In the world of crypto it is absolutely essential to do your own research. My advice, read a lot but approach everything with a critical mind.
Here are some stuff you should check out this week.
Nick
A tale of two recoveries
This week I’ve been thinking about how the financial markets have recovered from the crash of early March. So I pulled a chart to compare the Bitcoin and SP500 recoveries.
The charts look similar. But the more interesting idea is that both recoveries are driven by the Federal reserve pumping money into the system. Except that:
For the SP500 the Fed’s money literally props up the price in the short term.
While for BTC it is the long term destructive effects of the Fed’s actions that is pushing the price higher.
Folks, you don’t need to put on big leverage when you invest in Bitcoin
I’ve read this interesting story in Ars Technica about how hedge funds focused on cryptocurrencies are not performing so well.
One of the reason cited is that many of those funds are getting crushed because of the amount of leverage they put on each trade.
Obviously Bitcoin and other cryptocurrencies are volatile. That means if you are an investor in the space, professional or otherwise, you can’t avoid very strict risk management. And one of the basics of risk management is to size your positions according to the volatility of the market.
Don’t put 100x leverage on your trades. Understand how much you stand to lose in case of a volatility spike. Don’t be overconfident.
Skip this at your own risk…
What do you think about crypto?
In this edition of the Crypto Long And Short newsletter Noelle Acheson is pointing out some interesting results from a survey about people’s trust in crypto around the world.
Probably the most striking data in there is the geographic disparity of the opinions about crypto. Asia’s average trust in crypto is 60%. Compare that to the global average which is 48% and the US which is only 34%… You can tell where things are happening and it’s not in the old world.
See more details of this survey and what Noelle has to say about it in the link below.
Another one bites the dust
Telegram’s CEO Pavel Durov announced that they are abandoning the Telegram Open Network. This is following a long battle with the SEC over their token distribution.
You see this is why Satoshi Nakamoto was so wise to stay out of the spotlight and eventually withdraw altogether. Bitcoin does not have a parent company. Bitcoin does not have a CEO. There is nobody the SEC or the Congress can summon. Nobody they can fine or imprison.
Bitcoin is resilient. This is all you need to know.
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