The Mind of a Market – Part 1

Author: Duane M. Tilden, P.Eng.                      Date: July 2, 2018

The arrow of time points forward; past events are irreversible

Foreword:

This article, has grown and is expanding as I write. Being my own editor I have to make decisions, so that in order to expedite publishing I am breaking the material down into parts. The idea behind this article is to explore what makes the cryptocurrency market move and the psychology behind the market, a collection of minds or “hive-mind“. We will use references from the stock market and investing community, social sciences, finance, engineering and other realms of thought and application.

I would like to postulate that collectively CC markets are populated by a type of person who has a basic understanding of the fundamentals of Bitcoin, blockchain and smart contracts, online interaction and the use of app’s, purchasing and trading, banking, stock markets, economics and other needed basics to make the ecosystem have value and meaning to the user.

Or perhaps, the user is in the process of learning these fundamentals, as such having desire and ability to learn new concepts and be able to employ them digitally is necessary for success. There are learning curves to be surmounted; patience, persistence and diligence are required. In any event I invite seasoned pro, novice or the curious to follow my explorations into the world of crypto.

Image result for whale

Photo #1: National Geographic – Migrating Whales

What is the Cryptocurrency Market?

The cryptocurrency market is dominated by a few major assets, most notably Bitcoin which has a current dominance factor of 42.6%. Reviewing listed CC assets listed on the website coinmarketcap.com we find the use of charts and graphs useful in understanding how values and prices fluctuate over time in these markets. I have used these charts in previous articles, listed below is the current Total Market Cap of $257 Bn, which has recently increased by $21 Bn since Friday, June 29th.

Total Crypto Market Cap Jun 24 to Jul 1 2018 #1

Figure 1: CryptoCurrency Total Market Cap Chart – June 24 to July 1, 2018

For the sake of simplicity, my analyses is generalized in nature. Individual traded assets have their own utility and value based on a multiplicity of factors, some of which may be intangible. When deciding which assets to choose for holding and trading there are many of those factors which become important when considering risking investment over time. We will delve into this issue in another post, all part of the due diligence process.

Over the past decade, blockchain technology has captured the imagination of technologists around the world, and in the past year Initial Coin Offerings (ICOs) of cryptocurrency tokens have exploded in popularity. In just the first four months of 2018, ICOs raised $6.3 billion USD in funding, 18% more than in all of 2017. (1)

As we can see from the excerpt taken from the CPA Ontario website ICO’s raised $6.3 Bn in funding for the first quarter of 2018. For argument’s sake we can extrapolate a value of $30 Bn for the year, or even more to $50 Bn if we assume more issues later in the year. However, considering the total trading values in active markets we can by inspection see that the ICO market is small compared to values traded on exchanges. Total Market Cap can increase by over $20 Bn or more in a day (2), and daily volumes also can vary in the same range of about $10 to $20 Bn over 24 hour periods.

As a final note, not all transactions in cryptocurrency need to be done through an exchange, and private transactions are not included in TMC analysis, although it is fair to assume that trade values of these transactions will be made close to current market prices. When trading on exchanges one must always be aware of the market depth compared to order size, which can cause significant run up in price when a large transaction is made on the market. One reason why experienced traders generally make smaller incremental buys or sales to limit market distortion and costs as well as profit from large trade orders which run up the market temporarily.

Modeling Generalizations

For the sake of most of my market reviews there are certain generalizations which I make, first is I exclude ICO’s as a minor influence on the market as a whole. Those who intend to issue ICO’s would be wise to incorporate market analysis and timing as part of their marketing strategy. Starting an ICO in a soft market will be more difficult when money is tight for investors, as an example.

The second generalization I make is to limit reviews generally to the top 25 listed CC’s by market capitalization. From past analysis I have found that over 80% of capital is contained in the top 25 while the remaining 1500+ listed account for the remaining 20% Total Market Cap. Movements of these coins may be important to the individual trader, however as factors that may move the whole market their sphere of influence is generally limited.

Thus, as we can see, the above reductions will simplify future modeling of cryptocurrency markets by eliminating ICO’s and examining global movements of the top 25 listed cryptocurrencies, of which Bitcoin currently dominates with a MC of $108 Bn USD, followed by Tether, Ethereum, EOS, Bitcoin Cash, Litecoin, etc.

Who are the Players in the CryptoCurrency Markets?

First there are the digital assets or cryptocurrencies, which we already discussed in general and of which there are many. However, we have reduced this population down to a usable quantity for analytical and discussion purposes by reducing the market to the top 25 and ignoring the effects of ICO’s on the market. Next to be discussed is the user base, which is a generalization for investors, holders, developers, traders, speculators and the consumer marketplaces. Some of these markets are more developed than others as more people learn the benefits of cryptocurrency, the blockchain and distributed ledger technology.

As both sides of the markets have grown we will examine the effect of exchanges and how this third component enables the other two components to interact much like how a third leg is necessary to the utility and stability of a stool. These virtual cryptocurrency exchanges have many similarities to the stock market as both represent an asset the basis of which are distinct and separable, frequently representing commodities or utility previously considered intangible.

Demographics of the User

Is it possible to identify the “average” or “normal” user, and thus be able to establish some trends or behaviours that can be predicted? Let us explore this concept further.

One Bloomberg News article found online mentions a survey which found 5% of 5700 adults surveyed owned Bitcoin.

Nearly 60 percent of Americans have heard or read about the world’s largest cryptocurrency, according to a joint SurveyMonkey and Global Blockchain Business Council poll of more than 5,700 adults conducted in January. But only 5 percent of people actually own the digital coin.

Those few Bitcoin investors are of a fairly consistent demographic. An overwhelming 71 percent of them are male. The majority — 58 percent — are young, between the ages of 18 and 34 years old. And unlike the broader U.S. population, nearly half of them are minorities. (3)

Another survey is more thorough providing demographics on users interviewed in their surveys. It also provides interesting feedback as to the nature of existing resistance to adoption as seen below in Figure 2. Something which should be paid particular interest.

Finder

Figure 2. Table of Reasons – Resistance to CryptoCurrency Adoption

Other interesting demographic information can be examined such as age groups, gender, income level and ethnicity of those surveyed may provide useful information. For example who are those most likely to invest in Bitcoin or other Cryptocurrencies? This survey compares Millennials, Gen X and Babyboomer generations.

Millennials and Generation X

A similarity between the results of the Finder survey and the survey by LENDEDU is that Millennials are the largest group invested in cryptocurrency followed by Generation X.

The survey by Finder found that among those who purchased cryptocurrency there are:

  • 17.21 percent of Millennials surveyed,

  • 8.75 percent of Generation X surveyed.

Finder

Figure 3. Table of Crypto Investors by Age Group (4)

 

Summary Comments – Part 1

In order to make sense of our examination of the cryptocurrency market we have used scientific methods of reduction to group together data in meaningful ways and thereby reducing workloads. The generalizations, rules or assumptions are that the market is fairly well represented by the movements of the top 25 listed cryptocurrencies, and that ICO’s are a separate market which has little effect on the main market.

The current model is a spreadsheet analysis of price and total market capitalization of the top 25 cryptocurrencies as listed on Coinmarketcap.com for a particular time period. Cycles in capitalization may be uncovered through data analysis. Also opportunities in markets and penetration. Current surveys indicate populations which require more attention and information for wider adoption which are useful for marketing campaigns.

 

Part 2 (To be Continued)

  • Trading Exchanges and Price Movements
  • Whales and Institutions
  • Trading Levels, Trust and the Nash Equilibrium
  • Time Frames, Cycles and Risk
  • Geographical and Geopolitical Factors

 

References:

  1. navigating-the-brave-new-world-of-cryptocurrency-and-icos
  2. weekly-market-cap-surges-50-billion-cryptocurrency-prices-continue-to-rise/
  3. a-look-at-who-owns-bitcoin-young-men-and-why-lack-of-trust
  4. how-many-americans-really-own-crypto-skewed-results-of-polls-and-surveys

 

 

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Market Sentiment Analysis of Candlestick Charts

Author: Duane M. Tilden, P.Eng.                       Date: June 23, 2018

To become a successful trader in markets, such as cryptocurrency trading, one has to develop strategies which will give them the greatest probability of success, or for most, a profit.

How much risk and reward is up to every trader, as well as the selection of digital assets held and quantity. There are short, medium and long term goals and various methods of achieving each one of these objectives.

One tool that is very useful for developing short term trading strategies which can return a profit to the trader, is understanding Candlestick charts.

Figure 1: Anatomy of a Candlestick (1)

Anatomy of a candlestick

For reading and developing trading strategies, understanding the mechanics of a candlestick chart can lead to opportunities in trading assets to maximize ROI (return on investment), or to determine when to buy and sell assets.

How to Read a Single Candlestick (2)

Each candlestick represents one day’s worth of price data about a stock through four pieces of information: the opening price, the closing price, the high price, and the low price. The color of the central rectangle (called the real body) tells investors whether the opening price or the closing price was higher. A black or filled candlestick means the closing price for the period was less than the opening price; hence, it is bearish and indicates selling pressure. Meanwhile, a white or hollow candlestick means that the closing price was greater than the opening price. This is bullish and shows buying pressure. The lines at both ends of a candlestick are called shadows, and they show the entire range of price action for the day, from low to high. The upper shadow shows the stock’s highest price for the day and the lower shadow shows the lowest price for the day.

Bearish and Bullish Candlesticks

A candlestick represents the price activity of an asset during a specified timeframe through the use of four main components: the open, close, high and low.

The “open” of a candlestick represents the price of an asset when the trading period begins whereas the “close” represents the price when the period has concluded. The “high” and the “low” represent the highest and lowest prices achieved during the same trading session.

There is much more to reading and understanding candlestick charts than is covered here. This brief has informational links to where more information on patterns and indicators, and advice on how to use these patterns to make decisions in trading.

Bottom Line (2):

Investors should use candlestick charts like any other technical analysis tool (i.e., to study the psychology of market participants in the context of stock trading). They provide an extra layer of analysis on top of the fundamental analysis that forms the basis for trading decisions. We looked at five of the more popular candlestick chart patterns that signal buying opportunities. They can help identify a change in trader sentiment where buyer pressure overcomes seller pressure. Such a downtrend reversal can be accompanied by a potential for long gains. That said, the patterns themselves do not guarantee that the trend will reverse. Investors should always confirm reversal by the subsequent price action before initiating a trade. (Read more in Candlestick Charting: Perfecting The Art)

References:

  1. crypto-trading-101-beginners-guide-candlesticks/
  2. using-bullish-candlestick-patterns-buy-stocks

How to Invest in CryptoCurrency – A Guide for Everyone

Of the many and diverse interests of mine, I include the emerging technology and upcoming revolution in finance, the CryptoCurrency [CC], Smart Contracts [SC] and the BlockChain [BC]. This makes sense as it fits in well with my technological background and interest in all things internet and information technology.

My first experiences with CC’s go back to 2012 when I was first looking at Bitcoin. I was interested in mining and how the various video cards of the day would perform to mine the BTC. Unfortunately, beyond doing some initial research and some trials with faucets in 2014, I did not invest early in Crypto. Some of the early amounts were still in present in my wallet and the small amount had grown considerably even left alone, from about $1 to $20 in a couple of years. This is shown in my current balance below.

Yesterday, January 13th 2018 marks a first. The day I spent my money on cryptocurrencies online and put myself at risk, and this is after much careful deliberation. I am starting with $200 (Canadian Dollars) with a plan of  investing $100 weekly in strategic ways to build my nest-egg. This will require some amount of discipline to maintain this schedule however I believe is doable and easy to duplicate.

Blueprints for Success – A New Blog

When someone finds a way to produce a product or service better than other’s they create an opportunity to profit from their advantage. My past experience working as a professional engineer in a number of consulting and design firms, including my own company, have proven that these methods work. It takes time, research, trial and error, and finally reporting.

Accumulating knowledge in a book is an evolving task and takes time. As I move forward, I plan to divest to you, the reader, my methods. What I did, how it is working, and other related concerns, opportunities or just prognostications. For this I will be creating a separate yet to be named and soon to be launched blog.

The First Steps – Make a Budget

Making the decision to start investing took some time on my part. Of course budgeting was crucial and ensuring that I had a stable source of income to commence a savings and investing program. I will be able to establish more detailed plans as my investment grows.

Wallets and Exchanges

This alone is a seemingly large and complicated topic. At present I will leave out most details and explanations for later posts, focus being on getting started.

At this time I am using Coinbase as both my on-line wallet and exchange.  Eventually I will have more wallets, some online, others on my digital devices. The wallet is where individual CC’s are digitally stored. These include online wallets, wallets stored on devices such as computers and phones, and hardware wallets. More later.

I created an account and linked my bank account via a Visa/debit Card which I already obtained from my bank for online purchases. I had done this a couple of weeks prior to making my first transaction.

Transaction Details

The first transactions were two purchases where I bought $100 of Bitcoin and $100 of Ethereum. The amounts include transaction fees and worked out to purchase 0.00538 BTC and 0.05557 ETH and have been detailed as seen in the screenshot.

ScreenShot - Coinbase - 01#1141018

Figure 1. Screenshot of Coinbase Cryptocurrency Transactions 

Also shown in the activity which is a third transaction I made to acquire some mining power, where some of the recently acquired BTC were forwarded to the provider from the Coinbase wallet.

Transaction Fees

To Be Discussed (TBD).

Mining

I decided to experiment with hiring some computing power online from the cloud using the provider FFLAK. Upon registration you receive a 14 day trial and 100 Gh/s mining power to mine Bitcoin. I upgraded to add mining of Ethereum at a rate of 2 Mh/s in one transaction using $40USD of BTC, and upgraded another 2 Mh/s with $40USD of LTC. See Transaction Fees.

On the calculator provided the projected return from my initial $80 investment annually is $348 after service fees deducted which is 435%. A pretty good rate of return, worth making an initial trial investment.

ScreenShot - FFLAK ETH Calculator- 03#1141018

 

Figure 2. FFLAK Mining CC Calculator

Prior to investing, I have been experimenting with mining and faucets. Since October of last year I have been mining a pre-ICO CC using my browser. This currency uses a novel approach to mining and I have accrued over 60 tokens over the past 4 months. Visit JSECoin to learn more.

ScreenShot - JSECoin - 02#1141018

Figure 3. JSE Coin Browser Mining Program

Faucets and Games

TBD.

ICO’s – Initial Coin Offerings and Airdrops

TBD.

Cryptocurrency and Value Propositions

TBD.

Disclaimer

No guarantees or warranties are implied or expressed by the author. Risks are inherent when investing in speculative ventures, and not all information may be included when opinion based statements and projections are made. The reader is advised to perform independent due diligence.

All readers and investors are assumed to be self-governing and able to formulate their own opinions and make independent decisions. No liability will be assumed by the author, his assigns, or the corporate entities mentioned in these published articles, for any losses.

Any payments made to the author are generated by referral links. These generate a small return and is the only financial reward provided to the author. This is in return for his time and expertise spent in sharing this valuable information to you the reader. Please follow the provided links as a small, no obligation courtesy.

Referral Links:

  1. Wallet and Exchange:  Coinbase 
  2. Mining Contract:  FFLAK
  3. Browser Mining: JSECoin

 

7 Things You Can Legally Steal from Successful Companies

Data-gathering from scratch is a daunting prospect. The good news is a lot of this data has already been gathered for you by your competitors.

Source: thenextweb.com

“If you just want to get a list of the top influencers of an account, use this tool to generate the data. If you want more comprehensive data on your competitors’ followers you can use this tool. It is important to make connections with influencers early on so they can be evangelists for your brand.”

See on Scoop.itSocial Media, Crypto-Currency, Security & Finance

Juxtapoz Magazine – SUPERSONIC INTERVIEWS: Victo Ngai

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Victo (short for Victoria) Ngai is a Hong Kong born, currently living in New York City illustrator. Her work is filled to the brim with brilliant colo…

Duane Tilden‘s insight:

Brilliant Illustrations!

See on www.juxtapoz.com

How To Triple Your Success Using #SocialMedia #Advertising Platforms | #Forbes

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The following guest post is by Neal Rodriguez, an online marketer who has helped iconic brands such as The Nielsen Company, Adweek, AOL, and dozens more meet their business objectives using social media and the search engines.

Duane Tilden‘s insight:

[…]

Last month, I delivered a presentation before some public relations professionals representing some of the biggest universities in the country. And when I suggested that they should consider using social ads to convince people to subscribe to their digital assets by Liking their pages on Facebook, or buying views on YouTube using their ad platform, many rejected the idea like I was passing them a plate of AIDS. Interestingly enough, Mr. Weintraub outlined some ways that public relations specialists or marketers assigned to acquire publicity can use social advertisements to target journalists, writers or reporters based on how they classify themselves and post their professional titles as an interest. He simply instructs his readers to target Facebook ads by listing keywords, such as blogger, editor-n-chief, correspondent, news editor, writer, columnist, and dozens more in the interest field.

On social media or other advertising platforms, I always aim to advertise for life-time value; meaning, I like to advertise to acquire contact information and/or have people subscribe to my digital assets like a Facebook business page, or email list. This way I can keep subscribers abreast of everything I’m communicating or marketing. With an engaged following, you create an endless line of opportunities to recoup your investment in the advertising every time you publish new content. Moreover, now that everybody’s a “journalist,” with the immediate ability to tweet, post on Facebook, or launch an online publication with WordPress or other type of open source content management system, when something is worth citing, you’ll have an active user base of publishers that are likely to link to your content. I have also managed email lists to which writers of mainstream media outlets are subscribed; thus having them on board also increases the chance of securing publicity on iconic publications. Mr. Weintraub’s approach, however, allows you target journalists that are not subscribed to stay abreast of your content. He argues that since social advertisements look like organic posts, media stakeholders are more likely to simply click and cite the piece of content to which they’re exposed.

Mr. Weintraub will delve further into how brands can leverage Facebook and other forms of social advertising during his upcoming talk at Search Exchange, in Charlotte, North Carolina in July.

See on www.forbes.com

Klout and Kred Scores: Social Media, Politics and Influence – How it Works.

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Metrics providers offer social media influence scores; here’s what you need to know about them.

Duane Tilden‘s insight:

Do Social Scores Really Matter?

Unfortunately the answer is much more complicated than a simple yes or no. The majority of experts Government Technology spoke with said that, specifically in the public sector (versus the private sector), the social media influence scores of those who follow you tend to matter much more than your own scores. Why? Because others’ Klout and Kred scores can help you better identify whom in your constituency to respond to, as well as how best and how soon to engage with them. Social media influence scores essentially offer a shortcut to identifying, evaluating and engaging key influencers in your specific sector.

For example, someone with high Klout and Kred scores has a wide scope of influence online. What they say, post, share or tweet about your federal, state or local agency within their own and others’ social media networks has a higher potential to reach and impact others significantly more (and perhaps more meaningfully) than someone with low social media influence scores.

“If you are a government agency and you have someone yelling and screaming at you on Twitter or Facebook, or if someone just created a social media account simply to harass an agency, a social media manager or communications director could pick up on a person like that very quickly if they have both a low Klout score and low Kred scores,” said David Gerzof Richard, a social media and marketing professor at Emerson College in Boston and president of public relations and social media firm BIGfish.

“Conversely if you find people who have high Klout and Kred scores, and they really understand where your agency is going, and your agency’s goals, and they’re sharing your social media content, those people would especially be your super targets,” Richard said. “They’re the people you want to make sure are seeing your agency’s social media messaging and content, because they’re actively sharing it and they have a high rate of influence. What they share gets a lot of exposure and engagement, so it’s important to engage them.”

Examining your followers’ social media influence scores also helps to quickly, easily separate the “wheat from the chaff,” said Richard, enabling you to prioritize positive influencers and advocates over “noisy,” negative trolls and other disruptive followers.   Be Aware, but not too Concerned

“I think it’s a good practice for state and local governments to be aware of their social media metric scores, but I wouldn’t say they should necessarily be concerned about them, particularly on a day-to-day basis,” said Bill Greeves, CIO of Wake County, N.C., and co-author of Social Media in the Public Sector Field Guide.

See on www.govtech.com