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So far Dan Simerman has created 8 blog entries.

Knowing The Market: ICOs Cooling Down?

The CEO of Ripple and the Cofounder of Ethereum are in the news this week claiming that the majority of ICOs are scams and need to be closely reviewed by investors and consumers.

While I agree that there are some questionable ICO projects out there (see: Jesus Coin ),  the idea of funding a project outside of traditional venture capital is an appealing one.  The fact that this funding mechanism is abused by harmful actors is unfortunate.  The real harm of the ICO craze, however,  is how it negatively impacts the cryptocurrency ecosystem as a whole by diverting resources and attention from larger, truly innovative projects.

Personally, I’m glad that the ICO craze of mid 2017 has died down.  Half baked Ethereum projects, some with absurdly long product release schedules, were taking too much funding away from revolutionary protocols like IOTA and Ethereum.

What we are seeing now is a micro trend movement from a focus on smaller projects to larger projects. With all the Bitcoin hardfork news behind us (for now), it seems the market is willing to once again bet big on the top 20 players.

As institutional money starts to flow into larger, more established projects, expect to see large, high marketcap projects continue to dominate into 2018 as the majority of ICOs look increasingly less favorable to investors.

2017-11-18T14:23:19+00:00 November 18th, 2017|Crypto Currency News|0 Comments

Mr. S’s Hopping Strategy

Not all coins are created equal. Some coins in my portfolio are marked ‘long term’ (about 85-90%) of them. The other 10-15 percent of my fund is allocated to what I like to call a “Hopping Strategy.”

What is the hopping strategy you ask?

Some coins gain momentum early on for a mix of reasons:

  • They had a really successful ICO.
  • People love the branding/team.
  • They have a really strong community.
  • Exchange trollboxes are actively spreading info for a pump/dump.
  • Right place right time.

These coins offer a great opportunity to get in, make a quick 5-10x and hop out at a peak. Even if you expect to hold a project long term, you can use this as a vehicle to multiply your position on a coin, or to ‘hop’ into a long term coin.

This is something I enjoy doing frequently. With Swarm City I rode the wave from .25 to 4.50 and sold before it crashed back down to 1 dollar.  With that war chest I increased my stake in Golem, a coin that I hold long term.  

This is an easy strategy, and something I recommend trying out for yourself.

Takeaway: Some coins will  rise disproportionate to their value at launch and drop back to earth. This does not mean it will not rise back in the future, however it might take some time. Use these as opportunities to increase your stake in other coins, or as a vehicle to increase your war chest.

Mr. S

2017-11-16T14:20:20+00:00 November 16th, 2017|Crypto Currency News|0 Comments

What is a Pump and Dump?

A pump and dump is a scheme where whales use large amounts of money to effect the price. One recent example was with ChainCoin (A project I kick myself for not riding out).

Chaincoin Pump and Dump

Chaincoin Pump and Dump

The coin went from 1 million to 100 million in a very short time.  The trollbox claimed that this was a permanent trend that would sustain itself forever.  This was intentionally or unintentionally an attempt to get more people to buy into the coin as it rose. This is what is called the ‘pump’.

When coins hit crazy valuations like this, they oftentimes fall back to earth, known as the ‘dump’. You’ll hear chatrooms constantly talk about ‘pump and dump’ schemes. While not all quick rises are p and d’s, many can be.

Don’t mistake a correction for a p and d. And if you do take a position in an active p and d, be cautious to get out before it all comes crashing down.

2017-11-13T19:04:17+00:00 November 14th, 2017|Crypto Currency News|0 Comments

Pay attention to a cryptocurrency’s market cap, not the price of the coin

New traders can get excited over the ‘low’ price of a coin. They look at Ripple at 20 cents and think that it could reach Bitcoin levels in the thousands. While this is ‘technically’ possible, it would require Ripple to be valued in the trillions of dollars. Why is this the case?

Ripple Price

Ripple Price

Each cryptocurrency has a different number of coins issued. Some are in the millions while others are in the billions.  What this means is that you are better off looking at the total market cap of the coin rather than the price of the individual coin to gauge future value (among many, many other factors).

Bitcoin Price

Bitcoin Price

If a coin has 10 million coins issued at a cost of 1 dollar per token, the total market cap would be 10 million.  Depending on the project, it’s possible that the token value could rise to 100 easily with today’s valuations.

If a coin has 1 billion coins issued at a cost of 1 cent per token, the total market cap would still be 10 million, however getting to 100 dollars would require the project to be worth 100 billion. Possible? Yes, likely? Again, depends on the project.

Takeaway: Always look at the market cap when making assessments of possible future value. Some projects may hit the trillions in the next decade, but most won’t. That being said, many will grow from 10m to 100m which is 10x.  Not bad!

Mr. S

2017-11-08T01:47:04+00:00 November 10th, 2017|Crypto Currency News|0 Comments

What we mean when we say ‘institutional money’ is coming…

Big banks, large investors and high net worth individuals have been slow to jump into the cryptocurrency space…and for good reason. Up until the last 12 months the space has seemed somewhat illegitimate to many people in power. This lack of trust came from a number of different sources which we’ve discussed in previous posts, but some key ones are:

  • The high profile collapse of Mt. Gox, one of the largest exchanges in 2013.
  • The Silkroad using bitcoin as it’s main method for purchasing drugs.
  • 60 Million dollar Ethereum DAO hack.

 

With that all in mind, the hype train took off summer of this year as Ethereum rose from 8 dollars to near 400 dollars. Billionaires started to claim that they would invest 10% of their net worth into the cryptocurrency space. Banks and large organizations started signing onto the Ethereum Alliance, a legitimate organization dedicated to the advancement of the ethereum blockchain in industry.

This air of legitimacy should not be taken lightly. There are billions and billions waiting on the sidelines to jump into the crypto market.  But it hasn’t happened yet.  

Even with all of the turmoil in recent weeks, this is the best time to jump in.  Once the large banks and funds start to dip their toes into the water it could have the effect of prices skyrocketing. Remember, these coins have a fixed number of tokens issued, so as demand shoots up, price will follow. Bitcoin has a maximum supply of 21,000,000 coins, which will be ‘mined’ over the next 100 years.

Takeaway: The next two years could see an explosion as institutional money from banks and private investors start to make their way into the cryptocurrency space. Get in before and ride the wave.

Mr. S.

2017-11-08T14:48:11+00:00 November 8th, 2017|Crypto Currency News|0 Comments

What is a Pump and Dump?

A pump and dump is a scheme where whales use large amounts of money to effect the price. One recent example was with ChainCoin (A project I kick myself for not riding out).

The coin went from 1 million to 100 million in a very short time.  The exchange trollbox claimed that this was a permanent trend that would sustain itself forever.  This was intentionally or unintentionally an attempt to get more people to buy into the coin as it rose. This is what is called the ‘pump’.

chaincoin pump and dump

chaincoin pump and dump

When coins hit crazy valuations like this, they oftentimes fall back to earth, known as the ‘dump’. You’ll hear chatrooms constantly talk about ‘pump and dump’ schemes. While not all quick rises are p and d’s, many can be.

The downturn we are witnessing now is not a pump and dump of the market. Instead, it is a good portion of the market cashing in on the impending hardfork that will produce Bitcoin Gold.  Anyone who carries bitcoin in their wallet will automatically receive Bitcoin Gold.  Many see this as a way to print ‘free money’ as the fork takes place.  The unintended consequence is that many investors are taking out their investment in other coins to purchase bitcoin.

Don’t mistake a correction for a p and d. And if you do take a position in an active p and d, be cautious to get out before it all comes crashing down.

Mr. S

2017-10-09T19:49:57+00:00 October 10th, 2017|Crypto Currency News|0 Comments

China Cracking Down? Or Taking Its Sweet Sweet Time?

Over Labor Day Weekend, the market reacted heavily to the fact that:

  1. China is looking to ‘Ban’ ICOs.  Whether this is a permanent is yet to be seen.  I’ve heard that China may be implementing a short term ban while they figure out how to properly regulate them.
  2. China is considering ‘shutting down exchanges’ permanently. Again, the key question here is whether or not this is temporary or permanent. Some reports suggest that it might be too little to late, and that banning exchanges won’t stop chinese crypto traders from investing.  There is too much money on the line.

Personally, I think that China would be crazy to regulate bitcoin to the point of it being illegal to operate a blockchain company or trade cryptocurrencies. Not only is there too much money on the line for the chinese government, but the underlying technology, the blockchain, is a technical innovation that is starting to become fiercely competitive.  One has to assume that China is cognizant of this, and will allow innovation to continue in this space.  

The market slow down of late is most likely a result of a larger trend of investors weary of regulation around the world. One thing this is not is the armageddon of all crypto. We’ve seen many bad events that people proclaimed should have brought the whole thing crashing down:

Mt. Gox

Silk Road.

Ethereum Hardfork + DAO attack

And yet, we’re still here.

From a macro perspective, this regulation episode could be a blip on the radar. It could also be a sign that the space is starting to mature. We will have to wait and see as more news drips out in the Fall. 

-Mr. S

2017-10-03T03:07:02+00:00 October 3rd, 2017|Crypto Currency News|0 Comments

Jamie Dimon Thinks Bitcoin Cares About His Comments…It Doesn’t

New traders are worried that Jamie Dimon’s comments are cause for concern. Some even believe that they caused the markcap of bitcoin to drop significantly.

Personally, I think that’s a load of horseshit.

There are WAAYYYY too many factors, both national and international, that contribute to the price of Bitcoin. A powerful person in the banking sector shouldn’t have too much of an impact.

A couple things to note:

  • Banks are threatened by bitcoin and other cryptocurrencies for many reasons.
  • One of those reasons involves using a currency outside of their control. It requires no intervention on their part.
  • Another reason is the blockchain – blockchain technology is replaying their need to act as a ‘centralized ledger’ for transactions’. The decentralized ledger replaces it.

What’s most likely the case is that the questionable news from China is causing the price to fluctuate so widely. China is a much larger market than most people think. They are a HUGE player in the space and their traders have a big impact on price.

Jamie Dimon is a smart guy, but this is not one of the smartest things he’s ever said. Will there be corrections in the future? Sure. Will shit projects die once the market matures? Sure. But to say that the entire thing will blow up might be a bit nearsided.

Mr. S

2017-09-15T14:32:33+00:00 September 15th, 2017|Crypto Currency News|0 Comments