EnginesofCryptoTradingSamShames

WithBruceMarshallApril21,2018

Geopoliticaluncertainty,cavaliercentralbanks,debtburdens,emergingassetclassandtechnology.AskingwhyIshouldcareaboutcryptoisakintoaskingwhyshouldwecareabouttheinternetintheearly90s.

However… apictureisworthathousandwords…

“We’reXYZTraders,WhyShouldWeCare?”

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GainingPerspectiveonNewTech&Markets

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• Bitcoinhas“crashed”over50%multipletimesinitsexistence.• Thelongtermtrendremainsup• TheNasdaqbubbleofthe90shadthesameproblemwithvaluingnewtechnology… ittakestime.• Newparadigm?Historymaynotrepeatbutitdoesrhyme…• Ifyou’reacontrariananddonotlikethecryptomarket,isthereabettershortopportunitythanthis?

SimilaritiesBetweenCryptoandTraditionalMarkets

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• BitcoinandEthereumworkasindices• BitcoinissimilartotheS&P500• EthereumissimilartotheNasdaq• Directionoftheindiceshaslargeeffectondirectionofunderlyings

• Altcoins(anythingotherthanBTCandETH)workasunderlyings• Altcoinswilltraderelativetothe“indices”withhigher%agemoves

• Similartosmall-capswithinanindex• Canbesectorizedsimilartotraditionalmarkets(energy,tech,financials,etc.)

HowCryptoTradesWork

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Tradesasamixofforexandstocks• Relativevalueaspect=Forex• Blockchainprojects/fundies aspect=Equities/Companies

Equityexample– XLMUSDpair– BuyingXLMwithUSDorUSDT

• HerewearebuyingStellar(XLM)usingUSD(T)asfunding• XLMisacompetingtransaction/paymentsystemtoBTC• ValueofXLMUSDisindependentofBTC

Forexexample– ETHBTCpair– BuyingEthereumwithBitcoin

• PriceincreaseswhenEthereumoutperformsBitcoin• AsthevalueofETHincreases,theamountofBitcoinittradesatincreases.ETHwouldbestrongerthanBTCinbullmarket.

• KeyriskmetricasETHoutpacingBTCimplies“riskon”

PathwaytoEntry- USDGateways

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TherearealimitednumberofUSDtoCryptogatewaysGDAX/CoinbaseisthemostcommonlyusedU.S.basedexchange

InitialAccountFundingInvolvesTheseSteps:

• CreateaCoinbase/GDAXaccount(CoinbaseandGDAXaresamecompany)

• FundtheCoinbaseaccountwithbanktransfer,debitcard,orcreditcard

• Oncefunded,theaccountwillhaveaUSDbalance• GDAX,Coinbaseexchange,allowspurchaseofBTC&ETHwithUSD• TheadvantageofusingGDAXisnomarkuptomarketpriceandzero“maker”fees.“Taker”feesare0.3%.Maker=limitorder/Taker=marketorder

• OnceyouhaveconvertedfromUSDtoCrypto,theBTC,etc.canbetransferreddirectlytoanotherexchangetofundanaccount,exampleBinance

ExchangesWeTradeWith

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LongTrades• GDAX/Coinbase– Largecrypto/USDgateway• Bitmex– Futurescontracts,leveraged,XBT• Binance– Largestexchange,BTC/ETH/Alts• Bitfinex– Largeexchange,BTC/ETH/Alts

ShortTrades• Bitmex– Futurescontracts,leveraged,XBT• Bitfinex– Largeexchange,BTC/ETH/Alts• Kraken– LeveragedspotBTC

PrimaryFundingCurrencies

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• Bitcoin(BTC)• Ethereum(ETH)• BinanceCoin(BNB)• Tether(USDT,stablecoin)

Thesecoinscanbeusedtopurchasealmosteverycryptooutthere,theyaretradedasPAIRSsimilartoforex

WhatAreAlt-Coins?

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Altsactasthesmall-capsofthecryptoworldandwilloutperforminbullishmarkets

Altsarewherecryptotechnologyisbeingadvanced.ThesealtsrespectivelytrytocreateBlockchain-basedsolutionsforrealworldproblems.Manyofthemareplatforms(thinkiOSorWindowsforBlockchain).Manyofthemaretokenstobeusedontheplatformbackbonetoaccomplishspecificgoals,i.e.,payingfornetwork

“Alt-coins”areanycryptothatarenotBTCorETHAlthoughEthereumisincludedasanalt-coin,weconsideritpartofthe“Majors”

WhatMovestheCryptoMarket– Followthe$$$

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• Bitmexfuturescontract(XBT)– Trades$2-$5Bdaily• Bitfinex&BinancespotBitcoin(BTC)–Trades$300Mdaily• Bitfinex&BinancespotEthereum(ETH)–Trades$200Mdaily• BinanceAlt-coins– Trades$1B+daily

Futurescontract(XBT)>SpotBitcoin(BTC)>SpotEthereum(ETH)>Alt-coins(multi)

EnginesoftheCryptoMarket

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• SimilartotheFANGstocksinmarket• Largeeffectontheoverallindex/market• Whentheymovetogethertheydictatethedirectionofthemarket

• PrimaryEnginesofCrypto• Bitcoin/XBTContract(BTCFutures)• Ethereum• ETHBTCpair(relativeriskonoroff)

Let’sGetIntoSomeCharts!

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• Bitcoin– BTCUSD&XBTUSD–Largestmarketcap• Ethereum- ETHBTC– Daily– Thispairshowsrisktakinginthemarket• Tether- USDTBTC– Daily–Thispairshowsriskaversioninthemarket• Market&Alt-CoinIndexes

ETHBTCAprilIgnition

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XBTUSDAprilIgnition

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ExampleofRallyinAlts– Cardano (ADA)

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ExampleofTether&BTCRelationship

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MajorsIndexExampleofKeySupport

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Alt-CoinIndexExampleofKeySupport

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HowTheCryptoMarketNeedsToEvolve:ATrader’sPerspectiveandClosingThoughts

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Tether&Bitfinex:• TetheractingasCentralBankforcrypto• Bitfinexoneofthelargestexchanges• RelationshipbetweenthesetwoentitiesandrelationtoBTCprice

Alt-CoinGenocide:• Thereare1600+totalcoins&tokens,90%willbepets.com• Consolidationandexitfromthemarketofmarginalplayers

MoreIntegrationintoexistingmarketstructure:• IncreaseliquiditythroughmoreUSDgateways.• Stablecoinbackedbyreputablecompanyorbank.

Whowinstherighttoexist?– Bitcoinandthemostpromisingprojectsthatfulfillanicheorneed

Top10CryptosForQ32018

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TOP 10 CRYPTOS FOR Q3 2018Primary token used on

the largest exchange

– Binance. Plan on

“burning” half of the

available supply.

Volatility - LOW

Intended to serve as the

backbone for the “Internet

of Things” … connecting

previously unconnected

devices to the internet and

Blockchain.

Volatility - HIGH

“3rd Gen” Blockchain

that aims at high

network transaction

rates.

Volatility - HIGH

Allows for the creation

of tradable company

shares on Blockchain.

Volatility - HIGH

CURRENCY (BNB)

PLATFORM (VEN)

PLATFORM (IOTA)

PLATFORM (ZIL)

UTILITY TOKEN (BTS)

Enterprise focused

Blockchain + dApp

platform. Supply chain

management.

Volatility - HIGH

PLATFORM (ONT)

PROTOCOL (ZRX)

PLATFORM (IOST)

PLATFORM (NEO)

CURRENCY (XLM)

Platform - Chinese

based “3rd Gen”

Blockchain platform.

Volatility - MED

Open protocol that

is designed to offer a decentralized exchange

as part of the Ethereum

blockchain.

Volatility - HIGH

Internet of Services, aims

to provide users with a

digital exchange for online

services and goods.

Volatility - HIGH

Chinese based. “3rd

Gen” Blockchain

platform.

Volatility - MEDIUM

High throughput

currency, attempting to

be “settlement layer” for

existing payment systems.

Volatility - MEDIUM

LearnandTradeWithUs!

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