Update on Cryptoassets as of February 17th, 2021 By, Van K. Tharp, PhD

 

Market Summary

Last month, the Bloomberg Galaxy Crypto Index was at 1414.37, following a low of 217.82 in early March. BTC had made a new high yesterday at $51,630.86. Today (February 17) and the index was at 2,295.61. That’s a huge gain for one month.

 

Let me put this into perspective. In late 2017, I said that cryptoassets were the biggest institution revolution since the Industrial Revolution and that they represented the investment of a lifetime. Institutions, however, were not ready or capable of participating in that revolution so they “pooh-poohed” it. The SEC decided that most altcoins were securities which precipitated a huge bear market. By the end of 2018, cryptos had undergone an 85% decline and BTC hit a low price of $3,236.76 on Dec 15, 2018. But then look what happened.

  • BTC was up 92.71% in 2019
  • It was up 305.94% in 2020
  • And it’s up 75.42% in less than 50 days of 2021.

Last July, we decided to open a position in GBTC with the money that new Super Traders paid us. We would take all the risk but would credit them with 79% of the gains. Those who paid $10,000 in tuition were able to finish ST Foundation without paying an additional $10,000 in tuition because of the gains. And those who paid $25,000 in tuition were able to pay for their ST Foundation and ST Awakening phases.

What did I say in 2018? There was actually a period from October through November last year when I made over $3 million in 7 weeks. Cryptos are the investment of a lifetime.

While BTC could go up another 10 fold in the long run, I doubt that it will go much over $100,000 this year. Our Super Trader BTC system currently has a stop at about $27,070 which means we only have a 4R gain left this year. Our system entered at $9156 on May 6th 2018 and we currently have a gain of 437%. We’ve held the position for 286 days and it’s only 12 days from being the longest we’ve held a position.

But the opportunity of a lifetime is not over because now the altcoins are starting to move. Here are a few examples, and this is just the movement in 2021.

  • BNB 289%
  • ETH 144%
  • LINK 178%
  • SNX 215%
  • AAVE 397%
  • CND 145%

And remember those gains are just from the 48 days of 2021.

I didn’t sell my altcoins during 2018 but just continued to slowly accumulate about $2,000 worth per month. That might not sound prudent and my account wasn’t at breakeven until about Nov 14, 2020 – but look at what’s happened to it since that time. The dotted red line in the chart below is breakeven.

Courtesy: https://www.bloomberg.com/quote/BGCI:IND

I think that there are a number of altcoins that could go up 10 times or more during the rest of 2021. Now we might have a decline of 40% or more during the year, but it probably will be short-lived with a very quick recovery.

As a result, we have made another offer to help people pay for the Super Trader Program and learn about cryptocurrencies.

1) Our prior offer involved a stock market account with GBTC and we’re slowly getting rid of that position because there are now much better opportunities.

2) We’ve opened up a company crypto account.

3) We’ve opened positions in 10 different cryptos starting on February 9th and we plan to open another 10 by the end of the month.

4) That account right now is up 17.7% in about a week and our hope is to make 1,000% this time. But again, we have no idea what will happen and it could lose money – though the Super Traders who participate will not lose any – VTI is taking all of the risk.

5) We are currently placing new money coming in from people joining the Super Trader program into the crypto account. We will keep these new positions for six months and we expect our returns here to be better than the returns with GBTC.

6) We cannot guarantee our expected returns, but we are taking all the risk and any gains will help people pay for the Super Trader program.

7) NOTE – The ST program has filled up in the last few weeks but we are accepting applications for people to join a waiting list with start dates in about July. But again, we have no idea if will be doing a crypto promotion in July.

Why are we doing this? There are two reasons 1) I have a strong belief that this is probably the investment opportunity of my lifetime and 2) if we make money, then why not share it with our clients. We actually believe that sharing the gains and taking all the risk increases our chances of making huge returns.

The table below tracks the price of five major cryptoassets across three generations of the technology now along with Bloomberg’s index:

  • Bitcoin, a 1st generation cryptoasset,
  • ETH and NEO, 2nd generation cryptos, and
  • Iota, a 3rd generation crypto
  • Holo (HOT) – I replaced Skycoin because it is pretty dead and there probably won’t ever be a market in it for US Investors.
  • BGCI Index – I’ve also started including BGCI prices in the table.

Date of the All-Time High Closes
*Jan 1 ** Feb 16, 2021 ***Feb 12, 2021 **** Dec 8, 2017 ***** May 29, 2019 # Feb 16, 2021

Look at the huge changes in a single month, or over the last two months, and you should have no doubt that the crypto bull market is starting to speed up.

The following table tracks the amount of money in stable coins in the top 100 or which have a market cap of over $100 million. The percentage of the total crypto market cap indicates one measure of health for the crypto market.

Since last month we had about a $2B gain in the market cap (over $100B now) of stablecoins.

* Bitcoin was as high as 90% of the market cap of all cryptos at the beginning of 2017 to as low as 32% at the top of the market. Part of the difference is that there are now nearly 2000 cryptocurrencies. So, the number keeps going up even though the market cap goes down.

** This was the peak of the crypto market in terms of market cap. Data via Tama Churchouse, Asia West Investor email on 4/11/18

& Tether is not included in the top 5 as of Sep 20.

Some interesting changes happened this month. CoinMarketCap.com listed 551 coins with a market cap of $25M. Eight months ago there were 133 coins with a market cap above $25 million. That shows the bull market in the other cryptos has started.

As I have mentioned previously, initial coin offerings were all the rage in 2017 until the SEC decided that cryptos were securities and ICOs were illegal. Now the new rage is Decentralized Finance and this group includes these new coins in the top 75: Wrapped BTC (WBTC), AAVE, UNI, DAI, YFI, COMP, SNX, UMA, CEL, LRC and SUSHI. I’m sure some of these coins will become buzz words in the near future.

I used to say that I only trusted those coins in the top 50-100, however, between Jun 2020 and the present, many coins fell out of the top 100. Some of them didn’t fall far but some of them fell out of the top 500.

We are now following 241 coins in our crypto model vs only 115 three months ago. We now include most of the top 200 cryptoassets in market cap. There are still some for which we cannot get price data – or at least good consistent data. Here are the last four months of data –

Notice that we now have 44.8% being strong bull versus 1.7% three months ago.

This chart shows the 15 top and bottom cryptoassets. First, a word of caution. I am presenting the results from an Excel spreadsheet but I’m never quite sure about the data quality. Two months ago BTC was #1, but for the last two months, BTC has a Market SQN of 1.00. A second spreadsheet showed BTC with a Market SQN® of 2.95 which would still keep its number as the top-scoring crypto. I still have no idea what’s happening with our data.

We now have 164 cryptos with Market SQN® scores above 1.0 and 49 with a score over 2.0. Last month it was 78 and 10, respectively.

BTC was up 92.7% in 2019, 305.94% in 2020, and in the first six weeks of 2021, it’s up 74.22%. Let’s contrast that with the other hedge against the USD and disaster, gold. Gold was up 20.94% in 2019, up 18.32% in 2020, and it’s down 5.1% so far in 2021. The path of safety is now BTC.

Gold has about 10 times more market cap than cryptos right now (even though cryptos are now over a trillion for the 1st time). If all of the money in gold went into BTC, BTC’s price would be about $370,000.

The following table shows the BTC year change since January 2010 –

People talk about BTC being volatile and risky. But where can you find something that has made over 1,000% in 3 of the last 11 years, over 100% in 8 of them, and had only two losing years? There is only one other place than BTC with anywhere near equal performance – other cryptoassets.

If you had bought BTC at the beginning of 2012 (well, not at the very beginning), you would have turned $1,000 into more than $7.1 million (up $4.5M last month). Our Super Trader BTC system only has three losing trades has outperformed buy and hold. The system entered its last position on May 6th at $9,156.06 and it’s currently up 437% on the current position.

I believe there are three ways to rank the top cryptoassets:

  • I’ve already given you the top cryptos based upon the Market SQN scores.
  • The next way would be to list the top cryptos based upon the gains over the last 180 days. (There are some cryptos that might become this group, but we don’t have 180 days of good data for many.)
  • Another way might be to rank them in terms of the gain over 2021 and I’ve already shown you a few of the coins that are up over 100% this year.

Remember these are 30-day percent gains. This is probably the easiest market possible to make a lot of money. You could, however, just as easily enter a position and immediately have a 25% drawdown – which could cause you to exit and then miss out on some nice gains. If you don’t have strong beliefs about cryptos like I do, crypto volatility will test you.

Finally, here is a chart showing the price of BTC since 2016. It used to have a huge gain at the end of 2018, but now look how that compares with the current price.

This newsletter makes no recommendations about cryptos but is a free service to the VTI community. I personally own positions in most of the cryptos mentioned in this newsletter, however, both my primary position and VTI’s primary position are in GBTC (Grayscale Bitcoin trust). In addition, I have a substantial position in many cryptocurrencies in the top 100 in market cap and probably everything mentioned in this newsletter.

Until mid-March when we’ll do our next crypto update,

this is Van Tharp.

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