Lets use this insane new technology to develop,, an insane new technology.

First, lets detail the reasons why I prefer algo trading to discretionary..

Trading bots are effective in crypto markets for several reasons:

Speed: Trading bots can execute trades much faster than a human trader could, as they are able to process large amounts of market data and execute trades within milliseconds. This speed can be especially important in fast-paced crypto markets, where prices can change rapidly.

24/7 Trading: Crypto markets never sleep, and trading bots can be programmed to run continuously, allowing them to take advantage of market conditions 24 hours a day, 7 days a week.

Reduced Emotions: Trading bots are not subject to emotions like fear, greed, or excitement, which can lead to impulsive or irrational trading decisions. This can result in more consistent and profitable trades.

Backtesting: Trading bots can be tested and optimized using historical market data, allowing traders to evaluate their strategies and refine their approach.

Automated Decision Making: Trading bots can be programmed with a set of rules and conditions, and they will execute trades based on those conditions without the need for human intervention. This can help to remove the emotional and psychological biases that can impact human traders.

Now we need a platform to host the code and trade for us..

TradingView does a great job of exactly this! TV uses a language known as pinescript, so we must prompt Chat GPT to utilize specifically this language such that it can be loaded into TradingView.

Here is the prompt I provided!

and the output I was provided:

study("1 Hour Bitcoin Trading Bot")

// Define the strategy variables

fastLength = 10

slowLength = 20

threshold = 0.02

minProfit = 0.05

minLoss = -0.03

long = false

short = false

// Calculate the fast and slow moving averages

fastMA = sma(close, fastLength)

slowMA = sma(close, slowLength)

// Check if the fast moving average crosses above or below the slow moving average

if cross(fastMA, slowMA)

if fastMA > slowMA

long := true

short := false

else

long := false

short := true

// If long is true, enter a long position

if long

strategy.entry("Long", strategy.long, stop = strategy.position_avg_price * (1 - threshold))

// If short is true, enter a short position

if short

strategy.entry("Short", strategy.short, stop = strategy.position_avg_price * (1 + threshold))

// Exit the current position if the fast moving average crosses back across the slow moving average

if (long or short) and cross(slowMA, fastMA)

strategy.close("Closing position")

// Exit the current position if the profit or loss reaches the minimum target

if strategy.profit >= strategy.position_size * minProfit

strategy.close("Min profit reached")

if strategy.profit <= strategy.position_size * minLoss

strategy.close("Min loss reached")

Now, lets load this into TradingView and see how it does. Here is how:

Open > New Strategy > Paste the Output!

One can then hit "Strategy Tester" to see how the code performs!

Although the output it provides is very basic, the framework is solid. Utilizing montecarlo engines and other tools, it can be developed further!

Money follows developers. Traders follow money. Lets start hunting!

This article will be sharing and expanding upon information shared in:

https://www.electriccapital.com/resources

Developers play a crucial role in cryptocurrency innovation because they are the ones responsible for creating and implementing the technology that underlies these digital assets. They are the ones who write the code that creates the blockchain, creates smart contracts, and builds decentralized applications (dApps).

Cryptocurrency is built on complex technology that requires a high level of expertise to understand and develop. Developers must have a deep understanding of cryptography, computer science, and mathematics in order to create secure and reliable systems.



While I Recommend reading it for yourself, lets get into it:

Net Developer Growth: NDG

The reason this is bullish is very simple. Increasing the amount of developers will increase the amount of innovation. Cutting edge innovation is where value generative investments can be found.

Key Statistics:

Attracted, Despite Price:

This is of particular interest because it shows the growth of developers despite the tough price action of 2022. It is this point that ,makes me extremely bullish because they are sticking around. Looking forward it is hard not to assume there is a bright future for cryptocurency.

Bitcoin. Etherem. Ripple. Solana. Matic. Avalanche. Fantom..

The list of chains is essentially endless. An inadvertent second order consequence of this is diluted attention and capital. However, it begs the question: will there be one blockchain to rule them all, or will the future be multi chain?

The Great Space Race:

The cryptocurrency market is similar to the tech boom of the late 1990s in that both are characterized by a rapid increase in the value of new and innovative assets, fueled by high levels of speculation, hype and investor optimism.

Although there were clear winners and losers..

I am typing this within a Google Chrome Browser.

On my computer that is running Microsoft Windows.

Listening to Music via my iPhone and Airpods.

The future of technology has, and always will be multi-faceted.

The tech boom and the cryptocurrency market have seen a large influx of retail investors and a general sense of mania driving prices higher, often detached from fundamentals or underlying value.

Maybe its not as different as we think?

Common Themes Among Winning Assets:

These paradigms are applicable between both Tech and Crypto.

Strong adoption and usage: They have a growing user base, active community, and are being used for real-world transactions.

Robust technology: They have a well-designed and secure blockchain infrastructure that can handle the scale of adoption. At this point in the market maturity, one should have a functional product.

Solid team: They have a talented and experienced team with a proven track record of delivering on their promises.

Partnerships and integrations: They have established partnerships and integrations with other companies and organizations in their respective industries, which can provide long-term stability.

Strong governance: They have transparent and effective governance mechanisms in place, with clear rules and decision-making processes.

Regulatory compliance: They are proactive in addressing regulatory concerns and work to ensure their compliance with existing laws and regulations.

Why the Future is Multichain:

Diversity of needs and use cases: Just as different tech companies serve different niches, each cryptocurrency project is likely to have a unique value proposition, target audience, and use case. This will lead to a diverse and decentralized ecosystem, rather than a single dominant player.

Network effects: Cryptocurrencies have strong network effects, meaning that the value of the network increases with the number of users. This incentivizes the development of multiple projects and ecosystems, each with their own user base and network effects.

Decentralization: Cryptocurrency is a decentralized and trust-minimizing technology. Having multiple chains allows for greater decentralization, reducing the risk of any single point of failure or centralization of power.

Innovations and improvements: Cryptocurrency is a rapidly evolving space, with constant innovations and improvements being made. This will likely lead to the emergence of new projects and chains that offer better solutions than existing ones.

In conclusion, the future of cryptocurrency is likely to be multi-chain due to the diversity of needs, network effects, decentralization, and innovations. This is similar to the tech bubble where different tech companies emerged to serve different niches and provide unique solutions.

TLDR: the future is multi chain because each new solution has an improved value proposition to the last. This will continue to compound upwards with the end goal of a fully mature and useable product.

FOMC Came and Went.. We got 25bps

Although this was expected, the context at which the choice was made is what matters. Jerome Powell appeared to engage in quite dovish discourse. Select usage of specific language such as:

Hovering rates.

Neutral rates.

Disinflation phase.

Tapering interest rates.

Lets talk about the "bull case" and if we have a rally on our hands..

Dovish vs Hawkish:

This terminology is referred to as "Dovish". One could understand dovish as:

Supportive of the economy.

Expansion of monetary supply.

Engaging in QE rather than QT.

Dovish is the polar opposite of Hawkish which can be understood as:

Restricting the economy.

Contracting the monetary supply.

Starting QT instead of QE.

Labor Markets:

In the context of alleviating economic pressure, we need to be watching the Labor Markets very closely. We have seen productivity (as measured by GDP) recover from two negative consecutive quarters. When evaluating the labor market, here are some key metrics that the Fed will be watching:

Non Farm Payrolls

Initial/Total Jobless Claims

Average Hourly Earnings

Unemployment Rate

The reason we need to watch the labor market closely is because the Fed has put incredibly large pressure on businesses with debt. Not only do they get less business as retail "feels the pinch", their operation costs have increased, and debt obligations become more expensive to service. The data released today and yesterday shows a robust labor market, despite the economic intervention thus far:

Jobless Claims 183k in January versus 186k in December

Non Farm Payroll at 517k versus 260k last month.

Unemployment rate in January was 3.4% and 3.5% last month

These data points are in confluence with a strong labor market and robust gains suggest that the Federal Reserve may have just finalized the "soft landing"

There is one chart everyone should be watching: hashrate.

Hashrate can best be understood as the total processing power dedicated to the Bitcoin network. A high hashrate indicates that the network is secure and that miners are still actively participating, even during a downturn in price. A significant drop in hashrate could signal that miners are losing interest or becoming unprofitable.

The units of measurement for hashrate are hashes per second (h/s).

Glassnode is a great resource for all things on-chain.

Key Takeaways:

Bitcoin's total hashrate is nearing an all time high.

The 30 Day Change of Hashrate Data Set is at a very extremer outlier point.

Seeing such a large shift in total network participation, one must ask: why?

Possible Etiologies:

Bitcoin's recent price appreciation has shifted margins closer to neutral/profits. Economics dictates that any miners should (in theory) take the opportunity if available.

Global energy challenges are starting to dissipate. Although not alleviated, there is a net decrease in energy related commodities.

New technology has become available which offers more powerful processing. ASICs are the typical Bitcoin Miners and the new models are starting to deliver world wide.

Frankly, a combination of the above reasons is the most plausible.

Lets talk crypto trading. This is the most dynamic asset class on planet earth. The volatility it provides cannot be matched. Throughout this article I am going to highlight a few key metrics one should assess when wanting to enter a crypto trade.

Correlation Matrix:

It is wise to perceive crypto as a higher risk and higher return alternative to standard "risk on" stocks. One should air on the side of caution when evaluating a trade within the space - volatility should be expected.

Below is a Pearson Correlation Matrix presenting data between SPY, NASDAQ, and Gold relative to Bitcoin. Positive values close to 1 are very highly correlated, negative values approaching -1 are negatively correlated.

Self explanatory, but one can see a trend: crypto/stocks typically move together,

With this in mind, it sets the precedent that we should be assessing Bitcoin and the crypto market as an extension of traditional markets - subject to the same fundamental factors.

Measured in Bitcoin:

Similar to how stocks can be measured in dollars, euros, or pounds, a cryptocurrency has different relative values depending on the reference asset. Using XRP Weekly as a case study, we can cleary see some favorable price action as it falls into deep value territory.

As you will see shortly, it is a distinctly different chart then the USD value.

Measured in Dollars:

Assessing the dollar value of 12H XRP, it appears to be more "mature" in its market structure development. In addition, one could argue it has less volatility.

The reason one must consider both the Bitcoin and Dollar value is the trend for "bitcoin season" versus "altcoin season" as measured by key metrics like BTC.D..

Bitcoin Dominance:

BTC.D or ALT.D (can do any alt coin in trading view) is a measure of the captured market capilitaization divided by total crypto market cap.

In this instance, it is clear to see that Bitcoin has been capturing significant market share and is absorbing market dominance.

When Bitcoin Dominance is finding support = Bitcoin Bull Market imminent

When Bitcoin Dominance is encountering resistance = Alt Season Opportunity.

As with anything, this is not promised. Additional context like a capitulating bear market could cause a rising BTC.D, without appreciation of Bitcoin itself.

Open Interest:

This metric provides insight into the derivatives market and the directionality within. Large spikes/falls in OI suggest accumulating or liquidation of positions, respectfully. The next logical question: dump or pump?

to which, there is no perfect answer.

Funding rates provide some insight into if the bulls or bears are the majority. Combining the OI picture above it is clear to see there is "average" OI with a bullish bias. This could be interpreted as the market is bullish and looking for Bitcoin to continue climbing - a perfect opportunity for a liquidity crunch to the downside.

Wrapping it up:

Learn something? be sure to follow!

Next article we are going to discuss a balanced approach to analyzing the market :)

Supply vs Demand is everything. The first edition evaluated how to properly assess the supply of a cryptocurrency. Now, lets zoom on in to the demand component.

What Does Demand Actually Look Like?

Higher than typical volume within the market.

Higher than typical volume for its own trading pairs.

Rising inflows as measured on Defi Llama or comparable website.

Listing of the token/coin on new platforms and exchanges.

Rising Open Interest showing derivatives increasing in volume.

Trading and maintaining price action above eMAs

I personally like the 9ema on a 1H to 4H time frame because it is skewed towards recent price action and is more responsive than an sMA

Trending on Social Media Platforms like Binance Feed and Twitter are key markets of social sentiment and overall "buzz"

Finding Demand:

Market screeners are a great way to find opportunities across the market. Here are some of favorite ones for your personal usage.

https://www.tradingview.com/crypto-screener/

https://bitscreener.com/

https://messari.io/screener

https://altfins.com/crypto-screener

Remember, we want to find projects with volume and trading above their MAs. Use that criteria to refine your search further.

Story to Match:

A cryptocurrency is only as strong as the narrative behind it. We wrote three detailed articles diving into the current narratives, and tools to find existing ones! Please check it out, it is worth your time.

Thanks for reading!

Introduction:

Welcome to a new series where I will be sharing the tools and methodologies I use to find value across the cryptosphere. We are going to take a bottom up approach, zooming in on different aspects of the cryptocurrency market. We want to know the specific details while retaining a holistic and multi-faceted approach. Lets dive in!

Tokenomics:

Supply/demand is everything in a novel, and relatively illiquid market such as cryptocurrency. When one is performing their due diligence, they must properly assess tokenomics to understand the supply side of the equation.

Here are some key questions to ask yourself prior to investing..

What is the token's circulating supply?

How does this compare to the total supply?

Who owns majority of the tokens?

How are the new coins minted and distributed?

Is the project inflative or deflative in nature?

This is of course from the fundamental "investing" perspective. Traders typically have shorter time horizons where these questions are not as quintessential. The next logical question, where does one access the information required to answer these questions?

CoinGecko

Can answer most of these questions, and is a great free resource. Here is an example of their expertise regarding the ETH Supply Schedule

Vesting Schedules:

Venture capital makes the world (and crypto) go around. Although VC influence often brings much needed attention to projects, it is usually correlated with an opportunity to sell their bags. Early tranches are given ridiculously low prices.

Follow the money, right? Coinmarketcap.com has a great feature where you can track the portfolios of the biggest venture capitalists in the space:

To avoid being "dumped on" by VCs, you must understand when they can sell.  Typically one can find this information included in the whitepaper. Here is an example with Aptos (APT)

Final Note: If you do not know where the yield comes from, you are the yield.

Today is a big day in the macro scene!

Lets review some of the data that released today, ahead of tomorrow's PCE print. There are two key metrics from both the labor and productivity stand point I want to discuss today. Lets dive, starting with the labor market.

Context: Inflation can be tamed best if national productivity decreases and the labor market weakens to reduce demand.

Jobless Claims

Overview: this metric is relatively self explanatory. It is a data set that reports the number of new jobless claims. Data is collected on a weekly basis but is reported to the public as a monthly figure.

The Federal Reserve has maintained a strong labor market as measured by unemployment and jobless claims. However, if they want to control inflation properly, this will need to change. Despite QT measures, the job market remains robust and demand has been properly satiated.

Actual = 186k

Expected = 205k

Last Month = 192k

Conclusion: for the Fed to have evidence that "things are breaking" they would want to see a sustained uptrend in Jobless claims. This metric is measured month by month, but another data set known as "continuing jobless claims" provides insight into the total number of unemployment people. Even analyzing this metric reveals a robust labor market.

Real Gross Domestic Product:

Overview: this is the headliner metric to assess a nations productivity, This metric might be familiar with a basic background in economics. It is taken at face value in a "top down" methodology to assess a productivity.

It is measured as a % relative to the quarter before.

Positive Values imply economic growth

Negative Values imply economic contraction

Actual = 2.9%

Expected = 2.8%

Last Quarter = 3.2%

Conclusion: the economy grew at a reduced pace. This is great for the bulls because it shows net economic growth. However, it is very hard to control inflation properly in an expanding environment.

Final Thoughts..

Has the Fed Controlled Inflation? We will find tomorrow with the PCE Print. PCE is the same as CPI, but it excludes Food and Energy.

Actual PCE = ?

Expected PCE = 4.4%

Last Month = 4.7%

Stay tuned for tomorrow's article

Has Inflation truly been quelled?

Despite monumental money printing, the rate of inflation appears to have settled. Consumers measure inflation as CPI. This measurement includes all good and services which would typically be purchased by a household. The Federal Reserve inacts policy based upon a different metric: PCE.

Personal

Consumptions

Expenditures Price Index

Mathematically speaking, it is directly comparable to CPI. However, it intentionally excludes both food and energy. The calculation doesn't account for these because of their natural price volatility. Intentionally excluding these items prevents over reacting/controlling the market in light of natural/normal swings in commodity pricing.

Lets look at the data!

The upswing of PCE in later 2020 came as the inflation began to set in. Inflation also had momentum secondary to supply chain dynamics and global shipping logistics.

Why Does This Matter?

If you subscribe to "efficient market hypothesis" then the market has already price in this data piece. If you don't lets talk about the implications of this!

First Data to Consider: Federal Fund Rate History

The Federal Reserve have been hiking interest rates very aggressively with the hikes ranging from 75bps to 50bps. In this context, an alleviation of 25bps gives the market room to breath and paints a "dovish" picture.

Second Data to Consider: February FOMC Speculation

The ever efficient market believes are we going to get 25bps at the next FOMC. This is being said with 98.9% confidence at this time, meaning 1% chance of a 50bps: within the context of alleviating PCE and a strong labor market.

What Happens Next?

Given no sudden changes of the inflation situation, I think the market is going to continue to expect 25bps. The Federal Reserve is severely opposed to under tightening/reducing rates in fear of the 70s/80s when inflation was bad, it seemed fixed, but came back with a "second wave" which was much more devastating then the first.

Expected FOMC outcome: 25bps and neutral market volatility depending on the tone of JPow during his speech.

Unexpected FOMC: 50bps and a hawkish tone cause downward volatility.

2023 Expectation: no rate cuts

I do not like XRP from the fundamental perspective. However, I see an opportunity for a high conviction trade - and I usually have to investigate further. Here are some quick thoughts regarding the current XRP Price Action.

Note: I do not care about the lawsuit. I think they will lose.

XRP Weekly entering value territory "retest" of a resistance as support.

While the XRP USD 12H has a similar (but more bullish) price action pattern:

Our $PCC Trading bot is sensitive to trading ranges, moving average, and spikes in the volatility. It is currently long bias on XRP 2H

Another consideration is BTC.D Weekly. One cannot ignore Bitcoin in the current market. Although it moves with less volatility, it drives the market direction and provides context for the rest of the alt coin market.

I do not think it is likely for BTC.D Weekly to oscillate 8% upwards without even a week of consolidation.

Open Interest 12H is going to provide real time insight into what the derivative degens are doing. Large spikes in OI as the volatility contracts will show us a big move is coming - but the direction cannot yet be determined (with certainty.)

Additional Considerations:

I do not care about the lawsuit. Personally, I think they will lose later this year.

The pump will be giga if they do win. I am not a legal expert and its not like American Justice systems are well designed to be effective.

Subject to multiple "blackswans" ie: the court case, and the high correlation between stocks/crypto makes an event like upcoming PCE prints and FOMC dangerous.

Good R/R trade with multiple points of confluence regarding the price action. I do not care for XRP fundamentals.

Not financial advise.