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Roger Bryan, Digital Currency Index founder and cryptocurrency investing expert, breaks down where cryptocurrency currently stands in terms of the overall financial markets. Learn more about the upcoming news that could impact cryptocurrency investments and get the updates on six different cryptocurrency coins.
The following is a transcript of the video:
Hello everyone, and welcome to the Roger Report for January of 2019, welcome to the new year. So, this month what we do, what we want to do, is talk a little bit about what happened in 2018.
More importantly, what didn’t happen, and the probability of those things happening in 2019 and what specifically that could mean for the market. So, we saw 2017, the ICO year.
We saw 2018, kind of the regulation year, and of course from our perspective regulation needed to happen, but regulation also came in in a matter that kind of flattened out the market in conjunction with liquidity issues. And created kind of the staleness, where we’re waiting for forward momentum.
We saw a terrible end to December, with a Christmas slump that no one really wanted to see, setting the stage potentially for some buying opportunities early in 2019.
So, what are we waiting for in 2019, and what’s on the books right now that has scheduled dates of what’s going to happen that can add in some forward momentum to the overall market?
I always like to start with the overall market from a momentum perspective, and then we’ll talk a little bit about the different individual assets that we’re working with in order for you to have a full picture of the overall market, and the assets individually, so that you can make some smart decisions about what you may want to be doing with your portfolio.
From a macro market perspective, we had hoped that the fall of 2018 was going to bring things like the Bitcoin ETF, some futures platforms, some regulation clarity on securities and utilities, so that we could figure out exactly where to put our capital in order for long term wealth appreciation.
None of that happened.
In fact everything kept getting punted further down the road. We’re sitting here, it’s January, and we’re dealing with the government shutdown, that some are now saying could cause even further delays from an SEC perspective, in bringing some of those products to market.
Even those that have scheduled dates at which they plan to come to market. One of the things that we have seen happen in January, which is of the three big things that we’re looking for, which is regulation, ETFS, and then futures contracts.
The regulations specific around securitization of tokens, meaning equity tokens or security tokens and the play on that, is that the T-0 platform has gone live and they are accepting registrations for the platform.
There’s nothing trading yet and registration is going a little slow, there’s an expectation that was going to happen. In fact they said they weren’t going to open up trading to the general public until August of 2019. But in talking with some industry friends we were excited to at least see that they hit their deadline of January 10, and are moving forward with things.
Now Backed, which is owned by ICE, which owns the New York Stock Exchange, says that they do still see a potential first quarter issue for their futures contracts and Bitcoin.
What’s different about them is the settlement will actually be in Bitcoin for any of their settlement facilities throughout the world. Pretty exciting stuff.
Why is this important?
Well, in a flat market, where there’s a lot of volatility and the volatility is typically based on more news and emotion than it is fundamentals of asset, that we need some forward momentum news in order to create more demand, in order to create, more market awareness.
There was a big talk of 2018 was going to be the year that the main street investor came into the markets. Well, it was kind of a horse and a cart dynamic.
The main street investors that wanted to be in on crypto, came in on crypto. Those that are still hesitant about it of course didn’t. Now they’re probably not going to choose this time to step in on their own. Unless, institutional organizations are able to create instruments that allow them to enter with current capital already at play in the market.
So from a macro perspective, looking for those things to happen. We’ve got some security tokens coming. BAKKT still says that they’re looking at a Q1 play, for their futures contracts.
It seems like 2019 can kind of be that point where we’re going to set the stage for what’s going to happen in the future.
Roger Bryan, founder of Digital Currency Index
And then you look at the Vanec Solid X ETF. Now the ETFs are still getting pushed out a little bit. There is some hope with the head of the FEC is definitely into them. Saying it’s not their job to protect the individual investor from good or bad investment decisions.
It’s only their job to protect them from good or bad assets. And no one can deem these to be bad assets as they do have their own market demand economics. And it does make sense if you think about it.
If you have a buyer and you have a seller of an asset, it makes Bitcoin no different than fiat currency, meaning that its exchange of value is based on the two parties’ decision about what it’s worth in that exchange. Seems brilliant to me.
The last macro concept that we’re looking at needing to improve upon this year is the liquidity. Now, liquidity comes from a demand economic perspective relative to the three categories that we’re watching for.
Liquidity has really been the overall market problem and any asset below Bitcoin is that there was an excess supply and limited depend, when you’ve got a closed market. And closed in the aspect of, not a lot of net new capital coming in.
From a decentralized perspective and its 24/7 trading capacity, it’s actually a more open market than basically any other market in the world, closed in that there’s not a lot of net new capital coming in.
So that means that if you have a high risk tolerance today, that you could consider this a decent buying opportunity from a macro market perspective.
That’s not a recommendation, it’s just an actual overall investment and economic concept when you look at this different cycles that this asset’s gone through and the potential cycles that it’s going to go through and where you feel that we’re at on that overall psychological demand for cryptocurrencies or Bitcoin.
Now, if you’ve been following me since the summer of 2017 when the Roger Report started, you know that we’ve been saying since then, and you can check out my LinkedIn profile under Roger Bryan, you can look at the article I published, in 2017 and the update that I made in 2018, where I make the predictions on where the overall market’s going from a macro valuation perspective and specifically why.
Not necessarily individual assets, because I don’t have a crystal ball. But when we look at it from that perspective, and that we understand that 99 percent of the assets that are out there in the crypto-sphere, think about this, there’s 5,000 or 6,000 different assets that are publicly available to trade, that 99 percent of them are worthless.
So, if you want to avoid that mess and you want to dial in on what some of the best assets are, you again can look at the partnerships that equity trust has developed and the assets that they have at play. Now every month, I like to go in and I like to talk about those individual assets a little bit. Not every single one every single time, but this month a couple of them.
You’ve heard me mention Bitcoin. Far and away, most industry insiders, unless they have a vested interest in some other project would say, if you want to be involved in this market, you want to minimize your risk for making bad decisions on some of the more, on exterior assets in this class, that, buy Bitcoin.
That you really, no one thinks over the long term that you’re going to go wrong with Bitcoin at the price point that it’s at now.
Again, not financial advice, just a perspective, industry specialists, any article that you go read, just, if you believe that it’s going to go to $250,000, awesome, if you think it’s going to go to $25,000, awesome, maybe a little bit more realistic in the next few years.
If you think that it’s going to go from its current price around $3,600 just up to $5,000 at some point in the future, you see it as a buying opportunity for a 40- or 50-percent gain.
Again, none of my personal opinion in that, its just math.
When you look at some of the other assets that are available, in all there’s six, let’s talk about them for a second.
Ethereum’s been interesting over the last 30 to 45 days, coming up on the middle of January here. Um, it saw bottoming out around 84, 86 dollars. It may even have dipped into the high 70s there for a minute, and its climbed its way back up into the 150 range and then back down to 130.
So, why that forward momentum after the downward momentum? Well, we saw macro market downward pressure on all the assets through the Christmas season, and then we saw some upward momentum on Ethereum for their on, on chain fork, called Constantinople, as they start to work towards proof of work. Or sorry, proof of stake over proof of work.
And you start to look at some of the abilities of the chain and the different styles at ERC tokens in general. Which is the Ethereum blockchain that other projects use in order to create their projects or their blockchains.
You’re seeing a lot of this in the securitization of tokens. Uh, meaning equity tokens, or tokens that carry security in companies. Creating fungibility, meaning the ability to back up the information that’s on there in a way that can be um, re-accessed if access is lost, um, that’s not a general concept for most blockchains but it is a primary concern of the SEC if securities are going to be issued on these different blockchains.
That did create some upward demand. There’s always been the downward pressure of a complete understanding of Ethereum’s use case from a valuation perspective, IE, gas, or the transaction cost between um, two transactions on that chain.
Some people believe that Ethereum’s basically worth zero because you can create on their chain, and then not need to use actual Ethereum. You can create your own coin that can be used on that.
Some people um, have price targets of $500 on the chain, saying that the STO market or security token offering, what I call ICO 2.0, may create increased demand in that and other blockchains that are specific to the issues of security are cryptocurrency.
A lot of risk and gambling involved in that. But Ethereum would still probably fall in the number two or number three spot as a primary asset that you’d want to hold if you’re playing in the market. Bitcoin being number one right now.
[Related: Do You Have to Pay Taxes on Bitcoin?]
When we get into XRP, you are seeing that when the SEC came out late last year, and said that Ethereum is not a security, that because of the way that it was created and the transition that the blockchain had, and the value that it actually fulfills in the marketplace, that it is a commodity or utility but they didn’t rule on XRP.
In order to lower the overall transaction and settlement costs. Has really been pushing to create more utility for the XRP on the X Rapid system, creating more market demand.
You do have to understand that there’s a massive amount of supply and a massive amount of supply locked up in that coin. With that being said, it’s still held its value pretty well over the last downward trend in the overall market, creating some greater use case, through X Rapid and the XRP.
And creating stabilization in its price over the long term investment horizon that it may potentially have.
Now as we move past those three assets and we work in on the other three assets that are available through the equity trust platform, Ethereum Classic has had some problems recently.
They’ve had, some of their major developers leave, which have been detrimental to the project.
Next is Bitcoin Cash. Bitcoin Cash has been interesting. There was a very contentious hard fork, IE it split, into two new assets, last month.
And what we’re seeing now is both of those assets are now sitting in top ten market cats. Looking to see if one was going to win out over the other, um, while both of them are still trading. I do know that a lot of platforms is-, have actually locked up trading in Bitcoin Cash.
So it makes it a little bit harder to get in and out of right now. They’re waiting to see how this all settles. Keep an eye out, we’ll talk about it each month, we’ll keep you aware of what we know on this.
The last one, Litecoin, you haven’t really seen a lot out of them, they’ve kind of just fallen by the wayside.
If you’re not familiar with Litecoin, it was supposed to be, Bitcoin is gold, Litecoin is silver, it had a great run-up at the end of 2017, early 2018. But then it was kind of a, I don’t want to say it was abandoned by Charlie Lee, its founder, but he exited out of the position because of a conflict involved with it.
And then they’ve really not done too much. People could argue that they’ve been doing a lot. I’m going to say that they’ve not done too much.
So that’s a quick overview of the six assets that are available on the Equity Trust platform.
We’ve talked a little bit about the overall market, we’ve talked a little bit about the individual assets, now let’s talk about their place in the overall economy.
We’re dealing with, whether or not you want to call it a trade war with China that has had certain elements of impact on the overall market, it’s interesting.
A lot of macro crypto-economists, or cryptonomists, would like to believe that that should have been a catalyst for forward momentum in Bitcoin as an asset. Because we have seen that in other cases where there’s been problems with governments that have led to buying sprees in Bitcoin. It didn’t necessarily materialize.
In the US, you’re looking at a couple different macro economic fundamentals. You’re looking at a stabilization, or even potentially a decrease in asset values of real estate.
Of the higher end in some of the bigger markets. Which has been interesting. Some people think that’s because of the upward pressure on interest rates, some people think its because of the downward pressure on other types of credit, or other psychological elements of fear overall market with the stock market with some pretty dramatic point shift, swings, on a daily, weekly basis.
So when we try to group all of that together into, what is the right opportunity, or is now the right opportunity, we look at 2019 as being a stabilization year.
This is the first month of the year. So we’re going to talk about what we kind of see for the year.
There are some major things that can happen in order to create upward or forward momentum in the market, but we’re sitting and waiting, and we’re going to wait all year long and they’re going to happen slowly, setting the stage for what the future of this market’s going to look like.
If 99% of the assets have to go away, but we have a whole new asset class in STOs or security tokens coming, could there be a complete rebalancing of the market this year?
Could more assets become available through the custodian services that exist out there, giving you access to more?
Absolutely that’s going to happen.
That’s both an element of liquidity and also an element of regulation. So, let’s sit back, let’s watch, let’s take this ride together.
Roger Bryan is not an employee of Equity Trust Company. Any opinions or ideas expressed by Mr. Bryan are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and its affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.
Prior to making any investment decisions, please consult with the appropriate legal, tax, and/or investment professionals for advice. As a self-directed IRA custodian, Equity Trust Company will not provide investment advice or risk assessment of any investment. The digital currency market may experience a high degree of volatility and clients should consult with an investment professional before any investment is made.
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