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The crypto markets are in bloodbath mode today. Bitcoin is down 14%, plunging below $5,000 to new yearly lows. Bitcoin Cash has tumbled 43%(!) allowing Stellar to become the fourth-largest cryptocurrency by market capitalization.

Almost every coin is down by double-digit percentages.

Despite numerous analysts claiming that Bitcoin has “bottomed,” it’s clear this bear market is not over.

Some of you will have been here before. After 2013’s bitcoin high of $1,100, we struggled through a long, two-year decline before bottoming out at $220.

But if you’re starting to panic, here are nine possible strategies to navigating this crypto massacre. 

Note: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

Bitcoin 24-hour price chart. Source: CoinMarketCap

1. Don’t Try to Time the Market

Whatever you do, don’t try to time the market. Don’t believe anyone that tells you that bitcoin has bottomed. The truth is: no-one knows where the bottom is. Really.

John Bogle, the grandfather of index funds once said: “Sure, it’d be great to get out of stocks at the high and jump back in at the low… [but] in 55 years in the business, I not only have never met anybody who knew how to do it, I’ve never met anybody who had met anybody who knew how to do it.”

If professional investors can’t time the stock market (with its hundred-year patterns and history), you certainly can’t predict the crypto market.

One of the strategies we’ll cover is buying more crypto during the crash, but don’t convince yourself this is the bottom, and be wary of trying to “catch the falling knife.”

As we go through these strategies, always keep this number one rule in mind.

2. Do Nothing (Hodl!)

Hodl is the rallying cry of all bitcoiners who are in the red. The term came from a drunk BitcoinTalk forum user who adamantly claimed he was “hodling” (misspelling the word “holding”) his funds during the 2013 market crash. 

Five years later, that strategy would have paid off. Holding on through the darkest moments and riding out the dips is a classic investment strategy.

However, we are not in a classic market like stocks or commodities. There’s no long-term historical precedent to assume bitcoin will recover. We should also remember that stocks are tied to companies that sell real things to real people. Even in a crash, they carry on business and bring in money. That’s not (always) the case with crypto.

Bitcoin has recovered from price crashes before and hodlers have been rewarded. But beware there is no guarantee Bitcoin will recover to its former glory this time around.

just-hodl-it

3. Cut Your Losses

Sometimes the stress and panic of watching the value of your investments plunge simply isn’t worth it. Every investor takes losses – it’s part of the game and it’s an important learning curve.

I once threw my phone at a wall after cutting a particularly big loss in the forex markets a few years ago. It’s frustrating, but sometimes cutting the loss is the best thing for your mind!

You should never invest more in crypto than you’re willing to lose, so cutting your losses shouldn’t be too painful. If it is, it’s a sign that you’ve put too much money into the market.

Bear in mind that this bear market almost certainly isn’t over yet. Things may get worse before they get better and the losses may accumulate further.

4. Buy More?

As the old saying goes, “buy when there’s blood in the streets.

Every investor is taught to buy when there’s fear in the market and sell when there’s hype. You don’t need me to tell you there’s plenty of fear going around right now.

Traditional investors like Warren Buffet made their fortune by purchasing assets when everyone else was offloading. It takes a high risk appetite to buy into the market when everyone is selling, but it can pay off.

Again, beware that crypto is an entirely new asset class and there’s no guarantee its price will recover.

 

5. Rebalance Your Portfolio 

A market crash is a good time to re-evaluate your portfolio. You suddenly see which coins and projects are the most vulnerable and volatile.

As the hype dies down around crypto, this is when the true winners will emerge. It’s a good time to assess the market in the cold light of day.

6. Look for Strong Opportunities 

If you are reassessing the market, what should you look for? Well, the same thing as always in crypto investing:

The team, the product, and the market they are serving.

The coins and projects that will survive this crash will have a few things in common. They’ll have a dedicated, passionate, experienced team. Look at who’s running the project and the community around them.

Next, look at the product they are creating. Does the coin or project have some type of usability or utility? Does it solve a problem or create a new opportunity?

Finally, who’s the market for this project and is it a viable one? For example, Ripple’s market is the banks, Ethereum’s is developers, Stellar’s is the unbanked.

The crypto hype is over. Only those with real value will survive, so look for that value and future market opportunity.

7. Dollar Cost Averaging

I’ve already warned against trying to time the market. So instead of waiting for the bottom, some investors may choose to “average down” by purchasing a fixed dollar amount of crypto at regular timely intervals – once a week or once a month, for example.

If you buy $100 of crypto every month, for example, you’ll average out the cost of buying. When prices are low, you end up buying more crypto (because $100 buys more coins).

You might not time it perfectly to buy in at the bottom, but you will get a more even average cost rather than purchasing in one lump sum.

It’s an age-old investment strategy that requires discipline. We should also point out that this strategy does not guarantee you won’t lose money (no strategy can do).

8. Learn

Watching any investment go down is difficult. However, you learn a whole lot more when things go down than when they go up!

You learn more about the market, a project’s viability and the strength of its team. You also learn more about yourself – your discipline, your appetite for risk, your mistakes and your successes.

Make sure you take something away from this market crash and apply it to the future. 

9. Don’t Panic

This is easier said than done, but the most important thing is not to panic. Now is the time for fierce discipline and due diligence. Before you make your next decision, take the time to research as much as possible. Try to act with a clear head.

Conclusion

Despite repeated attempts to call the “bottom,” bitcoin continues to find new yearly lows. This is still a relatively new and volatile market and all strategies should take that into account.

To reiterate: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

Swiss crypto ETP

The world’s first fully-regulated crypto ETP (exchange-traded product) will launch in Switzerland this week, allowing people to trade a basket of cryptocurrencies including bitcoin, ethereum, XRP, bitcoin cash, and litecoin.

It’s important to point out that, contrary to some misleading news reports, this is not the much-hyped bitcoin ETF (exchange-traded fund).

The cryptoverse is eagerly awaiting the approval of a bitcoin ETF, with many calling it the future catalyst for a bitcoin price surge. But how is this Swiss crypto ETP different? And what exactly do you need to know?

Amun crypto ETP
The new Amun crypto ETP will track Bitcoin, Ripple XRP, Ethereum, Bitcoin Cash, and Litecoin

What is a Crypto ETP?

An ETP is an acronym for “exchange-traded product.”

In simple terms, an ETP tracks the price of an underlying asset (or a basket of assets), like gold, stocks, and now cryptocurrencies.

The beauty of ETPs is that they are simple and cheap. With this new ETP, investors don’t need to buy cryptocurrencies directly or figure out how to store them. They simply buy the ETP from their broker and instantly get exposure to a basket of five cryptocurrencies.

The ETP is traded on the Swiss stock exchange and can be bought through a traditional stockbroker.

In essence, they’re more accessible to institutional investors which may lead to more money flowing into the crypto market.

Sounds a Lot like an ETF…

It is. The difference is that “ETP” is an umbrella term for different types of exchange-traded products. Those products include ETFs.

ETFs are the most popular type of ETP, but there are others, including exchange-traded notes (ETN) and exchange-traded vehicles (ETFV).

Further reading: What is a Bitcoin ETF? (And Will It Trigger a Price Surge?)

Swiss Crypto ETP Launches This Week

The Amun Crypto ETP will begin trading this week on the Six exchange. It will track a basket of five cryptocurrencies, weighted heavily to bitcoin and XRP. The exact makeup of the ETP is listed below:

Bitcoin: 49.7%

XRP: 25.4%

Ethereum: 16.7%

Bitcoin Cash: 5.2%

Litecoin: 3%

crypto ETP bitcoin, ripple xrp, ethereum, bitcoin cash, litecoin

It’s interesting to note that XRP receives a significantly higher weighting compared to ethereum. Although XRP overtook ethereum as the second-largest cryptocurrency last week, the heavier weighting may be an indication of Amun’s expectations for the future.

Note: the weighting will be rebalanced automatically on a monthly basis.

Amun notes that it aims to provide a diverse holding of crypto assets. However, it removes any assets that are tied to a fiat currency, like tether, and any currencies with anonymity features (such as zcash and monero).

The Amun Crypto ETP also avoid any coins without sufficient liquidity and those that don’t trade on reputable exchanges.

Speaking to the Financial Times, Amun CEO Hany Rashwan said: 

“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”

The ETP carries a management fee of 2.5% annually.

Jane Street and Flow Traders will back the fund and have agreed to pour money into the ETP to give it liquidity. They are known as “market makers.”

Ticker: “Hodl”

In true cryptocurrency style, the ETP will trade under the ticker $hodl. It’s a nod to the popular crypto meme “hodl,” a misspelling of “hold” which was adopted by crypto enthusiasts as a term for holding bitcoin even through the biggest price drops.

just-hodl-it

It launches on the Swiss SIX exchange, the fourth-largest stock exchange in the world. Based in Zurich, it has a market capitalization of $1.6 trillion.

Swiss Stock Exchange: Bullish on Crypto?

This isn’t SIX’s first foray into the cryptocurrency world. In July 2018, SIX announced plans to launch a fully-regulated crypto exchange, overseen by Swiss banks and regulators.

At the time, SIX CEO said: “For us, it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry.”

Set to launch in 2019, the exchange will facilitate trading, settlement and storage custody services.

How Is This Different to the Anticipated Bitcoin Etf?

First, there’s the makeup of the ETF itself. The Amun Crypto ETP tracks a basket of cryptocurrencies, rather than purely bitcoin.

Secondly, there’s the scale and impact of the ETP. While the Swiss ETP is an important first step, launching an ETF in the US is a much bigger beast. 

The size of the exchange is the first point of difference. The Swiss exchange has a market capitalization of $1.6 trillion, compared to the New York Stock Exchange’s $21.3 trillion and the Nasdaq’s $7.8 trillion.

Simply put, launching a bitcoin ETF on one of the major US exchanges would have a much larger impact.

Then there’s the regulatory process. Switzerland, as explained, is much more open to the crypto industry in general. Approval in Switzerland is less of a groundbreaking move. Whereas the approval of a bitcoin ETF in the US would break down the door for countless other cryptocurrency products and investment vehicles.

The Securities and Exchange Commission (SEC) faces a deadline of December 29th to rule on the next bitcoin ETF proposal put forth by VanEck. However, there’s a good chance the SEC will push the decision back into 2019.

Commentators expect a bitcoin ETF approval to kickstart a new bitcoin price surge. It would, theoretically, allow institutional investors to flood into the market.

Currently, many Wall Street traders are forbidden to buy or hold cryptocurrencies as part of their client portfolios. Others are worried about the risk involved with buying and storing so much crypto directly.

A bitcoin ETF would give them an easier way to gain exposure to the crypto market, without the risk and complexity of buying it directly.

Conclusion

The Swiss crypto ETP is an impressive and important milestone in crypto adoption. It provides a simple route for institutional investors to wade into the crypto market. However, this is not the catalyst many are waiting for, and it does not make a bitcoin ETF approval in the US any more likely.

As always, Block Explorer will bring you more information as and when the true bitcoin ETF is approved in the US.

just-hodl-it

Every Friday, we take a light-hearted tour through the best memes, colloquialisms, and strangeties from the cryptoverse. As bitcoin hits a 12-month low, what better place to start than hodl! Carty Sewill explains.

Hodl; in times like these it’s harder than ever. Those of us with iron hands are still memeing our way to financial ruin or redemption. We’re ‘Holding On for Dear Life.’ 

That’s what it means to hodl doesn’t it? Well not exactly. 

What Does Hodl Mean?

Like any good meme, hodl has gone through many iterations. In an etymological sense, everyone’s favorite crypto meme started out as a typo. A typo by a drunk guy named ‘GameKyuubi,’ who submitted a post titled “I AM HODLING” on the BitcoinTalk forum during a market dump in December of 2013. 

hodl origins - bitcointalk forum

He explained his position as a “bad trader” and emphatically professed:

“NO SHIT I SHOULD HAVE SOLD… You only sell in a bear market if you are a good day trader… The people in-between hold.” 

His post was met with mockery and “hodling” quickly became the preferred inside joke of BitcoinTalk users and bitcoin enthusiasts alike. And it didn’t stop there.

How it went from typo to inside joke to the preferred meme of bitcoin maximalists is anyone’s guess. But needless to say, it’s gone far beyond that. One no longer hodls just bitcoins. Hodl has become the mantra of anyone who’s ever hoped to turn a long-term profit in crypto. 

Even ethereum and monero lovers hodl these days. Hell, the markets in general. I’m hodling silver as we speak. It’s given rise to tee shirts, posters, videos, and an endless stream of original content from designers turned crypto-admirer.

hodl sparta meme

Eventually, it spawned an acronym. Well a backronym, actually: “Holding on for Dear Life.” It’s what a lot of us are left doing these days; wearing our hodl tees and compulsively checking BitMex. 

In the end, that’s what hodl really is. Hodl is a strategy for those of us who don’t have the free time or wherewithal to play the market like a professional trader. We aren’t all day traders and those of us who believe in blockchain and the future of decentralized currencies, like GameKyuubi stated in that ill-fated post, have little choice other than to trust their gut and hodl on.

Best Hodl Memes

Nike hodl meme

hodl meme

Bitcoin whales

Bitcoin whale is the term given to those with huge amounts of bitcoin. And if they were to suddenly sell all their coins at once, it would cause an enormous splash on the markets.

It’s estimated that only 1,000 “whales” own about 40% of all bitcoin.

To put it another way, 61% of all bitcoin is owned by just 0.07% of wallets.

But who exactly are these crypto millionaires with gigantic bitcoin wallets?

A few names spring to mind:

Satoshi Nakamoto Bitcoin’s mysterious founder is estimated to own one million bitcoins. He mined them in the early days and has never moved them since.

The Winklevoss Twins – The arch nemeses of Mark Zuckerberg, the Winklevi poured much of their Facebook legal settlement into bitcoin. They’re estimated to own 1% total bitcoin supply. 

There are others too. Early adopter Charlie Shrem, for example. Then there’s billionaire Tim Draper and Barry Silbert, both of whom bought bitcoin in a 2014 auction.

However, a recent Chainalysis report dug deeper into bitcoin whale activity. Analyzing the 32 biggest bitcoin wallets, here’s what they discovered:

chanalysis bitcoin whales
Credit: Chainalysis

A Third Are Active Traders

Nine of the 32 largest whales were actively buying and selling in the last year or so. They could be individuals or institutional crypto hedge funds.

As for their activity, these holders were generally “buying the dips.” In other words, they were waiting for bitcoin to decline before buying more.

As Chainalysis explained: “they have, on net, traded against the herd, buying on price declines.” So, despite media claims, bitcoin whales aren’t necessarily the ones crashing the price. Instead, bitcoin whales are stabilizing the market, buying at the low points to prop up the price.

Chainalysis also estimated that most of these active whales splashed into the market in 2017 so they are relative newcomers.

Early-Adopters 

Chainalysis uncovered a handful of wallets dating back to the early days of bitcoin. These are early-adopters and miners that amassed a large wallet when bitcoin was in its infancy.

Trading activity is “extremely low” among this group, however, a fair number appeared to “cash out” during the bull runs of 2016 and 2017, making a fortune in the process. 

Criminals

Of the 32 largest bitcoin wallets, three have been linked to criminal activity. Those three wallets contain 125,000 coins, worth $800,000,000 at today’s prices.

Two of the wallets are linked to the infamous Silk Road black marketplace, where users could buy drugs and weapons with bitcoin. Chainalysis concludes that the third wallet was involved in money laundering.

Further reading: Black Markets, Fraud, and Money Laundering: How Much Is Bitcoin Used For Crime?

Lost Wallets

The remaining largest wallets have lain dormant since 2011. We assume the private keys to these wallets are lost for good which means these whales no longer have access to their vast fortune.

These lost wallets contain 212,000 bitcoins, or approximately $1.35 billion worth of bitcoin.

It’s estimated that a total of four million bitcoins have been lost over the years.

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binance CEO

October was the worst month of the year for cryptocurrency volume. Now deep into a bear market, the amount of crypto changing hands on a daily basis has slumped.

However, CEO of the world’s largest cryptocurrency exchange, Binance, says the real volume is at least twice as big as reported.

Speaking to CNBC’s Ran Neuner, Changpeng Zhao pointed to the enormous over-the-counter (OTC) market for hidden volume:

“What I’ve heard is the OTC market is at least as large as the live recorded volumes. So that is at least 50 percent of volume that is not being reported on CoinMarketCap.”

Crypto volume, explained: “Volume” is the amount of cryptocurrency changing hands on a daily basis. It is typically measured on CoinMarketCap by combining data from cryptocurrency exchanges like Binance, Coinbase, Bitfinex, etc. 

OTC Markets: Where the Whales Trade

Traditionally, over the counter markets are those in which trades are made in secret, and not recorded on an order book.

In the case of bitcoin, investors are buying and selling millions of dollars of cryptocurrency directly between one another, avoiding an exchange like Binance completely.

They may also operate through crypto brokers (such as BitStocks or Circle) which require high trading minimums. It allows “whale” investors to move their cryptocurrency without shaking the markets.

bitcoin whales

As Large as the Exchange Market?

As mentioned above, Changpeng Zhao believes this crypto OTC market is at least as large as the recorded volumes across the major exchanges. 

This chimes with a report released earlier this year by research firm TABB. They concluded that the crypto OTC market is at least two to three times larger than reported.

CoinMarketCap is currently reporting a 24-hour volume of $12.5 billion. If Changpeng Zhao’s analysis is correct, the real trading volume across the crypto market is closer to $25 billion.

Why Do “Whales” Trade OTC?

The first reason is liquidity. Crypto whales and institutional investors often trade multi-million figures in bitcoin and altcoins on a daily basis. 

Even the largest exchanges don’t often have millions of dollars in liquidity to facilitate such trades. Only by making private trades can they access the necessary buyers.

Furthermore, if a whale suddenly offloaded tens of million in bitcoin on a crypto exchange, it would very likely crash the market.

“We Are Still a Very Healthy Business”

Elsewhere in the interview, Changpeng Zhao reaffirmed that Binance was a healthy business, despite a 90% drop in volume since January’s boom.

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