Crypto Rally Imminent? (Chart of The Day 15)

Sector Closes In On Key $150 Billion Value Level

The Cryptocurrency Sector has endured one severe BEAR MARKET.  From a peak market value of $825 Billion, the Sector lost 88% of its value before bottoming last December. (https://coinmarketcap.com/charts/).

The wipeout of value has been more than justified by the Sector’s disconnected fundamentals.  Holders of Cryptocurrencies own ABSOLUTELY NOTHING.  Bitcoin holders will NEVER receive a dime of cash flow, have no claim to any patents, or to Blockchain technology. Cryptocurrency “investors” are plagued by theft, loss, and scams.  Cryptocurrency “investors” have completely ignored this lack of value. These issues were discussed recently here: “The End For Bitcoin?” (https://markonomics101.com/2019/02/03/the-end-for-bitcoin-2/).

Despite the bad news, Cryptocurrencies may be overdue for a decent BEAR MARKET Rally.  And, coincidentally, the Federal Reserve is back into accommodative mode.  Yes, the entity that blew up the “Everything Bubble” is providing ample liquidity to the financial system, AGAIN!.  Will History repeat? “Federal Reserve To The Rescue”.  (https://markonomics101.com/2019/01/31/federal-reserve-to-the-rescue/).

The Federal Reserve has completely brought equities back to life.  “New Bull Market Highs in 2019?”  (https://markonomics101.com/2019/02/13/new-bull-market-highs-in-2019/).   

Is it possible that the Fed has inadvertently breathed new life into Cryptocurrencies, too?  A new Bubble, even?

Bitcoin Surges To Near $4000

While the fundamentals remain poor, larger Capitalization issues have formed BULLISH Triangle Chart patterns.  A Slide Show of the key Cryptocurrencies is below.  A few takeaways from these charts are as follows:

  1. All of the large Cryptocurrencies, except Bitcoin, have broken out of Triangles and have turned their patterns BULLISH. Bitcoin is on the cusp and turns BULLISH at $4,000.
  2. Litecoin has the most BULLISH pattern, having broken out the earliest.  It has had the sharpest gains so far and appears to be an early candidate to lead the rally.

JP Morgan Cripples Ripple

While the charts are shaping up nicely, fundamentals remain absent.  In addition, competition has gotten even stiffer.  JP Morgan, whose CEO Jamie Dimon once called Bitcoin a “fraud”, has introduced its own form of “Cryptocurrency” called the JPM Coin.

Morgan’s coin is aimed at more efficiently transferring money, competing directly with XRP, the Ripple token.  Unlike XRP, JPM Coin is a “stable coin”, backed by the US Dollar and JP Morgan itself.  Its value is fixed and predictable.   XRP, on the other hand is highly volatile.  If successful in achieving its promise, JPM Coin could render XRP completely obsolete!

The JPM Coin is targeted primarily toward large Corporate users who routinely transfer large sums of money overseas.  Currently, corporations and banks use the prehistoric SWIFT network to send funds.  SWIFT is very slow, often taking 3 or more business days to clear.  Morgan’s coin would settle immediately.  (https://www.ccn.com/bloomberg-editor-says-jpmorgans-cryptocurrency-will-obliterate-ripple-is-xrp-in-trouble).

JP Morgan transfers $6 Trillion per day.  The potential market for JPM Coin is massive.

Other significant entities are rumored to be developing some sort of Cryptocurrency capability.  Amazon and Facebook are speculated to be creating their own coins or currencies.  The low barriers to entry, encourage new entrants but ultimately drive any economics lower through competition.

“Investing” in Cryptocurrencies

It bears repeating that Cryptocurrencies have absolutely NO investment merit.  The JPM Coin is now a better play than any of the Cryptocurrencies.  Shareholders of Morgan will benefit from any economics the JPM Coin produces.  Holders of Bitcoin, on the other hand, will NOT benefit one iota from its use.

The differentiation between the Cryptocurrency itself and the creator can be HUGE.  A perfect example is Ripple.  The economics of XRP are exclusively the property of its corporate parent, Ripple Labs, NOT holders of the coin.  “Ripple’s Triple Gives New Hope To Cryptocurrency Investors”. (https://markonomics101.com/2018/09/24/ripples-triple-gives-new-hope-to-cryptocurrency-investors/).

JP Morgan is obviously too large to be any kind of real Cryptocurrency play.   The JPM Coin will only be, at best, a fairly small fraction of their business.  Is there any way to play Cryptocurrencies in order to earn true economic benefits of the sectors potential?

Overstock.com Is A Real Cryptocurrency Play

Formerly an internet retailer, Overstock.com (OSTK) put its retail operations up for sale in order to focus exclusively on its own Cryptocurrency.  OSTK  invested $175 million into its wholly owned Medici Ventures which is creating the coin and blockchain applications. (https://mashable.com/article/overstock-blockchain-cryptocurrency/#bWXXJY1GNaqp).

There is absolutely NO guarantee that Medici will be successful for Overstock or its public shareholders.  However, any financial success WILL pass on directly to shareholders.  As of the close February 20th, 2019, OSTK’s entire market capitalization stood at $700 Million.  One would think that success in Cryptocurrencies could be worth $Billions, offering substantial upside to OSTK shareholders.

In no other financial arena is misinformation more prevalent than in Cryptocurrencies.   One has to wonder how many continue to believe that their Cryptocurrency holdings are “investments”, when in fact. they have as much merit as bus tokens or Beanie Babies.  “Inflection Point (Part 4) Cryptocurrencies: Commodities or Collectibles?”. (https://markonomics101.com/2018/08/04/inflection-point-part-4-cryptocurrencies-commodities-or-collectibles/).

Cryptocurrencies continue to capture the investing public’s imagination and, unfortunately, have been a sinkhole for their assets.  But not for informed investors.   That’s where we come in.  We inform, so you don’t have to learn the hard way.

Be Informed, Not Misled!

 

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