Helicopter parents. They never let their kids out of sight. They fret at the possibility of any potential danger, striving to protect their snowflake charges from harm, reassuring the child so they know just how special, precious and helpless they are… and that they can never, ever fail.
Of course, this backfires horrendously, resulting in what we see today: leaders who are entitled silver-spoon-fed adolescents conditioned to require constant coddling — not to mention the fact that their parental stimulus packages have taught them that everything in life is free. Including bailouts. Money please!
And who are they really “protecting” anyway? Kids are resilient. It’s adults who struggle with change.
As the United States celebrates Independence Day, I ask the question: Do you feel… independent?
Or is your government a helicopter parent, standing over your shoulder and second-guessing every financial decision you make?
You’re reading Cointelegraph Magazine. So I’ll make an educated guess.
It’s time for a change in your relationship. It’s time your government allowed you to grow up.
Adulting is hard
For Americans, Independence Day is supposed to be about hot dogs, fireworks, and the celebration of the birth of a new nation founded on principles of freedom and equality.
Obviously, that was pre-COVID. Now we’re asking to unhuddle our masses through social distancing, and while we may still yearn to breathe free, we’re on physical lockdown as well as suffering increasingly draconian financial oversight from a variety of acronymed bodies.
The tools of decentralized trade, however, may yet overcome the tyranny of our financial system, enabling a reformation of economic interaction that steers us away from centralization and toward more just and equitable means of controlling our own financial futures.
The first stage of this “growing up” process, Barney Mannerings, co-founder and CEO of decentralized derivatives exchange Vega Protocol explains, came about through the creation of Bitcoin: a peer-to-peer network that enables the permissionless and trustless exchange of value.
This early step in the democratization of money was followed by the tokenization of assets and the decentralization of a range of financial tools. The next step, he feels, is the decentralized exchange. Such exchanges allow peer-to-peer trade without the need for any central intermediators to hold our hands and ensure our “safety.”
Get your DEX on
DEX (decentralized exchange) technology allows participation on equal footing with the bigwigs, Mannerings says. Users need no longer be railroaded into a prescribed batch of menu offerings from a select group of dominant companies; instead they can access a smorgasbord of investment choices to suit different appetites for risk and reward.
Mannerings explains that some centralized services allow users to take positions with low or no fees because they pick up money on the flipside for helping their clients to bet against the crowd.
“Look at Robinhood,” he says. “They make money by selling your order flow to some hedge funds. They don’t even make money off charging you a fee, they make money because the hedge funds want to know what you’re doing so they can make money. That means you’re not playing the same game as everyone else and you’re not on an even footing.”
With a DEX, everyone gets the same information, the same tools for risk, and a range of tools that are normally hidden from people in traditional markets, Mannerings says. This theoretically offers a stronger guarantee of fairness without the possibility of front-running.
Mario Blacutt (often writing as “Berzeck”) is the founder of the Nerve Network and the decentralized exchange NDEX. He explains that DEXs can offer unique opportunities for new projects as well as investors. Small projects with strong potential can be listed on decentralized exchanges without having to wade through a slow application process, and without paying large entry fees that can be unreasonably demanding — especially in the early stages of a project’s development.
“There are a lot of stories of smaller, good projects that do not maximize their potential because they never get the opportunity to be listed. We wanted to break that pattern and offer smaller projects the opportunity to be listed for free on our exchange.”
It’s not just centralized exchanges that stand in the way of financial autonomy, either. Governments have been known to meddle in pocketbooks from time to time too. Mannerings explains that it’s “Like what happened in Europe after the financial crisis; some governments took money off some of the wealthiest people to help pay for things. When they decide that’s going to happen, or that you can’t spend it a certain way, or that they want to freeze your money, you suddenly discover it’s not really yours. You don’t really have that full control.”
The individual’s power over their own finances has essentially been granted (or withheld) at the whim of banks, financial institutions, and governments. Kain Warwick, founder of the Synthetix asset platform, explains that it’s only in the last few years that this has begun to change. “The promise of decentralized self-sovereign tech is being realized, which is exciting.”
If you have your funds in the bank, PayPal, Venmo or other centralized services and they decide they don’t like what you’re doing, they can just cut you off, Warwick says. “You’re guilty until proven innocent.” Censorship-resistance is a critical feature of decentralized platforms, he continues. “That’s one of the huge promises of Bitcoin originally… that you could make payments anywhere over the Internet and you didn’t need to rely on some third party as an intermediator.”
Loi Luu, co-founder and CEO of Kyber Network, seconds this message of financial independence. With Kyber, users can make connections on the blockchain that are fully transparent and permissionless. “Regardless of where you are, what’s your background, you can always interact with Kyber, because it’s fully powered by blockchain.” This has the added advantage of making trading safer, easier, and more accessible, he says.
And it’s all about user choice for Alex Wearn, co-founder and CEO of IDEX. The team’s goal is to build an exchange that has the same user experience as centralized offerings, but doesn’t require you to hand over control of your private keys. Users can choose their own custody solution, whether it be hardware wallets for retail clients or large-scale custodial solutions for institutional needs. “It’s really all about giving users that choice and catering to their needs rather than forcing them into a one-size-fits-all option of the exchange holding funds.”
Not your keys, not your coins
Warwick explains the problem of centralized crypto custody. “We see it every day. Someone puts value into a centralized service or to a custodial platform and they lose access to their coins. If you don’t have the private key to your assets, then you’re relying on someone else to keep them safe. In some cases that’s fine, but ultimately, the ability to have control of your own assets, to make that decision for yourself to have full self-sovereignty, is where the power comes from.”
It’s time for governments to treat us like adults, Mannerings says. Users should be able to evaluate their risks and choose products and services that offer freedom and control.
Loi Luu advises users to be their own advocates throughout this learning process and to approach the newfound tools with caution. “Controlling your own wealth is good if you know what you’re doing, as in, you know what is required to be fully in control of your wealth, you know how to keep your private keys safe, you know how to do a backup, and you know which site is a phishing site, so you’re not falling for scams. But if you don’t have enough knowledge or technical background, controlling your own wealth on blockchain might be risky.”
Berzeck explains it’s a pillar of the blockchain technology ethos:
“You own your money, but you have to be aware of the responsibilities of owning your own money. You have to be careful with that freedom.”
This transition to greater individual monetary responsibility will take time, he says — probably more than we want to believe it will. He suggests it will take at least a generation to change society’s ingrained mindset about how banking and money works today.
What’s so great about the DEX model?
Mannerings worked in traditional finance, which he admits offers technologies that are incredibly useful but deeply inaccessible to those on the outside. In his line of work, managers would sell derivatives to small companies — but were buying them from a different desk, in a chain of buyers and sellers who all skimmed profits in additional layers of transactions. “The size of the difference between the market price and what these people were getting it for was huge. That was a problem but there wasn’t an obvious solution until the crypto stuff came along.”
Vega co-founder Tamlyn Rudolph witnessed this privilege of access during her time in traditional markets. When she was trading, she was able to register directly and trade on her own account, unlike most people. She saw the huge discrepancy between her own knowledge and access to the market compared to the paltry offerings her family and friends accessed.
A decentralized platform puts tools into the hands of the people, Rudolph says. With the Internet of Value, parcels of risk can now be swapped around, allowing users to “carve out risk” for themselves. “Own your own financial risk, be able to understand it, carve out what you don’t want, and take on other people’s risks that you want to help with.”
Berzeck speaks from an entirely different experience, having lived under what he describes as a corrupt regime in Bolivia until a recent coup began to change things for the better, he says. “Many bought the socialist dream,” he recalls, but it followed a catastrophic path similar to the one Venezuela faces now. “It works at first… but long term, it always fails. It’s been proven again and again in many different countries.” The president of Bolivia, Evo Morales, enforced the heavy centralization of markets, controlling every aspect of the financial system — ostensibly for the protection and safety of the people, Berzeck says.
Cryptocurrency offers the exact opposite of overbearing governments, he suggests. “Banks closed my accounts because they wanted to ‘protect me’… I’ve seen firsthand what total centralization and control can do to individuals. That’s why I value the kind of freedom that blockchain offers.”
All hands on DEX?
The future is looking very bright for the DEX movement, Loi Luu says. The Kyber Network has enjoyed an incredible eight to ten times growth year-over-year due to massive expansion in DeFi and related applications. “When DeFi grows, Kyber grows,” he says. The ease of use of decentralized applications has improved significantly in the last couple years, too.
Both Luu and Berzeck caution that decentralized solutions won’t take over completely any time soon. Both solutions will co-exist, with centralized solutions remaining the main regulated on- and off-ramp for fiat to crypto interaction. Berzeck explains, “We should be aware that centralized exchanges and DEXs will coexist and probably complement each other. We should not try to artificially accelerate the process. The technology just isn’t there yet.”
Synthetix’s Warwick agrees. “It’s still very high friction to use a DEX,” he admits. A user may choose to use a DEX, but it’s not the solution for everyone. “I think that’s coming. With scaling and other things we’re seeing, we will get to a point where the status quo moves to DEXs.”
Darren Liu, lead developer of Binance’s DEX solution, Binance Smart Chain, says technology tends to move in waves, with DeFi currently drawing the most attention and activity. The Binance Smart Chain offers new tools for DeFi that he says will enable more users to join the trend.
For true mass adoption to happen, Berzeck says it’s all about what works for users. If it reduces costs to clients, they will be interested in it.
“That’s what companies want. They don’t care about dogmatic things. They don’t even care about decentralization. The only thing they care about is to reduce costs and increase income.”
“So, we give them a way to reduce costs and prove that blockchain technology is able to reduce costs for them. That’s the way we should face this problem of how to increase mass adoption.”
Banks and financial institutions still hold the monetary keys in the form of liquidity, Mannerings explains. Money is controlled in just a few places, giving those parties the power to run the show. “That power is almost accidental. They were in the right place at the right time, they have support from regulators, but they’re fundamentally not doing anything super-special.”
It’s probably one of the reasons why finance has been less disrupted by the Internet than most other aspects of the modern economy, he suggests. “Yes, you can go on online banking, but the actual conduits of money have not changed much as a result of the Internet, just the way you present it to users.”
“It’s waiting for this decentralized technology where you can say, we no longer need a bank, we no longer need an exchange to sit in the middle as an organization controlling this. There’s a protocol that sits in the middle and satisfies all the different players, and now all the people who might want to trade can get together and say ‘hey this is a thing we want to trade now’ and they can trade. And they don’t have to trust each other, they can put up their margin on a decentralized protocol.”
“They can do that without asking someone’s permission and without enriching those guys in the middle.”
Kyber’s Luu is excited to see this transition taking place. “You really feel the freedom. The fact you can do a loan and then contribute to some asset management protocol blockchain within one or two minutes without waiting for weeks to get approval from banks or financial institutions, it’s just mind-blowing.”
Helicopter parents and helicopter money
We’re all familiar with the concept of helicopter money, in the wake of the massive economic stimulus packages (“bailouts”) of 2009 and 2020. Free markets aren’t free. They’re coddled by the Fed, given sugar by tax-cutting politicians, and only one billionaire — Chamath Palihapitiya — seems to have the adulting skills to suggest that we should just let the failing companies and executives learn by failing.
“Who cares? Let them get wiped out. Who cares? They don’t get to summer in the Hamptons? Who cares?”
It all traces back to those helicopter parents that end up doing their child a disservice in the name of safety. “There’s a tendency to assume people need to be protected from themselves.” Mannerings says. “The problem is the more you go down that route, the more it looks like they needed protecting.”
When everyone is told that every financial product in the world is safe… and one turns out not to be safe… people will lose funds, resulting in the clamor to control and regulate even more, he says. It’s a well-worn road that leads to totalitarianism.
Mannerings compares a night out bowling to a day out skiing as an analogy for financial awareness. “You go bowling, you don’t expect it to be dangerous,” he says, you just go have fun and get drunk and it’s fine. “But if you go skiing, you know it’s dangerous, and so you treat it with the right respect.” You might take lessons, start easy and avoid difficult runs until you are ready.
“It’s not that the people who go skiing are smarter than the ones who go bowling, it’s that they understand what the risks are and because they know they are risks, the vast majority of them properly evaluate what they can do, and don’t do things they shouldn’t.”
The same is true, he says, of finance. “Stop treating people like babies” and educate users with greater access to information.
“I think you’ll find people don’t need anywhere near as much babying as some people like to make out, if you arm them with information.
Independence Day is a great time to reflect on that. America’s been founded on the very idea of freedom… You’ve got to trust your citizens and give people that freedom. And they won’t let you down.”
BAT, Stellar Lumens, VeChain Price Analysis: 07 August
Bitcoin’s latest attempt to climb on the charts has been met by some degree of success, with the world’s largest cryptocurrency, after a long time, managing to hold a level above the psychological resistance of $10,000. At press time, Bitcoin was being traded at $11,736 with a trading volume of $8.3 billion.
Such success was underlined by the fact that while BTC failed in its attempt to sustain a breach of $12,000, it didn’t fall below $11,000, implying that Bitcoin is again building up strength before its next effort. The same had a profound impact on the performances of alts like Stellar Lumens, VeChain, and Basic Attention Token.
Stellar Lumens [XLM]
Stellar Lumens, the crypto-market’s 14th-largest crypto, hasn’t had the best of times over the past 8-10 months or so. In fact, while XLM was once a regular in the top-10, it isn’t anymore, with XLM overtaken by the likes of Tezos, Cardano, Chainlink, and Crypto.com Coin. However, true to its altcoin credentials, the month of July came as a relief for XLM, which is why at the time of writing, its YTD gains were as high as 135%.
Interestingly, while XLM had stagnated somewhat towards the latter half of July, Bitcoin’s resurgence in August came as a godsend. In fact, at press time, XLM was up by over 12% over the last week.
The cryptocurrency’s technical indicators were evidence of the recent movement as while the Parabolic SAR’s dotted markers were well under the price candles, the Awesome Oscillator pictured a lot of momentum in the XLM market, despite the fact that the histogram was largely bearish.
On the development front, there hasn’t been a lot to report. However, U.K-based challenger bank Revolut did announce XLM support.
Basic Attention Token [BAT]
Brave browser’s native crypto, Basic Attention Token aka BAT, has done well for itself since the catastrophic market crash back in March. In fact, while recovery has been slow, a look at its charts would reveal that BAT had been on a gradual uptrend for a long time. However, the same seems to have stagnated over the past few weeks.
While BAT did gain on the back of Bitcoin’s latest resurgence (7% in the last 5 days), the price hike wasn’t enough to rejuvenate the dormant uptrend on the charts.
BAT’s technical indicators seemed to correspond with such an observation as while the Bollinger Bands revealed that BAT might continue to trade within a tight channel, the MACD line was pretty close to the Signal line.
The crypto was in the news recently after Brave’s new partnership with Japan’s BitFlyer meant that local users will finally be rewarded BAT.
The crypto-market’s 18th-ranked crypto, VeChain has been one of the market’s best-performing assets over the course of 2020. In fact, at the time of writing, VET was noting YTD gains of over 275%. Like XLM, VET too surged on the back of the altcoin market doing so well in the month of July.
While VET had been on a downtrend since it hit a local top in the second week of July, its recent hike of 22% was pushing the crypto into yet another uptrend on the charts.
The latest movement had a significant effect on VET’s indicators as while the Chaikin Money Flow surged over zero to underline the fact that there were higher capital inflows, the Relative Strength Index was climbing towards the overbought zone.
Analyst Explains Reasons Bitcoin Price Could Fall Back to Lower $10Ks
- Bitcoin is facing risks of a price correction towards $10,000, according to a TradingView analyst.
- He spotted the cryptocurrency trading near its weekly resistance level, noting that it may amount to profit-taking action among traders.
- Nevertheless, he also asserted that Bitcoin is in a bull market, adding that the price would likely bounce back from its $10,000-lows.
Bitcoin’s efforts to log a breakout move above $12,000 may fail as selling sentiment grows near the said level.
The benchmark cryptocurrency risks breaking lower after retesting the $12,000-mark, says a TradingView.com analyst who analyzed the level for its historical significance as a resistance. He said the BTC/USD exchange rate is near its weekly price ceiling, adding that any efforts to push the pair above it is a bad strategy.
“Whether Bitcoin has the momentum to break above $12,000 without longer consolidation, I have no idea. But, buying at the current price is certainly not the best action to take. [One] should always buy at pullback or on the consolidation breakout,” the analyst wrote.
Bulls Playing a Blind
He concluded after analyzing three typical trading behavior as Bitcoin trades a hundred dollars below $12,000. Either a trader is opening new long positions near the weekly resistance, or s/he is shorting the rally with risky leverages – a “revenge” for missing out the Bitcoin’s second-quarter bull run.
And then, there is a third kind that is taking selling the top to secure short-term profits. The analyst favored the third strategy, stating:
“In my opinion, the best approach is certainly not the 3x actions mentioned above, but to take some profits off long positions at resistance or perhaps put a trailing stop.”
A Bitcoin Pullback to $10K
The analyst expected the next pullback move to push prices down towards $10,000. He attached a chart that showed the future potential moves for the cryptocurrency.
It showed the bitcoin price attempting a bounce-back towards $12,000 from a so-called “minor support” level. Nevertheless, an extended move to the downside took the rate to an area called “better support.” The range lay in the middle of $10,265 and $9,802.
“Personally, I would only consider once the market touches around $10,200 followed by a change of structure,” the analyst added. “Only then I will buy on the pullback with a target of at least 2:1 risk-reward.”
He further stated that a pullback move might not necessarily end the bull market. Bitcoin may keep growing higher towards $12,000 or beyond. The strategy is only about spotting the change in short-term bias to secure interim gains.
Bitcoin holds a long history of posting 30-40 percent bearish corrections after every parabolic move to the upside. Other analysts also see the cryptocurrency keeping up with its previous trends, especially given the higher bids for safe-haven assets against a falling US dollar and bond yields.
“Selling your BTC now on a 13% pullback is like selling on the red circle on this chart. Insane gains are coming, don’t get shaken out,” said Lark Davis, a cryptocurrency analyst.
Bitcoin was trading at 11,791 at the time of this writing.
Two Macro Calls That Could Propel Bitcoin to $14,000 This Year
- Bitcoin may hit $14,000 in the coming quarter.
- The analogy appears out of two extremely bullish calls made for the US dollar and Gold.
- Bitcoin has shown an extreme correlation with the two macro assets this year.
Bitcoin may have some fuel left to continue its 2020’s run-up towards the $14,000-mark.
The level–last approached in 2019 against the backdrop of an escalating US-China trade war and falling yuan– has fallen back into the radar of Bitcoin bulls. Only this time, the weakening US dollar has replaced its Chinese counterpart as the cryptocurrency’s bullish catalyst.
Meanwhile, fears of inflation caused by the US Federal Reserve’s dovish policies have improved Bitcoin’s upside prospects. Bids for safe-havens have gone higher as the central bank maintains its benchmark rates near zero, crushing bond yields. That has sent the price of Bitcoin and its traditional hedging rival, gold, up north.
At the time of this writing, BTC/USD was trading 64 percent higher. The XAU/USD, on the other hand, was up 36.93 percent.
An Ugly US Dollar Quarter Ahead
Technical readings see Bitcoin and gold as overbought assets. In simple words, they both remain under the risks of downside corrections caused by profit-taking behavior. Traders may sell them at their local tops to secure short-term profits, thereby pushing the demand for the US dollar higher.
But then, one analyst sees the greenback in a dangerous zone. Win Thin, the head of global currency strategy at Brown Brothers Harriman, told CNBC that the dollar might drop further into the current and the next financial quarter, blaming the US’s inability to contain the COVID pandemic as effectively as Europe and other territories.
“This is one of the rare occasions when Europe will actually outperform the U.S.,” the analyst said. “The stars are aligned against the dollar.”
He added that the US dollar index, which is on track for its seventh weekly decline in a row, may drop to its 2018 low before the end of 2020.
“I do suspect given the cyclical, we’ll test the downside of that range, and for the DXY [dollar index] that’s around 88,” Thin explained. “So, we’ve got some ways to go.”
The negative correlation between the US dollar index and Bitcoin has grown since March’s global market rout. Therefore, any weakness in the greenback could point to a more substantial Bitcoin ahead, bringing its psychological upside target of $14,000 in proximity.
A Bullish Gold Call – and Bitcoin
With sentiments against the US dollar, the first asset that is to benefit the most is gold. EB Tucker, the director of Canada-based Metalla Royalty, told Kitco in his latest interview that he sees the precious metal hitting $2,500 by the end of this year.
“Normally I would say [the bull run is overheated] but what I’m seeing in the daily action is that gold is rising in a very measured way and is not meeting much resistance, so when that’s happening you just step out of the way and let it go, that’s what you do,” he said.
Mr. Tucker had earlier predicted gold to hit $2,000, a forecast that came to be true earlier this week.
A booming gold prediction typically leaves Bitcoin under a similar bullish spell.
The cryptocurrency’s one-month realized correlation withe the precious metal hit 68.7 percent on August 6, its highest this year. Given the relationship continues further into the year, Bitcoin may end up hitting $14,000 as gold hits $2,500.
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