Hello everybody and welcome to the Roger Report Public Edition for March 2019. Each month, we like to dive into four different elements of this industry.
The first one is the macroeconomic view. When we start thinking about macroeconomic, we can start to look at the earning season, which has been a little bit lackluster this quarter. We’re also looking at some cracks in the macroeconomic environment that shows a potential for recession at the end of 2019 or early 2020. The length of that recession is really unknown.
Now, what are some of those indicators that we’re looking at? A big part of that is a shake up in the auto industry where retail sales seem to be down about 25%, which is having reverberations through a lot of different parts of the economy. People are looking at this as from a consumer sentiment perspective, but they’re also looking at it from an increasing interest rate perspective. You have to balance that against the terms in which car loans are happening right now have been extended from those four and five years to six and seven even. So, people are being forced to keep their cars longer based on the debt that they’ve acquired with that.
Which leads to the last part of that potential down turn in the economy being a debt balloon that’s happening to cause multiple sectors again from consumer debt to mortgage debt, in relation to mortgage interest rates of cooling in the housing market. I don’t know want to sound all doom and gloom because there are some bright opportunities. And there’s some shining lights in the economy or opportunities to buy the tech sector. A lot of these plays getting beaten down with poor outlook are really trying to find a point of rebalancing in order to find forward momentum again in the future. That can sometimes create opportunity. It’s always good to be looking at your overall portfolio, looking at the macroeconomic environment, and your plays in different sectors to make sure that you’re well balanced.
Now, when we talk about a well balanced portfolio, we look at are you one of the 8% of Americans that own cryptocurrency? If you are, we’re going to dive into the three factors that we’re watching that we believe will create forward momentum for Bitcoin and some of the other associated coins that are out there. Those three factors which we cover every month are regulation, ETF’s, and security tokens. We view those as the biggest opportunity for improvement in the overall market. So, let’s go through those.
The regulated token environment has been interesting over the last month. We’ve seen earlier this year one of the biggest platforms come to market being T-Zero which is still only open to accredit investors as they figure out some of the internal workings of how they’re going to bring this to public markets later this year. We’ve seen news of Circle starting to work on security token offerings.
For those of you that this is the first time watching this video, I highly recommend that you take an opportunity to subscribe to our monthly newsletter brought to you by Equity Trust. It’s completely free and you’ll see a subscription button on this page. We will dive into some of those stories a little bit more in depth and share some sources on what’s going on with them in detail.
We still see this as the biggest opportunity because it brings new liquidity to the market once this is available to the public. As an accredited investor right now, you have to have a high risk potential or high risk profile in order to be participating in some of these investment opportunities with the hopes that as they come public that they will create interest from public investors, ie. bring more liquidity into the market which then in turn can be brought back through to stable coins and potentially even Bitcoin.
The next being are ETF’s. While we haven’t necessarily seen any ETF’s get approved for public use by the SEC, we have started to see some of the private offerings get a little bit more momentum behind them and that they’ve even spawned off some secondary opportunities.
Genesis has become the custodian for Bitcoin in Ethereum Bank. Why is this interesting? Well, the banks paying 6.2% interest on Bitcoin in Ethereum deposits. Now, you can go out and do your own research in order to avoid making it sound like we’re recommending using this bank without doing due diligence. You’re going to have to go out and do some of your research or look at our newsletter and it’ll link you to stories about this bank and what they’re doing so that you can make a decision of whether or not you think this is an interesting opportunity for you if you are one of those 8% of Americans that have cryptocurrency holdings.
Why do I keep saying 8% of Americans that have cryptocurrency holdings? Well, that means 92% of the people out there don’t. This leads to a macro-element of the overall cryptocurrency industry. We’re seeing the highest volumes in Bitcoin that we’ve seen in 13 months. Since the last major decline, we’re seeing the most interest in the market that we’ve seen since that decline. That’s a really good indicator of potential forward momentum. We’re not necessarily seeing a mass entrance of new liquidity into the market, ie. new investors bringing capital in to buy previous supply, but we are seeing interest in both content as well as cyclical trading volume increasing without an influx of net new capital.
When we look at that from a macro environment, we know that there’s 5,000 different assets out here in the cryptocurrency sphere. They all lead up to Bitcoin in one way or another, not from a technology perspective, but from a value prop perspective. Maybe with the secondary asset into some of the Ethereums and ripples, or in some of the stable coins in order to have cash in market while not having it deployed in a volatile asset.
When you have 5,000 assets and you really only have 100 of them that should exist, you’re starting to see the remainder of people shed those non-liquid assets at any dollar value that they can to move into those other assets that are going to have a better potential for forward momentum, ie. Bitcoin with all of the momentum behind those big three.
We’ve talked about ETF’s, we’ve talked about equity tokens. Let’s talk a little bit about regulation. Now, regulation is kind of stifled ETF’s and it’s also stifling some of the future projects like backed that wanted to come out with Bitcoin settled future contracts with a current future contract from the CBOE are actually settled in USD, so you’re not playing off of an underlying asset. You’re playing off of the underlying assets bases or volatility in order to try to predict and make money.
We saw last month a slight spike in core asset values. When we talk core assets, we’re talking about the big six that you can get access to from the Equity Trust trading platform through your self-directed IRA and the momentum into those. Now, it’s not been heavy in all of them, but it did create some forward momentum in Bitcoin in Ethereum. Ethereum’s been pegging between $120 and $160 sitting in about $135 today. If you’re a volatility trader, there’s a lot of opportunity there for 5%, 10% swings.
Bitcoin had a little bit of a push up over that $4,000 spot price before falling back down slightly below it right now. Again, all of that building forward momentum across one of the big three hitting. Potentially, this year 2019 we could see all three. Regulation being figured out to allow for ETF’s in future contracts. The launch of publicly available futures in ETF’s contracts, and then also our equity tokens becoming public at the end of the year creating greater liquidity by broadening their horizon for investment into digital assets.
I want to talk about two stories that I think are really important for the market that you can get in full detail on our newsletter. Again, subscribe with the button on this page so that you can get a notice every month when we publish this newsletter. Dive deep into what’s going on with each and every individual coin that Equity Trust offers through their platform.
But, the biggest piece of news was about the Facebook cryptocurrency project and what that’s going to look like. It’s really under lock and key and kind of hush hush at Facebook. Apparently, they’ve set up separate offices, require separate ID cards to get into, none of the staff that’s working on the project is allowed to talk with other Facebook employees or anyone in the general public about exactly what they’re doing.
It’s going to be a really big deal because if you look at Facebook’s potential for being a marketplace for assets, which it already is.
When I say assets, I mean tradable goods. The Facebook marketplace, as a real estate investor myself when we need to rent out properties, I don’t bother with Craigslist anymore. I go straight to Facebook and I’ve got a 100% rental rating out of that. If I need to sell something, yes there’s a lot of apps or something out there, but if I need to get rid of a snowboard or something like that, I throw it up on the Facebook marketplace and I’ve got offers within minutes.
Now, the ability to transact between these individuals is a little bit more complicated. I’ve got to go out. I’ve got to meet them somewhere. I don’t want to invite them to my home. We’ve got to trade cash. There’s risks associated with that. What if a currency could be used in the middle that could be settled in USD? We call it maybe a Stable Coin. It’s pegged to value of USD, so there’s no volatility that would allow me to do online transactions of services and goods, settle that into a cryptocurrency that’s got a lot more security associated with it, and then take that currency and trade it back into USD or whatever your denomination is in the country that you may be in. That’s kind of a big deal.
Seeing a major player like Facebook, there were rumors that it was going to be Amazon first and we don’t know if Amazon is or is not working on some of these, but Stable Coins will provide new outlets for the trading of goods, and then create more opportunity for liquidity that those people that own those assets could then move into the Bitcoin markets with greater ease and efficiency.
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