Bullish DOT and Bleeding XRP #63
Market Meditations | December 30, 2020
Fundamental and technical analysis for traders and investors.
Dear Meditators
A remarkable time to be in the crypto market right now. As one coin bleeds out, another is thriving.
In today’s letter, we provide DOT fundamental and technical analysis for traders. A much more bullish outlook compared to XRP. We answer the hottest question in crypto right now: buy the blood or is the nail in the coffin?
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Scaramucci’s Skybridge Has Invested $182 Million Into Bitcoin ?
The firm, which has $9.3 billion under management, is also preparing to launch the Skybridge Bitcoin Fund LP in January, according to documents filed with the Securities and Exchange Commission (SEC) on Dec. 21. According to the deck, the fund has already invested $25 million in bitcoin and outside investors will have to put up at least $50,000 in order to invest in the fund. A re-allocation of funds by such institutions from the fixed-income market to bitcoin would “produce a substantial increase in the price of bitcoin.” Read more.Crypto-friendly Trading Firm eToro Rumored to be Prepping for 2021 IPO ?
Sources told Cointelegraph that eToro has been working with the London Stock Exchange’s ‘Elite’ program. A number of mainstream financial entities, such as MicroStrategy, have started a trend of institutional Bitcoin investments. Coinbase’s move to go public, along with hints at a similar move from eToro, could stimulate further adoption of cryptocurrency. Read more.Cover Protocol Token Holders Attack Compensation Plan ?
DeFi insurance project Cover protocol recently suffered losses when an unknown attacker minted over 40 quintillion Cover tokens. Since then, the Cover team announced a compensation plan based on the snapshot that “will be taken at block 11541218, one block before the first major exploited mint.” Nevertheless, the compensation plan appears to have sparked controversy for the project with some token holders now accusing the Cover team of being dishonest. Read more.Panthers’ Russell Okung Becomes First NFL Player to Be Paid in Bitcoin ?
After tweeting about it in May 2019, Russell’s demand has now been realized officially. The arrangement will be done through Zap, a startup founded by Jack Mallers. Their Strike product enables traditional paychecks to be converted into BTC. Apparently, Okung’s $13 million yearly salary is being split 50/50 between bitcoin and fiat. According to Okung, other pro athletes have also started onboarding to the program. Read more.
A Shining Star DOT: 60% Increase in 6 Days
When the whole world has its eyes on Bitcoin and Ethereum, we can lose sight of silent troopers. We are talking about DOT, the native token of Polkadot.
Founded by Ethereum co-founder Gavin Wood, Polkadot is a blockchain network that supports various interconnected sub-chains called “parachains.”
Parachains can run higher transaction throughput than Ethereum because of its more sophisticated design, as CoinDesk reported previously.
The currency’s rise began on Dec. 23, when Binance announced a $10 million fund to support projects of Polkadot. This is part of the exchange’s efforts to bring DeFi experiences to its users.
The next big boost came on Dec. 28, when Twitter ? users noticed the ETH/BUSD pair on Binance’s homepage had been replaced by the DOT/BUSD pair. This of course, gives DOT a lot more exposure than it historically has had.
This exposure comes at a good time, when retail traders look for tokens that could outperform Bitcoin in the short term.
The last time DOT had this kind of exposure was when a Bloomberg article labelled it the ‘ethereum blockchain killer’.
As depicted in the graph above, DOT has managed to move from lows of $4.77 to an ATH today of $7.65.
This represents an impressive 60% increase in just 6 days ?
The recent price action, Binance developments and the strengths of “parachains” all bode well for the coin’s long term growth prospects.
XRP: Buy the Blood or is the Nail in the Coffin?
This week was the culmination of a debate that has been going on for years within the crypto community: Is XRP a security?
Barely a week after the U.S. Securities and Exchange Commission (SEC) charged Ripple Labs for violating federal securities law by selling XRP to retail customers, several major exchanges like Coinbase have suspended trading for XRP pairs.
Not surprisingly, the XRP token witnessed an incredibly volatile trading week with +30% swings on both sides as traders and investors tried to estimate the long-term consequences of the SEC’s action. Is it time to buy the blood or are the SEC’s charges the nail in the coffin for XRP?
For this article, let’s take another look at the developing situation after I first wrote about it last week. I take a look at this week’s price action, the latest developments and how confirmation bias got the best out of some long-term XRP investors.
XRP’s Dead Cat Bounce
There are certain moments when paying attention to technical levels has very little value because of some fundamental catalyst.
XRP crashed over +50% following the SEC’s news and even dragged down the whole market, but some forgot a golden rule that applies to pretty much every market: Nothing goes up or down in a straight line.
When everybody is trying to do the same thing, catching an XRP short for example, the market has a tendency to punish those who come in late.
The big short squeeze on Christmas convinced some people that the bottom was in and other potential delistings had been priced in.
A few days later, Coinbase confirmed the rumors and officially announced that they halted trading on XRP pairs. A second dump commenced and XRP dropped 30% after the news, crashing from $0.28 to 0,17 in less than a day.
Yesterday, Ripple came with a statement of their own, saying that the majority of their customers are not located in the U.S. and overall XRP volume is largely traded outside of the U.S as well.
Remarkably, Ripple wrote that they look forward to ‘working with all of the Commissioners and the SEC’s new leadership, once appointed.’
The market reacted positively and quickly bounced from the lows, soaring over +40% from the lows just a few hours earlier.
With such a big lawsuit hanging over their head, it’s hard to foresee a long-term recovery for the XRP token until the case gets resolved.
In Ripple’s defense, they have a huge war chest to defend themselves and will likely do everything in their power in order to continue their business in some fashion, even if that means relocating the company outside of the SEC’s jurisdiction.
Lawyers estimated that the SEC has a good chance of winning the case so making a bullish case for XRP right now is difficult, but that doesn’t mean that Ripple has thrown their towel in the ring.
A Race Towards Decentralization?
Reading between the lines, some users on Twitter pointed out that following the charges, several projects might be wondering who the SEC’s next target will be.
They have said that they don’t consider Bitcoin and Ethereum a security, but the legality of several initial coin offerings (ICO’s) and the issuance of ERC-20 tokens remains a controversial topic within the industry.
Will there be a race towards more decentralization by companies that have raised money over the last few years?
Will projects avoid doing business with U.S. customers now that the SEC is officially going after well established companies?
It looks like we’re in for yet another bumpy ride.
Conclusion
Even as 2020 draws to a close, the crypto market continues to teach traders lessons. The markets can be cold and unforgiving at times but each event (black swan or not), if analysed and thought about properly, makes us a better trader.
The recent XRP price action has taught us that nothing goes up or down in a straight line and the market can punish those who join late.
The outlook for XRP is bleak but we do think it is too soon to say the nail is in the coffin. Making a bullish case is very difficult but we wouldn’t step out of the ring just yet.
George1Trader: Becoming a Profitable Trader at 21 Years Old
George (@George1Trader) is a full-time crypto and FX trader. George also has his own trading group The Hunt, where he provides educational content and helps newer traders accelerate their learning process.
Things I learned:
Trading groups can accelerate your learning process, but at some point you gotta go your own way. The best way to learn is to actually trade and learn from your mistakes.
Most people are not willing to put in the right effort to succeed. As long as you’re willing to invest your time trying to improve your own strategy and keep up with the market, you can make it as a trader.
Growing your portfolio plays tricks with your mind. Instead of risking a certain % of your portfolio (1R), using a fixed number can help you overcome the fear of losing money.
Traders who have mastered risk management and position sizing tend to perform better than the ones with the prettiest charts. Surviving should be a trader’s first priority.
When starting, keep things as simple as possible. Even simple support & resistance flips can work very well if you stick to the right risk management system.
Clear your mind. It can be very healthy to step away from the charts for a moment and clear up everything to come back fresh. You don’t have to trade all the time.
Planning your trades in advance can make the decision process easier. Know which triggers you are waiting for to execute a trade. When X happens, do Y.
Timing is incredibly important when trading alts as market sentiment tends to have a huge impact. Following Twitter can be a part of an overall trading strategy
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.
