Ethereum (ETH) to Repeat 2017? Supply Sink & Buy Pressure Coming

Ether outperformed Bitcoin during the ICO mania of 2017, as it was the most popular platform on which these projects were built on.

Now, during the DeFi mania, ETH is again surpassing Bitcoin, the largest digital asset with a fixed supply. In 2020 so far, ETH has recorded 238% positive returns compared to BTC’s just 56.05%.

According to on-chain analyst Willy Woo, Ethereum is actually “very close to BTC in terms of risk-reward.”

Bitcoin Risk Adjusted Returns vs Other Assets
Source: charts.woobull.com

Thanks to the DeFi craze, Ether’s supply has also been shrinking as a record 6.4 million ETH is already locked in the sector. Now, Ether’s supply is going to be even more contracted thanks to DeFi darling Yearn Finance.

The project has finally added yETH vault along with yWETH and other digital assets. Obviously, these debt-based vaults carry extremely high risk like any other DeFi project and also charges a 0.5% withdrawal fee, not to mention the record transaction fees on the second largest network.

In simple terms, lock in your ETH in a vault and take out more than you put in thanks to the 65% APY.

The community is extremely excited about this development, with some calling it “the world’s first autonomous on-chain hedge fund.”

“Could be a block hole for ETH, super bullish,” said another trader.

“YFI yETH vault will lead to a supply sink from ETH deposited to mint DAI, but also ETH buy pressure from yield farming earnings converted to ETH. Another timely benefit is that gas costs are pooled,” stated Alex Gedevani, who handles research at Delphi Digital.

With ETH leveraged in DeFi, staking coming in Phase 0 of ETH 2.0, and yETH vault here, the supply-side liquidity crisis is coming for Ethereum, which is expected to send the digital asset’s prices higher.

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Author: AnTy

Bitcoin to Follow the Same Trend as Amazon to Recover its All-Time Highs: Coin Shares

  • The ‘Big Bang’ of 2018 dwarfed by other asset bubbles
  • Bitcoin outperformed every other asset class
  • Why aren’t investment professionals allocating to BTC

The investment of the decade which recorded 9,000,000% gains is currently sitting at just around $7,100.

In the short term, Bitcoin is expected to experience a lot of pain ahead that would surely be mixed with its own dose of gains as well.

But as we reported, in the long term, a poll run by Mati Greenspan, founder of newsletter Quantum Economics found that a staggering 49.2%, nearly half of respondents believe that Bitcoin is going to climb to $1 million by the end of the next decade.

The Big Bang of 2018 Dwarfed by other Asset Bubbles

It all started at the end of 2013 when Bitcoin became a billion dollar market during a short-lived price run following the seizure of Mt. Gox and arrest of Ross Ulbricht.

In December 2017, BTC hit its peak at $20,000 while the crypto market cap nearly reached one trillion dollars, $835 billion, during the first week of January following a rapid run up in Ethereum, XRP and other altcoins as well.

This “big bang” was relatively large resulting in a 20x price increase in a year, but Meltem Demirors, Chief Investment Officer of Coin Share and Marty Stenson, Associate, who authored the 2019 Crypto Trends Report “the value created (and destroyed) is dwarfed by other asset bubbles.”

Bitcoin outperformed every other asset class

The world’s leading cryptocurrency is already the best performing asset of the decade with a whopping 9,000,000 percentage gains.

According to the digital asset management company Coin Shares, It took seven to seventeen years for Amazon to recover its all-time highs and Bitcoin is expected to “follow a similar trend.”

However, Comparatively, bitcoin has been a much volatile asset, “but on an absolute basis, it’s outperformed every other asset class over a comparable time scale.”

Why aren’t Investment Professionals Allocating to BTC?

As a recent report by Bank of America Securities stated, if you invested $1 in bitcoin at the beginning of the decade, it would now be worth over $90,000.

On the other hand, Demirors notes that more than half of all stocks underperform the risk-free rate (US Treasuries) and “many lose money.” Actually, less than 1% for stocks drive more than 75% of stock market returns, she added.

This is why “it’s odd to me that investment professionals aren’t allocating to bitcoin or a passive basket of crypto (which is still >70% bitcoin),” said Demirors.

She illustrates how ARK Invest, a fintech company made a small allocation, less than 1% to Grayscale Bitcoin Trust to their Innovation ETF in 2015 that was one of the best performing ETF of 2017.

But she notes, “This strategy requires conviction. Riding the trend on the way up is a risky proposition, given how volatile bitcoin is. Secular trends take time to develop, and cyclical volatility can be a major deterrent.”

But as we saw in the case of the dotcom bubble, a few like Amazon came out at the top as winners. As such, “investment decisions *today* should be shaped by our perspective on where the world is headed *tomorrow.*”

“I believe bitcoin is a massively important part of the future,” added Demirors.

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Author: AnTy

A 10% Bitcoin Allocation Investment Portfolio “considerably outperforms” a Typical one

  • Portfolio with BTC outperformed the other over one year period, reaching its 2019 high over the summer
  • Both portfolios had nearly similar Sortino Ratio
  • It also maintained greater risk-adjusted return with a Sharpie of 0.66
  • How does having just 10% Bitcoin in your investment portfolio fares in comparison to a typical non-Bitcoin one?

TradeBlock, an institutional digital currency trading tools provider answered that in its recent blog where it found that the portfolio with a 10% Bitcoin allocation along with 55% equities and 35% bonds “considerably outperformed” the one without Bitcoin but included 60% equities and 40% bonds.

The year-over-year performance between the two portfolios started with an investment of $1,000, with the assumption of yearly rebalancing at the previously mentioned percentage allocations.

Portfolio two with BTC outperformed Portfolio one over the one year period and then the former reached its 2019 high over the summer.

Portfolio comparison year-over-year

When it comes to risk, Portfolio 2 with a 10% bitcoin allocation outperformed the alternative portfolio but maintained a modestly higher risk profile because of the flagship cryptocurrency’s heightened volatility.

Both portfolios, however, had nearly similar Sortino Ratio, the risk-adjusted return of an investment asset, at 1.51 and 1.41. Earlier this year, Bitcoin had higher risk-adjusted returns at 1.97 than the 0.25 of S&P 500 and 1.06 of gold.

When it comes out more popular Sharpe Ratio to measure risk-adjusted returns, Portfolio one with BTC maintained greater risk-adjusted return with a Sharpie of 0.66 versus Portfolio 2 which had a Shape of 0.46.

The Best Investment of the Decade

It makes sense the portfolio with Bitcoin outperformed the alternate one as the world’s leading cryptocurrency hasn’t been only the best performance crypto asset of 2019 but of the decade.

A recent report by Bank of America Securities shared that if you have invested just $1 in Bitcoin at the start of the decade, it would have been now worth close to a million (more than $90,000).

During the same period, $1 in American stocks would have been up only 250% at $3.46, in gold, it would have been $1.34, 74 cents in crude oil, and $2.08 in 30-year US Treasury while you would have lost your investment by investing $1 in Burmese kyat, now worth $0.004.

Over this past decade S&P 500 and Dow Jones Industrial Average, however, made significant gains of 140% and 130% respectively, but still way less than BTC.

As trader Josh Rager points out,

“As amazing as these stock returns are, there is a potential opportunity to have similar gains with Bitcoin even at its current price: $7000’s.

Potential 1000+% returns, not only over the coming decade, but in the next few years if we see BTC hit between $75k to $100k+.”

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Author: AnTy

Bitcoin’s Ten Years Young and Is Already Taking Conventional Investments to School in 2019

Bitcoins-Ten-Years-Young-and-Is-Already-Taking-Conventional-Investments-to-School-in-2019

2019 has been the year of crypto assets where it has outperformed most of the traditional assets such as oil, gold, and popular stocks. While 2018 was the year of the bearish trends, 2019 is highly bullish. The crypto market was expected to spring back and rise in value with an impending bull run on the cards. However, analysts were predicting the rise of the crypto market towards the end of 2019, but bulls arrived as early as April which has doubled the market cap of cryptocurrencies by double since the start of the year.

The total market cap of crypto space stands at a quarter of a trillion dollars and the daily trading volumes of the digital assets are touching as high as $80 billion. In comparison, traditional assets like oil are up by 29% in 2019, which is followed by popular stocks such as Nasdaq up by 15%, S&P up by 13%, Dow Jones up by 10%, and the Nikkei is up by 6%. While Gold has seen a mere surge of 0.46%.

While it is unfair to compare the traditional assets with the digital ones since cryptocurrencies are known to be volatile, where both the dips and highs are equally massive. During the recent surge in the crypto space starting in April, some assets such as Bitcoin Cash made 50% gains on a single day, which tells a lot about the volatility of these assets.

The 2017 rise of Bitcoin was surely phenomenal which took its prices from $750 to near $20,000 in December. Similarly, the downfall throughout 2018 saw Bitcoin, as well as the crypto space, lose more than 80% of their overall market cap.

The Changing Landscape of Digital Assets

2018 might have been a forgettable year for the crypto investors, however, the bearish trends of 2018 cut down the high-volatility of the crypto space, paving the way for traditional and institutional investors to make a foray into the digital asset arena. In 2019, the cryptocurrency market is stronger than ever before as more people have shown interest and are dumping traditional assets for the digital ones.

If we look at the gains made by some of the crypto assets it comes out to be more than most of the traditional assets combined. The biggest gainer in the digital arena is Binance Coin (BNB), which has surpassed its all-time-high record twice in the last month itself. BNB started the year at $6.19 and currently trading at $33.68. Litecoin has added around 265.85% to its value from the start of the year. Bitcoin Cash (BCH) the forked sibling of Bitcoin has also risen 186% taking its value from $150 at the start of the year to the current price of around $432.

Cryptocurrency Market Is Thriving and Prices May Go Further Up

2019 has been predicted to be the year of bulls, after bears dominated throughout 2018. The overall market cap of the cryptocurrency market stood at $125 billion at the start of the year, and currently, it is at $273 billion, seeing an increase of 118%. The daily trading volumes have risen a massive 500% from the start of the year as well. On January 1st the crypto space traded $12.6 billion worth of crypto assets and that trading volume jumped to 83 billion by 28th of May seeing a massive surge of 558%.

Bitcoin, the pioneer of the cryptocurrency space was only the sixth largest gainer with a 132% rise in value from the start of the year. Bitcoin started the year at $3,746 and currently trading at around $8638 after seeing a minor price correction earlier today.

The cryptocurrency space has not just made tremendous gains in terms of the value, but also as the preferred investment option over traditional assets. Various trust management and hedging firms have confirmed that new and upcoming traders want to swap their gold reserves for Bitcoin.

The current price movement in the crypto space is speculated to rise further throughout 2019, as the price charts, and key metrics suggest that Bitcoin and other altcoins are mimicking the patterns of 2017 rise. While there have been several speculations about the crypto market seeing another bottom before a full-fledged bull run takes charge, there are many who believe that the market has already passed the bottom, and prices would only go further up.

The best part about the current surge is that most of the naysayers and long term critiques have come around to join on the crypto bandwagon, having realized that the crypto space is thriving and here to stay.

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Author: Bitcoin Exchange Guide News Team