I'm now an analyst on our sister site, FA Trader. On that site, I don't post charts, but do fundy posts. Yes, you heard that right. I'm dusting off that ol' MBA and trying to behave smart .
I'm going start posting them here as well:
Before I write some more formal articles, the first of which is coming tomorrow, I want to discuss a common question and statement oI receive from those less knowledgable regarding cryptocurrency:
'Why so many coins?. Certainly we don't need all these coins. One day we'll see one.'
In some regard, I agree with the value of the question, for goodness sake there are thousands of cryptocurrencies!! But the second part, the statement, is unlikely true.
First, all coins are the result of a 'project'. While there are a few projects intended to be humorous or even a scam, most are legitimate explorations. That doesn't mean each is 'good'. Just as many startups go after the same goal (new technology, new markets, etc), there are many overlaps in coins. And, some projects are just failures.
To that end, while there is overlap among those thousands of coins, there are thousands of goals and with that 'functions'.
Here are some examples:
1) Some coins actually represent a business, and some of those coins put off dividends to holders in the form of more coins tradable for fiat.
2) Some coins are rewards for a function. I used to rent out my harddrive to a company like dropbox; a company without a data center, and I would received coins in return. There are coins providing a blockchain based function from supply chain, to banking, to identity and security, and I can go on.
3) Some coins are working on perfecting the idea of 'smart contracting' which is starting to affect the economy in amazing ways. I'll discuss this concept much later.
And many more....
In regard to some of the above, Bitcoin is the most 'dumb crypto'. It has little extra function rather than as a means of transferring value. Yet so far, Bitcoin has proved to have the most staying power. it is the coin of choice for banks and funds moving into the sector. It is the coin with the highest liquidity. But it is likely never to pay any of the functions discussed above.
So, I do guarantee that some coins are likely to go away. On EWT, I have tracked many counts that have already failed in the bear market we have seen since our December 2017 top. But actually very few. Most have held support at some level. If the bear market reasserts itself, we will likely see more fail. But I am willing to promise that we will not see most coins go to zero anytime soon. For one, there are thousands of problems blockchain is solving, and most of these solutions will use a means of exchange, or 'coin'.
But there is immense risk in any coin. Cryptocurrency is the most volatile underlying on the planet as far as I can see. I use Elliott Wave as one tool to discern which will survive. As insiders on projects, and developers participate in the development of these projects, they are also participants in the trade. Their sentiment as well as that of the broader market leave a sentiment 'trail' in charts. But I also do my best to learn about the projects. I use my product development expertise to try to understand whether the project is trying to solve a real problem, or a technology searching for a purpose to be.
In Blockchain, we are seeing one of the next key developments of the internet which will change how all of us, whether interested in crypto or not, will interact online. I assure you. And, wherever we arrive, or never arrive because this development will be a perpetual story, will not likely involve one coin to rule them all.