7 Crypto Assets Making Huge Moves As Bitcoin (BTC) and Ethereum (ETH) Prepare for Breakout, Says Analyst Nicholas Merten
Crypto analyst Nicholas Merten says the crypto markets are gaining momentum.
On a new episode of DataDash, Merten looks at digital assets in the 100-200 rank by market capitalization and points to a few that are making big moves.
“The excitement’s happening. We’re seeing a lot of plays starting to make 10, 20, 30% moves in a single day, and this is the kind of sign here of a reversal pattern in cryptocurrency markets. Optimism starting to show…
Request Network up 26.6%. Band Protocol, a competitor within the Oracle space, up nearly 18%. Ocean Protocol [up] 14%. Haven Protocol, another one that many people have been talking about, up 13.69%.
And also things like Theta Fuel, Elastos and Unibright all up in the double-digit territory. So this is really exciting to see.”
Merten says Kava (KAVA), a decentralized financial services platform currently ranked 102nd by market cap, is one of his top three plays of the month. The asset, trading at $1.75 at the time of writing, has surged since the beginning of July.
Merten is also bullish on Bitcoin (BTC), predicting a sharp move to the upside for the crypto king and for Ethereum (ETH) “in the next month or so.”
“I really do think you’re going to see Bitcoin above $10,000, you’re going to see ETH above $300, and you’re going to see a ton of altcoins continue day by day, in this case, to continue making double-digit returns into the month of August.”
Back in April, Merten said he believes $100,000 is a practical price target for Bitcoin’s next long-term cycle.
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Crypto's that are Seeing Heightened Interest & The Ones Not Popping
This week, several digital assets recorded substantial gains. It all started with Dogecoin when zoomers went on Tik Tok to pump this “joke cryptocurrency.” DOGE went up 150%, and the Google Search interest also jumped to a top score of 100, a massive uptrend from the usual reading that remained below 10.
However, Dogecoin has since retraced all of its gains and is currently in the red.
Another coin that has been a hit on the popular video-sharing platform is Zilliqa. However, the greens recorded by this crypto have been completely lacking.
A positive development has been Binance-backed BUSD coming to Zilliqa blockchain, which, along with Switcheo, is building a bridge between Ethereum and Zilliqa to bring the ERC20 stablecoin to it.
On Google trends, the search interest for Cardano and VeChain is still strong, to the full 100 on a scale of 0 to 100. Both the coins made sizable gains this week.
Cardano’s gains have been on the back of several announcements made during the Virtual meetup. In a blog post on Friday, IOHK’s Tim Harrison further shared that they have “effectively recreated the steps that we’ll go through later in July to activate Shelley functionality on the mainnet. A ‘dress rehearsal,’ if you like. And so far, it’s looking good.”
While ADA has calmed down, VeChain is still recording 10% gains but has slipped from $0.20.
Stellar started popping up later in the week to surge over 50%, with its competitor XRP also slowly moving up, now barely in the greens. However, this week, XRP tweets reached an all-time high as per Bitinfocharts only to tumble back down.
Elorand’s impressive feat of over 100% gains is slowly winding down the same as Ampleforth, whose “whole use case is around having stable purchasing power.” In the past month, both these digital assets recorded gains of more than 250%.
Because these cryptocurrencies are slowly giving up their gains, this looks like an “altweek” instead of an alt season,says analyst Mati Greenspan.
Although there are still “many projects that still have promise and lots of money available for investments,” Greenspan says, “the digital asset space is plagued with a lack of metrics to measure absolute value and instead must defer to relative value, or more often … momentum, which is what got us to the situation this week.”
When it comes to YTD changes, Aave is up a whopping 2,300%, Unibright 1,460%, Kyber Network 810%, Band Protocol 643%, Elrond Network 540%, and Bancor 500%.
Today, IOV Blockchain 80%, Kava is up 26%, Aave 18%, Algorand 17%, Bytom 15%, Hyperion 13.75%, and Balancer 11%.
According to trader Crypto Michaël, until bitcoin breaks out of its range, altcoins will continue to outperform bitcoin.
“Essentially, anything between $8,500 and $10,500 is playground time for altcoins, and that could last a few months longer,” he said.
But there are still some coins that are not rallying during this frenzy. Bitcoin hard fork Bitcoin Cash (BCH) and BCH’s hard fork BSV; both have been struggling in this rally. Litecoin is another top coin that is not giving any signs that it will lift off.
Although EOS’s YTD performance remains the worst with 1.41% losses, it has started stirring, but it remains to be seen if it will be able to wake up.
Monero did move, but the gains have been comparatively of small size, the same as Tron (TRX), NEO, Hedera Hashgraph, and Lisk. Maker’s value dropped this week.
Bitcoin and Ethereum meanwhile remained stable this week around $9,200 and $240, respectively.
Tether Freezes Millions of Dollars USDT in 40 Addresses Amid Regulatory Pressure
Stablecoin issuer Tether has blacklisted 40 Ethereum addresses holding millions of dollars of the tether cryptocurrency, 24 of which were banned this year. This finding follows the Centre Consortium taking a similar action due to a request by law enforcement.
Tether Frozen in 40 Addresses
Tether has banned 40 Ethereum addresses holding millions of dollars of the stablecoin USDT, according to an analysis by Ethereum researcher Philippe Castonguay who shared his findings on Dune Analytics. Banned addresses cannot receive or send the cryptocurrency.
The 40 addresses “have been banned from using USDT on Ethereum as of now,” Castonguay explained. According to the researcher, one address was frozen in 2017, eight in 2018, seven in 2019, and 24 in 2020 so far. At press time, the latest address on his list was banned on Friday.
Philippe Castonguay’s Dune Analytics dashboard showing 40 banned Ethereum addresses.
“Tether routinely assists law enforcement in their investigations,” Stuart Hoegner, general counsel at Bitfinex, Tether’s sister company, told The Block. “Through the freeze address feature, Tether has been able to help users and exchanges to save and recover tens of millions of dollars stolen from them by hackers.” The publication added that its analysis shows that $5.51 million worth of USDT is held in addresses blacklisted this year.
Tether is not the only one freezing its coin. This week, the Centre Consortium blacklisted an address with $100,000 worth of the USDC stablecoin in response to a request from law enforcement. Castonguay made a similar Dune Analytics dashboard to keep track of addresses banned from using USDC, which so far only includes one address.
Meanwhile, the New York Supreme Court’s Appellate Division ruled on Thursday that State Attorney General Letitia James can continue her investigations into entities behind tether. Bitfinex and Tether are also involved in another ongoing lawsuit.
What do you think about Tether’s action? Let us know in the comments section below.
Unicorn is a term used in the venture funds industry to indicate a privately held startup company valued at over $1 billion and usually no more than 10 years old. The term was coined in 2013 by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.
At that stage, there were only 39 companies that were considered to be unicorns. She looked at software startups founded in the 2000s and estimated that only 0.07% of them ever reach $1 billion valuations. She noted startups that managed to reach the $1 billion mark, are so rare that finding one is as difficult as finding a mythical unicorn.
According to Lee, the first unicorn companies were founded in the 1990s with Alphabet (GOOG) or Google as it is now called, being the super-unicorn of the group with a valuation of over $100 billion. Many more unicorns came along in the 2000s with Facebook being at the top of the list and classed as the only super-unicorn for that decade.
Categorizing these companies have evolved and the terms used now are, Decacorn which is for those companies over $10 billion, while Hectocorn is used for such a company that valued over $100 billion.
Since Lee’s publication, the term unicorn, is widely used and refers to startups in the technology, mobile, and information technology sectors and usually integrates all three, questionably supported by their fundamental finances.
Average Life Of A Unicorn
According to Google, there were 465 unicorns as of April 2020. The largest unicorns included Ant Financial, Didi, Airbnb, Stripe, and Palantir Technologies. The most recent Decacorn is Lyft which became a public company on March 29, 2019. Generally, these billion-dollar valued unicorns become a public company or are bought out or merged with another successful public company.
In 1999 the average life of a company was 4 years before it went public. Now that has been stretched out to 11 years before a venture-supported technology company is listed. This is brought about by an increased amount of private capital available to unicorns, along with the increase of the number of shareholders a company can have before it is required to disclose its financials publicly. Notably, private investors can only take a position on unicorns when they choose to list.
No Need For An IPO
Through many funding rounds, companies do not need to go through an initial public offering (IPO) to obtain capital or a higher valuation as they can just go back to their investors for more capital. IPOs also run the risk of devaluation of a company if the public market thinks a company is worth less than its investors.
Just two examples of this situation were Square, best known for its mobile payments and financial services business, and Trivago, a popular German hotel search engine, both of which were priced below their initial offer prices by the market.
This was because of the severe over-valuation of both companies in the private market by investors and venture capital firms. The market did not agree with both companies' valuations, which in turn, dropped the price of each stock from their initial IPO range.
Where And Who Are The Unicorns?
Unicorns are concentrated in a few countries/regions: China (125), United States (124), India (27), South Korea (11), UK (10), Israel (7), Sweden (6), Indonesia (6), Singapore (4), France (3), Hong Kong (3), Portugal (3), Switzerland (3), Australia (2), Estonia (2), Belgium (2), Canada (2), Germany (2), Ukraine (2), and fourteen other countries (1 each).
The Top 10 Unicorn companies are listed in this image below
Former Unicorns
Below are the top 10 unicorns that exited due to an IPO or Acquisitions
The valuation of a startup company to be classed as a unicorn is unique in comparison to more established companies. For an established company, the valuation stems from past years’ performance, while a startup valuation is derived from its growth opportunities and expected development, so there is no actual math to estimate startups’ valuations.
Valuations for unicorns usually come from funding rounds of large venture capital firms. To give such high valuations in funding rounds, venture capital firms have to believe in the vision of both the entrepreneur and the company as a whole. They have to believe the company can evolve from its unstable, uncertain present standing into a company that can generate and sustain moderate growth in the future. This approach can backfire as it did when it hurt Softbank, a leading investor in WeWork who took a $4.6 billion hit when the company failed to float in 2019.
A very significant final valuation of startups is when a much larger company buys out a company and gives them that unicorn valuation. For example when Facebook bought Instagram for $1 billion.
Bill Gurley, a partner at venture capital firm Benchmark predicted in March 2015 and earlier that the rapid increase in the number of unicorns may "have moved into a world that is both speculative and unsustainable", that will leave in its wake what he terms "dead unicorns". Also, he said that the main reason for Unicorns' valuation is the "excessive amount of money" available for them.
Similarly, in 2015 William Danoff who manages the Fidelity Contrafund said unicorns might be "going to lose a bit of luster" due to their more frequent occurrence and several cases of their stock price being devalued. Research by Stanford professors published in 2018 suggests that unicorns are overvalued by an average of 48%.
It’s In The Numbers
Businesses on the internet have made great headway. Some of the biggest businesses in the world, including Facebook, Amazon, Google, and Apple, are solidly established in the online tech world. A lot of other companies also have large, tangible revenue growth and earnings. They don’t buy users or customers with the hope of making money considering the inevitable attrition rate when those users eventually change their behavior.
So valuations shouldn’t depend on imaginary future earnings but on actual returns and EBITDA. (Earnings before interest, taxes, depreciation, and amortization) Amortization being affiliate fees or payments of an obligation of a series of installments or transfers.
Some argue that venture investors are getting over-enthusiastic when pricing businesses, inflating the price of startups that should be valued in the millions, not billions. Instead of carrying out proper risk analysis, they are diving in out of a fear of missing out on the supposedly next big thing.
Path To Profitability — The New Watchword
Silicon Valley’s crop of highly valued tech start-ups, which include Uber and Airbnb, now household names, all benefited from the mass adoption of smartphones and cheap cloud computing. Many of these companies built global empires by simply taking existing businesses, like taxis, food delivery, hotels, etc, and making them mobile, based online.
Now we are seeing the likes of robotics and Artificial intelligence (AI) startups wanting to be a contender for the next big thing in unicorns. However, growth at all costs has gone out the window after years of IPOs being done without much focus on profits.“Path to profitability” is the new watchword according to Ryan Dzierniejko of Sequoia along with Michael Moritz, another Sequoia partner who says “The law of economic gravity has returned as it does every decade or so”.
There are a considerable number of unicorn companies and the valuations seem to grow beyond the imagination of anyone. Is this the tech bubble 2.0?
Even before it was declared a global state of emergency due to COVID-19 on March 13, 2020, the unicorn reality check was underway with venture capitalists reckoning that a third of American unicorns would thrive, a third would disappoint and a third would be subject to an acquisition or die. Some are calling it the next dotcom bubble which burst 20 years ago with the advent of the internet and others are more optimistic. Either way, startup pastures that emerge in the aftermath of this economic upheaval will look very different.
The past decade saw huge sums of money from sovereign-wealth funds, also mutual and hedge funds pour in, either directly or via VC firms into startups that were unicorns or at the very least their backers believed they might be soon.
The jubilation began to diminish last year in May 2019, with Uber’s downturn of $43 billion, down more than a third of what it was on its first day of trading. Then, in October, WeWork, a “techie” office-rental group, scrapped its IPO after it became clear that investors had no appetite for shares in a firm that lost as much money as it generated in revenues. Its valuation was cut from $47bn to less than $8bn.
However, for Airbnb, a home-sharing website will bounce back from seeing bookings fall by 40% as the pandemic restricted travel and a possible delay of its IPO, (which was expected to be this year’s biggest) because, despite its losses of late, it is well managed and cash-rich. It also has an unmatched global reach and is likely to be back on track, making money once people are free to travel.
UNICORN — The New Buzzword In Marketing
Unicorns have come a long way since Aileen Lee coined the term in 2013, to convey wonder and rarity. Nowadays every startup wants to be one, for bragging rights and to hire the cleverest coders. Some are portraying themselves to be the next super unicorn to impress and lead potential users, consumers, and possibly victims into believing that the company is positioned to reach great heights and needless to say, using the term completely out of context.
“For millennials and Gen Zs being a unicorn became a filter,” says Jeff Maggioncalda, CEO of Coursera, a unicorn company that offers online learning courses and university degree programs.
A small Austin-based scooter startup called itself, simply, Unicorn. It was said to be an attempt to leverage the popularized name and what it stood for, as on a psychological level, people will tend to gravitate towards what they believe identifies as successful. The outcome? It subsequently failed when the firm went bust in December of 2019, after spending all its cash on Google and Facebook ads.
Artificial intelligence is a very generic term and used by many different industries for various use-cases, however, AI is being used in a way that is basically unchained and they’re not making smart decisions about it. It’s heading into areas that people don’t know about, giving it too much power and control and will ultimately get burned. It’s all about competition and the race to see who will create the best AI for any given industry.
Too many unicorns rest on shaky and opaque financial structures that may exaggerate their lofty valuations. These include “not-so-techy” capital-intensive firms such as WeWork, where accommodating more customers means leasing more physical office space.
Also, direct-to-consumer retailers such as Casper, which sell flashy bedding. The co-founder, Neil Parikh declared in 2016 that, “We consider ourselves a tech company first,” Stock Market investors considered it a mattress retailer. In February it listed at $575m, less than half its $1.1bn private valuation.
Artificial Intelligence (AI) used in marketing is more about automating simple tasks that allow us to free up more of our time to be strategic, effective, and less repetitive. It’s about improving processes while still keeping that human touch with customers and prospects. So you could say it’s automated intelligence. Some companies are taking it to the extreme with hype boasting they are first and foremost a tech company, and completely AI-based, but it is simply to generate a buzz.
In terms of the next unicorn Randy Komisar of Kleiner Perkins, a big VC firm, offers an alternative rule of thumb. For a unicorn to count as genuinely “tech”, and therefore profitably scalable, its actual product must be technology, he says, “it can’t just be using technology.”
Businesses selling physical goods or services and startups offering online solutions with an already established market without proprietary technology often don’t make the cut.
As it stands now, even viable listings are on ice until the markets’ pandemic fever breaks. In the interim, the unicorn sphere is talking about consolidating. Softbank reportedly wants Uber Eats and Door Dash to merge. In the USA, Uber may try to charm Lyft into merging, whose share price has fallen faster than its own.
There is no magic formula for identifying the next unicorn company and only time will tell us whether the unicorn boom is a bubble or not. If today’s big startups go on to secure significant profits for their investors, they’ll be looked back on as a smart opportunity well taken. If they go the way of WeWork, then the unicorn boom will be remembered alongside the dotcom bubble as an example of investor folly.
Deb Williams
A Crypto/Blockchain enthusiast and a strong advocate for technology, progress, and freedom of speech. I embrace "change" with a passion and my purpose in life is to help people understand, accept, and move forward with enthusiasm to achieve their goals.
Chinese Authorities Confiscate $15 Million in Cryptocurrencies, Arrest 10 Scammers
Chinese authorities have seized cryptocurrencies worth about $15 million while bringing down a scam involving fake Huobi tokens. In addition, ten people were arrested while luxury cars and real estate were confiscated.
The police in the Chinese city of Wenzhou, Zhejiang province, have cracked a criminal case and seized millions of dollars worth of cryptocurrencies, local media reported Thursday, calling the case the country’s “first criminal case involving smart contracts.”
The authorities began investigating the case after receiving a complaint in April from Li, a Chinese citizen who joined a Telegram group called “Huobi Global HT [huobi token] Arbitrage Chinese Community.” The group provided tutorials on an investment scheme that group members claim to be profitable. Li explained to the police:
Simply put … transfer your ETH (ethereum) to the account designated by the other party, and the other party will return 60 HT (huobi). After exchanging, the HT value added part is the money you make, the profit is around 8%.
The price of HT on July 3 was 28.61 yuan ($4) and the price of ETH was 1,589 yuan ($227), which should translate to a profit of about 8%, according to the report. However, when Li transferred his 10 ETH, worth 12,000 yuan ($1,714), to the account provided by the group owner, the other party returned 600 fake HT coins that could not be traded, Li claimed. That was when he realized that he had been scammed and reported it to the police.
After receiving Li’s complaint, the police launched an investigation into the scheme. They found that the group had more than 13,000 members. However, more than 10,000 accounts were idle “zombie accounts” and the remaining members and staff were actually computer bots. The report further notes, “There are only a few administrator accounts that are actually online, and their task is to publish tutorials to lure victims to be fooled.”
The arrests and confiscation were made after a month of investigation. The police say that this scam has swindled over 100 million yuan from more than 1,300 victims. The report elaborates:
[The police] successfully captured all 10 suspects … confiscated dozens of mobile phones and computers on the scene, seized tens of thousands of virtual currencies such as ETH, BTC, USDT, etc.
The police also seized real estate and luxury cars, such as a Mclaren and a Ferrari, worth more than 13 million yuan. The accused reportedly confessed to the crime after they were arrested.
Cryptocurrency exchange Huobi, whose coin was the subject of the scam, had previously warned about a similar scheme promoted by a Telegram group called “Huobi Global official risk-free arbitrage group.” The company emphasized at the time that the HT coins sent by the scammers were fake and it had never launched a “risk-free arbitrage” campaign.
What do you think about this case? Let us know in the comments section below.
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A New Price Valuation Model Says $10,670 Fair Value For Bitcoin
Seba, a Switzerland based bank, is proposing a Bitcoin valuation model that places its fair value at $10,670. At this price, the model suggests Bitcoin is trading at a significant discount, at just above $9,100.
In a blog posting this past Thursday, Seba says the model’s estimate relies on the same concepts as other valuation models. It draws comparisons with the FX space.
“In the FX space, for instance, Purchasing Power Parity (PPP) and Uncovered Interest Rate Parity (UIP), two models based on sound concepts, provide estimates challenged by empirical evidence,” the blog post points out.
Yet, in spite of lacking empirical support, such currency valuation models “shape and form the basis of investors’” understanding of the FX market.
Furthermore, the models help explain where currency “value originates in a fiat money world” where none of the currencies have “intrinsic value.”
Seba tries to contrasts the findings of its model valuation with well-known Bitcoin valuation models. As the blog posting further claims, other valuation models place the network’s value between 0 and $100 trillion. This is a vast range that does not provide insight, alludes Seba.
Nevertheless, Seba does admit the limitations of its own models. It notes that the models’ estimates for other cryptocurrencies remain inconclusive.
The financial institution’s first of two models is built around four key concepts. These are key characteristics of blockchains (network and immutability) and cryptocurrencies (monetary policy and currency type).
According to the Seba, the valuation model estimates are cognizant of the most sensitive variables, namely the number of users and monetary policy.
On the other hand, “the immutability and Gresham parameters have lower price elasticity.”
It further notes that “for immutability, the calibrated hash rate is a large number, its level impacts price level.”
In the meantime, the second proposed model compares the exchange rates of cryptocurrencies within the cryptocurrency space. It is based on a no-arbitrage condition (mining parity).
According to it, miners should expect the same profit when mining comparable cryptocurrencies in terms of consensus algorithms.
The bank asserts there is empirical evidence that strongly supports the existence of mining parity.
Since May 2020, the month of halving, Bitcoin has only gone above the $10,000 mark once, on 2 June according to Coinmarketcap.
The price has oscillated between the 9000 and 10000 range for the past two months. This price range is also just above the maximum observed Bitcoin miner’s break-even price.
What do you think about SEBA’s Bitcoin valuation? Share your view in the comment section below.
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