Volatility is Not Risk....
is a true statement if you manage your bankroll properly.
Volatility is mitigated by bankroll management (VaR). If a security is very volatile, then investors lessen the dollar amount invested as compared to other investments. If someone is speculating or trading, they either lower trading volume, widen stops, or do some combination of the 2 to mitigate Volatility. This is in part to insulate other positions in the portfolio,in part to mitigate exit liquidity risk, and paramount to managing VaR.
- Fay Dress and VBL for Soren K. Group
Bitcoin to Ether: Welcome to the Vomitorium
- Wednesday: 255 > 318 = 24% low to high
- Thursday: 318 > 276 = 13% High to Low
- Friday: 278 > 302 = 8.6% low to high
The last week of Ethereum trading as made more than a few people want to wretch we feel.
*Live Crypto prices below the fold*
So how does that compare to its big brother Bitcoin?
BitCoin Volatility Index
Bitcoin Volatility annualized is only 98% today. This is down from a high of 147% about 2 weeks ago according to bitmex
BVOL Index (Annualized Bitcoin Volatility)
- 6/30/2017 .BVOL = 98.74%
- 6/17/2017 .BVOL = 147.44%
BVOL above uses a 30 day moving average to create their annualized Bitcoin volatility index. They do not have an Ether equivalent index. So we did our own.
Comparing BTC Vol to ETH
Using similar methodology that BVOL does we did our own rough calculations on both cryptos for an electron-to-electron comparison:
1- Ether's vol as measured using a daily chart annualized with a 30 day rolling average is already higher than Bitcoin's.
We see Bitcoin's annualized volatility at around 99% down from a peak 2 weeks ago of 110%. By comparison, using the same exact method we see Ether's historical volatility as 130%, down from 166% on the day it Bungee jumped to 10 cents.
2- Ether's Vol using a 10 day rolling average has exploded relative to Bitcoin's
If one were to shorten the period form 30 days to 10 the difference and trends would be notable
- BTCUSD = 61% down from 137% 2 weeks ago
- ETHUSD = 137% down from 145% 2 weeks ago
What does it mean? It could mean that Ether is now entering "the show" where it will be more susceptible to comparisons to BTC.
Via Fintek
As we referenced a few weeks ago, there is a battle between Bitcoin (BTC) and Ethereum (ETC) for cryptocurrency supremacy. With that, the ETC followers are now finding out what bitcoin found out a long while ago; VOLATILITY. The one digital currency with more acceptance (deeper market) will be the survivor.
We do not subscribe to the "there will only be one" concept, but the point that ETH is now on the varsity does invite comparisons and more knee-jerk reactions.
Separately, the huge drop in BTC Vol is worth noting for investors and traders alike.
BitCoin at a Crossroads?
One thing is on our radar. While much of ETH recent volatility above BTH's has been specific to ETH the product itself, the precipitous drop in BTC vol is notable. To predict direction using volatility is something we do not do. But to handicap the potential effects in either direction we do attempt.
BTC Bullcase
BTC's Vol slide can be viewed as bullish because more institutional investors will be permitted by virtue oftheir by laws to put money into it based on volatility and liquidity. so if volumes go up while volatility drops, you havea recipe for institutional acceptance and another run higher.
BTC Bear Case
Conversely, and this is especially true in markets that are mature, a drop in volatility after a run up in an asset's price is frequently seen as a pause before a puke. This is because MOMO short term traders lose patience with the shrinking daily ranges and puke. Silver traders understand this when they say "Sideways is bearish in Silver".
There are many other ways to handicap future directional drivers using volatility as the "tell". But these are the ones we subscribe to most. Combined with Option skewness and Implied volatility we can handicap whether or not we should get out of the way of the next move, surf the wave, or trade counter it. And sometimes we are even right!
But it could just be nothing to trade off of at this stage of the product's life cycle. We are not playing here. Just watching and seeing if traditional volatility yardsticks are applicable yet.
Crypto Prices
Blockchain Daily News
Deals, Investments & M&As
Pantera Capital to Raise $100 Million In Investment For ICO Hedge Fund
Pete Rizzo - CoinDesk
The $600m market for initial coin offerings may soon be set to expand.
Investment firm Pantera Capital is launching a new hedge fund focused on investments solely in tokens that power public blockchain protocols.
FAO: Pantera was founded by its CEO, Dan Morehead, a former CFO and head of macro trading at Tiger Management, a hedge fund.
Cryptocurrencies
Burger King To Accept Bitcoin In Russia This Summer
William Suberg - The Coin Telegraph
Russian Burger King restaurants are due to start accepting Bitcoin as a payment method this summer, reports state on Wednesday.
DNT: A few days ago we covered a story about what we can buy with Bitcoin.. Maybe even sandwiches? Yes. And the list that Florin provided is growing...Great! Problem solved. We can buy a sandwich with Bitcoin. And not only in one place.
Exchanges & Trading Venues
Sell Side Forges Ahead With Ambitions For Live Blockchain
John Brazier - Waters Techology
This week it was the turn of both R3 and the Digital Trade Chain Consortium (DTC) to announce new developments regarding their respective efforts to get DLT live in the capital markets as soon as possible.
FAO: More details about R3’s announcement can be checked in our yesterday’s edition.
PR Web
Harbour introduces a democratic, community-governed framework to the blockchain ecosystem for managing and holding token assets by harnessing the wisdom of the crowd.
Circle, Blockchain And The Birth Of Social Payments In The UK
Madhvi Mavadya - Forbes
Last month, social payments app Circle made it into the top 20 UK iPhone App Store chart after a period of viral social growth and many young people have started to use the service in a social setting, in the same way Venmo is used in the US.
Vendors
SAP's Chief Strategy Officer Thinks Blockchain Is Not A Zero-Sum Game
Saheli Roy Choudhury, Geoff Cutmore - CNBC
SAP's chief strategy officer: Blockchain is not a zero-sum game and its implementation across various sectors is going to be an overall positive for businesses.
BitPeople
Bitcoin Exchange Operator Tied To Hacks Gets Five-And-A-Half Years U.S. prison
Jonathan Stempel - Reuters
A Florida man was sentenced on Tuesday to 5-1/2 years in prison after pleading guilty to operating an illegal bitcoin exchange suspected of laundering money for hackers and linked to a data breach at JPMorgan Chase & Co.
FAO: Anthony Murgio and his co-conspirators faced accusations of processing millions of dollars into bitcoin through the unlicensed exchange Coin.mx.
Regulation
CFTC Chief Asks Congress For More Money To Oversee Blockchain
Stan Higgins - CoinDesk
The US Commodity Futures Trading Commission (CFTC) has cited the advance of technologies like blockchain in a request to obtain additional funding for oversight activities. FAO: Seems fair. I remember last year they asked for more funds to watch the activity of HFT (high frequency trading) firms on US exchanges.
SEC Is Still Eyeing To Regulate The ICO Market
Anthony Coggine - The Coin Telegraph
US Securities and Exchange Commission is still eyeing to enforce regulations to Blockchain companies engaged in ICO. FAO: Interesting to watch this further. I bet they won’t be able to do it in the next 5 years. What do you think? Send me your thoughts.
Japan Looks To Blockchains For More Secure E-government Systems
Nikkei Asian Review
Japan wants to use the data storage technology behind bitcoin and similar virtual currencies to update how individuals and companies interact electronically with government, aiming to bolster information security while cutting administrative costs. FAO: Read the first two headlines of this section. Now read the headline above. Am I the only one thinking about the growing discrepancy between western and eastern governments when it comes to blockchain?
Startups, Accelerators & Hubs
Blockchain Developer ChromaWay Launches Postchain 'The First Consortium Database'
Ian Allison - International Business Times
Blockchain developer ChromaWay has released Postchain – "the first consortium database" – to combine the power and flexibility of mature, productised databases with blockchain database design.
Associations & Federations
World Economic Forum Publishes Blockchain Governance Taxonomy
Michael del Castillo - CoinDesk
The World Economic Forum has published a detailed white paper arguing that blockchain stakeholders should organize in a way that would dwarf even the largest consortia.
Press release here - via MondoVisione.
FAO: Today’s top story, but added in the proper section...
Analysis
Jonathan Garber - Business Insider
Ethereum is exploding higher Wednesday, trading up by 32% at $299.70. It hit a high of $308 earlier in the session. FAO: Bulls take charge.
Volatile And Interesting Months Ahead For Bitcoin: Charles Hayter On Bitmain's Hard Fork
Sidhartha Shukla - Money Control
Speaking to Moneycontrol Charles Hayter, co-founder and CEO of cryptocurrency data platform CryptoCompare, sheds light on the what Bitmain's proposed hard fork is and what it means for bitcoin, as a technology and on its price.
Other news
Blockchain: Initial Coin Offerings Pull In Millions, But At What Cost?
Joseph N. DiStefano - PhillyDeals
Innovators who want to raise capital in a hurry, for projects based on blockchain electronic record systems and electronic currency platforms, are bypassing initial public stock offerings (IPOs) to pitch quick-buck initial coin offerings (ICOs).
Fanciful Bitcoin Banknotes Show How Digital Currency Might Look In The Real World
NBC
“In some way, the project is a loose data visualization, but I mainly wanted to make the bills be interesting on their own as artworks,” says Matthias Dörfelt, the Los Angeles-based artist who made the notes.
FAO: Florin Adrian Oprea, Editor-in-chief Blockchain Daily News
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