create Royal Mint Gold, a digital gold token backed by gold bullion in the Royal Mint’s vaults. The entire commodities market is up for grabs, as is mass-market carbon trading.
  • Cryptocollectibles are entirely unique digital assets. Consider CryptoKitties, an app that enables users to purchase, raise, and even breed unique virtual pets. As of January 2018, Cryptokitties’ 235,000 users had conducted $52 million in transactions. Companies like Everledger and others are enabling the tracking and trading of these rare and very real collectibles on the blockchain.
  • Crypto-fiat currencies are issued and governed by central banks. In 2017, Venezuela shocked many by announcing its launch of “the Petro,” a cryptocurrency backed by the country’s vast oil reserves. The Federal Reserve and Bank of Canada should take notice: implemented properly, crypto-fiat currencies can make markets more efficient, transparent, and inclusive, and central bank policy more responsive to crises and shocks.

This Cambrian explosion of crypto assets will precipitate one of the greatest reorganizations of wealth and transformations to the global economy in our history. This represents a second kick at the can—an opportunity to assure that everyone has the ability to benefit from the prosperity of the digital age.

Which Type of Crypto Asset Do You Mainly Invest Into? Are You Going To Explore More Crypto Avenues? Feel Free To Comment Below And Let Us Know!



Here at Dollar Destruction, we endeavor to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

Source
Author: Alex Tapscott
Image Credit

Don’t forget to join our Telegram channel for Crypto, Business & Technology news delivered to you daily.