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18th SEPTEMBER 2019

THE ALLURE OF A DOLLAR COST AVERAGE

I’ve talked about dollar cost average approaches to investment plans before – which refers to assigning a fixed investment at a fixed interval over a long period. For example, $100 a week, every week for two years.

This approach can work particularly well for those who either don’t want to be a full-time trader or simply don’t want the stress of playing the highs and lows.

I recently came across this site which can help you visualise this approach in relation to Bitcoin. Using the above example, the return comes in at 32.13%. To put that in perspective, investors in regular markets consider 10%+ to be very good.

If you don’t already have an investment approach for Bitcoin or cryptocurrencies, and you want to start getting into the space, consider a plan to set and forget. Plenty of exchanges offer set direct debit options which take the hassle out of remembering to buy Bitcoin each week or month and some have the added safety net of custodial support.

TIM DRAPER PREDICTS BITCOIN TO HIT $250K BY 2022

Billionaire Tim Draper is known for picking successful investments (Skype, Tesla, Twitter and more) and in the crypto space he famously tipped $10K USD Bitcoin weeks before it got there and is heavily invested in the space to back up his claims. Recently, Draper made a bold claim – that Bitcoin would hit $250K USD by 2022. If that were to happen, the value of Bitcoin would equal 5% of total global currency markets.

In an interview with BlockTV and as reported by Dailyhodl Draper went even further and said, “I think that may be understating the power of Bitcoin…” And that if people “…have any distrust of their government, they’re going to much prefer Bitcoin because if the government is using currency as a political force, they’re going to lose out … Nobody’s going to be comparing anything to dollars 20 years from now. Nobody’s going to be using any kind of fiat currency 20 years from now.”

USD TO BTC COMPARISON

The cryptosphere is always aflutter with BTC to USD comparisons; ‘Bitcoin gained X amount versus USD this year/ month’. But rarely do we see the comparison done the other way. I took a moment this week to compare USD to BTC which revealed a pretty scary proposition if you are sitting solely in your countries native currency, understandably you get paid in and transact in fiat, but surely a hedge of some portion of this holding into Bitcoin is simple given the below statistics.

I went way back to basics on this one and simply searched USD to BTC. I was pretty shocked by the results.

Over the last five years, the power of the US dollar over Bitcoin has been in continual decline. Which basically means if all you did was hold your native currency, then you would have watched it steadily depreciate year after year.

Governments continue to print fresh fiat at alarming rates while Bitcoin releases its block reward. These rewards are continuing to reduce over time and eventually supply will dry up at 21 million.

I also checked out the British Pound to BTC which showed an equally concerning comparison.

IS BITCOIN MINING PROFITABLE AGAIN?

Yesterday one of Mining Store’s Directors, William Wright, wrote an article discussing whether or not Bitcoin mining is profitable again. Will breaks down how this can be calculated & explains his answer. You can view the article here.

OKEx DELISTING PRIVACY COINS

Leading crypto news site The Block, reported this week that Korean based exchange OKEx will delist all five privacy coins on its platform; monero (XMR), dash (DASH), zcash (ZEC), horizen (ZEN) and super bitcoin (SBTC).

This comes after the international anti-money laundering body, Financial Action Task Force (FATF), issued its regulatory guidelines relating to “travel rules”. Which basically ruled that exchanges need to provide details of both the buyer and seller for all transactions. These details include information like name, account number and location. Given the very nature of privacy coins is to deliberately prevent this, they have been deemed to breach the regulation.

It’s likely that privacy coins will continue to feel the heat from government regulators around the globe as they become subject to FATF, and probably KYC, regulations. You might remember that only recently Binance had to remove multiple coins off its exchange and relocate them to a US only Binance exchange to adhere to new regulations imposed on coins and tokens in the US. While this wasn’t privacy-specific and had more to do with KYC, it does show a global increase in pressure on exchanges and even other projects to stay listed.

YOUR PRIVACY AND FACIAL RECOGNITION (OPINION)

As I write this, I am extremely concerned at the news that the Victorian government in Australia will be uploading all driver licences into a facial recognition database. The Age reported yesterday that the first data upload has already been completed and VicRoads along with Victoria Police will both have access to the database.

So far the state government has blocked the federal government from accessing the database, and claims all citizens’ details are secure. The State has cited that this tool be used to counter identity theft fraudsters and terrorism-related activities.

I’ll be honest. This scares me.

China has been using facial recognition for some time and we have watched that play out recently in the face of the Hong Kong riots. Protesters have resorted to covering their faces while dismantling lampposts and devices they believe to contain this recognition for fear of harsh government retribution.

The underlying concern is that our freedoms are being stripped from us, one by one under the broad and secret banner of “national security”.

We are effectively moving towards living under constant surveillance and monitoring where nothing you do goes unseen, unwatched or unrecorded.

Link this back to KYC legislation around the globe and the delisting of privacy coins due to FATF and “travel rules” in Korea and it really does keep coming back to the same questions – how much privacy does your government want you to have? And how far are they willing to go to stop you from having it.

FEAR & GREED 

The Alternative.me Fear and Greed index is still showing a somewhat fearful market. Nothing like last month’s extreme fear and score of 11, but still a definite uncertainty within the market. With the launch of Bakkt futures due September 23rd, expect to see clarification of a shift in direction on or before this date.

Keep an eye on longs and shorts around this period as well and remember that sometimes no trade is a good trade. If you have a long term hold position then be sure to keep it on ice and don’t let the volatility around this period force you into rash decisions. Times of accumulation or stagnate sideways movements are often when people sell out of positions due to boredom.

Wealth accumulates over time and don’t be lured into a get rich quick mentality. Keep your eye on the long game and stay focused.

Author: Julian Carruthers

Not financial or investment advice, always do your own research.

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