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Your grandfather’s investment advice may not make sense in 2020

If you were born before the 1980s, your financial decisions are likely based on advice passed down from your Baby Boomer or Greatest Generation parents. They are probably more financially comfortable than you are, so it’s probably safe to follow in their footsteps, right? Wrong.

The conventional wisdom forged in post-WWII prosperity, which feathered many a Great Generation and Baby Boomer nest, does not reflect the forces underlying today’s economy or the massive technology-driven changes that are coming down the pike. …

The crypto market was up big for the month of November. At the end of the month, bitcoin is trading well above its 200-day moving average which is a bullish sign from a technical perspective. Market structure changed in the month of October with more of the entire crypto asset universe moving up. Global risk has come down over the past month which has risk assets, like stocks, bitcoin and other crypto assets, moving higher — with bitcoin making a new all-time high (ATH). There was a brief period where it traded over $20k. Once the next stimulus package is approved by Congress, we expect bitcoin to trade much higher. …

The crypto market was up for the month of August. At the end of the month, Bitcoin is trading well above its 200-day moving average which is a bullish sign from a technical perspective. Market structure continued with risk assets doing well in the current environment. The Fed’s massive liquidity and backdrop is still protecting asset prices. Other investment themes within the crypto market are gaining traction with DeFi (Decentralized Finance) in the lead. The biggest event of the month was at the end when bitcoin surpassed the $11,775 level, which had been a past level of resistance. …

The crypto market was up for the month of August. At the end of the month, Bitcoin is trading well above its 200-day moving average which is a bullish sign from a technical perspective. Market structure continued with risk assets doing well in the current environment. The Fed’s massive liquidity and backdrop is still protecting asset prices. Other investment themes within the crypto market are gaining traction with DeFi (Decentralized Finance) in the lead. The biggest event of the month was at the end when bitcoin surpassed the $11,775 level, which had been a past level of resistance. …

There are many valuation models for Bitcoin. Some are based on fundamentals like much of the work done by Chris Burniske in his book, Cryptoassets. Many models are outlined in CoinMetrics work starting, here. I think relating to Bitcoin as a network and measuring the network’s usage and utility is key. However, a savvy investor cannot overlook the data from this price regression model. It’s called the Stock to Flow Model for Bitcoin.

Graph by Plan B, posted on Twitter but available for public use from his GitHub.
Graph by Plan B, posted on Twitter but available for public use from his GitHub.

(My interpretation of work done by Plan B’s Stock-to-Flow Model, public use graph).

The Stock-to-Flow (S2F) Ratio is a model that models scarcity value. Now, just because something is scarce doesn’t mean it will hold value over time. Platinum is 30 times rarer than gold, but is it 30 times more expensive? No. It’s not even higher than gold right now. Why? …

Here’s what should we be thinking about going in to 2020. There are several factors affecting the emergence of Bitcoin as sound money. In January, we’ve started off 2020 with Bitcoin trading as a safe-haven asset, more correlated to gold and oil than risk-on assets like the stock market. Moving throughout the year, it will be important to track when Bitcoin is trading like a risk-on asset and when it’s trading like a safe-haven, or risk-off asset.

Crypto and Looking Ahead

The crypto markets have tail winds, which is great for investors. Here are a list of factors:

  1. Fundamentals of the Bitcoin Halvening Event in May of…

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Introduction

Last year, I wrote an article, Crypto Asset Fundamental Analysis — 7 Indicators & Ratios to Watch, about how to use fundamental analysis in the evaluation of crypto assets. We want to look at network usage to derive relative value based on that utility. Over time, we as the crypto investor community need to build a framework that shows outside investors how to think about fundamental valuation for crypto assets. I’ve added a couple more metrics to the framework that now uses 5 indicators and 4 ratios to give a window into the fundamentals of the crypto markets. …

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Introduction

Last year, I wrote an article, Crypto Asset Fundamental Analysis — 7 Indicators & Ratios to Watch, about how to use fundamental analysis in the evaluation of crypto assets. We want to look at network usage to derive relative value based on that utility. Over time, we as the crypto investor community need to build a framework that shows outside investors how to think about fundamental valuation for crypto assets. I’ve added a couple more metrics to the framework that now uses 5 indicators and 4 ratios to give a window into the fundamentals of the crypto markets. …

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Disclaimer: I am an active manager of a crypto fund.

There is a lot going on in the crypto markets, as always. In early 2019, we’re still in a crypto winter, the longest crypto winter ever, actually. Many thought that though the speculative side of investing is in a bear market there is a lot of building going on and the industry is still growing. Or, they mention the private investment or venture investing is still quite active. …

Image for post
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Disclaimer: I am an active manager of a crypto fund.

There is a lot going on in the crypto markets, as always. In early 2019, we’re still in a crypto winter, the longest crypto winter ever, actually. Many thought that though the speculative side of investing is in a bear market there is a lot of building going on and the industry is still growing. Or, they mention the private investment or venture investing is still quite active. …

About

Jake Ryan

CIO at Tradecraft Capital & Author of Crypto Asset Investing in the Age of Autonomy, published by Wiley this December

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