Crypto Daily News from ZBG Exchange
1. Crypto Long & Short: How Do You Measure Relative Value in Crypto?
Until recently, the manipulable “market cap” was nearly all investors had to go on when measuring the relative value of digital assets. More sophisticated yardsticks are emerging.
Pop quiz: If Bank of America stock is trading at $39, and Wells Fargo’s shares are changing hands at $47, which one is cheaper?
If you automatically answered “duh, B of A, it has a lower price,” without asking for more information, please do not start buying cryptocurrency. (Or stocks.)
As sophisticated investors — who make up the majority of this newsletter’s readers — know, determining the relative value of different assets isn’t as simple as comparing their prices. To suss out whether B of A is really a bargain compared with Wells, you would probably start by considering their prices in light of the companies’ profits.
According to Bloomberg data, at the Thursday closing levels quoted above, B of A had a price-to-earnings (P/E) ratio of 12.66, a tad higher than 12.48 for Wells, suggesting that the market values them roughly the same.
Another tried-and-true measure of relative value is how a company’s stock price compares to the sum of its assets minus its liabilities. By this measure, B of A has a price-to-book value ratio of 1.3, slightly above the 1.1 for Wells.
Again, the above is probably old hat for most “Crypto Long & Short” subscribers. But if you find it too abstract, consider this: Arnold Schwarzenegger in his prime weighed 230 pounds. That does not mean he was “fatter” than John Belushi at 222 pounds. For a more meaningful comparison, you would have to divide weight by height (body mass index), or ignore the scale altogether and measure the circumference of their forearms, wrists, hips and waists (body fat percentage). Or, you know, just look at the two of them side by side.
What I’m getting at is that numbers in a vacuum don’t tell you much without context.
A big challenge for investors in cryptocurrency is that the market has only started to develop anything like P/E for comparing the relative valuation of different digital assets. For most of this asset class’s history, market capitalization, a classic yardstick from the equity market awkwardly applied to a whole new type of instrument, was nearly all investors had to go on.
As CoinDesk Chief Content Officer Michael J. Casey has noted, market cap is subject to manipulation and, more distressingly, it implies that crypto — ostensibly an improvement over legacy money — is simply a means to get rich in dollars, encouraging shameless promotion over dutiful programming.
2. Top 5 cryptocurrencies to watch this week: BTC, LTC, ICP, THETA, FTT
Bitcoin is facing stiff resistance at the 200-day SMA but if bulls can clear this hurdle, LTC, ICP, THETA, and FTT may extend their relief rally.
Bitcoin’s (BTC) rally above $45,000 suggests that the short-term sentiment has turned positive and this has increased buying interest across the board and pushed the total crypto market capitalization above $1.8 trillion.
Driven by the tailwind of the London hard fork, Ether (ETH) broke above the $3,000 mark on Aug. 7. While the rally in the biggest altcoin is a positive sign, on-chain data shows the possibility of profit-booking in the short term.
Glassnode’s “Ethereum: Percent of Addresses in Profits” indicator has risen above 96.4%, which is the “red zone, historically associated with local tops,” according to Lex Moskovski, the chief investment officer at Moskovski Capital.
While the near-term price action may remain volatile, the long-term picture looks positive. Reports suggest that venture capital (VC) funds have invested $17 billion into blockchain firms in the first half of the year. This amount is almost equal to the total investments made by VC funds in all the previous years combined, which shows the bullish outlook for the future.
Buyers will now attempt to hold on to their advantage and build upon it. Let’s study the charts of the top-5 cryptocurrencies that may outperform in the short term.
3. What bear market? Investors throw record cash behind blockchain firms in 2021
VC investments into crypto over the first six months of 2021 have already more than doubled those witnessed in all previous years combined.
Despite the recent slight recovery of the cryptocurrency market, there is no denying the fact that the crypto industry has been faced with a great deal of volatility over the last few months, made evident by the total market capitalization of the sector that dipped from $2.5 trillion to $1.18 trillion over a 45-day span earlier this year.
Through all these ups and downs, however, 2021 has continued to see an increasing amount of capital enter this fast-evolving space. For example, reports indicate that over the first half of the year alone, venture capital (VC) funds poured in $17 billion into various crypto-related startups and companies.
To put things into perspective, the above-stated figure is by far the most witnessed in any single year and is nearly equal to the total amount raised in all previous years combined. Johnny Lyu, CEO of cryptocurrency exchange KuCoin, told Cointelegraph: “Early-stage investors of cryptocurrency have already achieved profitability and have a deep understanding of the development rules of the market. This is the key reason why they are willing to invest despite market fluctuations.”
Lyu further opined that for traditional investors, the crypto industry allows them to obtain higher returns in a shorter cycle, citing the volatility of Bitcoin (BTC) as an example of the same. “When the market experiences volatility, it is the best time for investing, and investors will profit from it.”
4. Indonesia’s Pintu Exchange Raises $35M in Extended Series A Led by Lightspeed Venture
Funding will go toward hiring efforts, improving Pintu’s market position, undertaking educational campaigns and delivering new products.
Indonesia-based cryptocurrency exchange Pintu has completed an extended Series A funding round led by Lightspeed Venture Partners.
Participation also came by way of Alameda Ventures, Blockchain.com Ventures, Castle Island Ventures, Coinbase Ventures, Intudo Ventures, Pantera Capital and others.
The $35 million in funding will go toward hiring efforts, improving Pintu’s market position via strategic partnerships, undertaking educational marketing campaigns and delivering new products and features.
5. New Brazilian Bitcoin ETF pledges carbon neutrality
Hashdex has promised to invest a portion of the assets managed by its new BITH11 ETF into carbon credits and green tech.
BITH11, a new exchange-traded fund (ETF) launched in Brazil by crypto-focused alternative investment firm Hashdex Asset Management, claims to be the country’s first “green” Bitcoin ETF.
The fund plans to neutralize its associated carbon emissions through purchasing carbon credits. To meet the ETF’s objectives, Hashdex has partnered with Germany’s Crypto Carbon Ratings Institute (CCRI) — which will produce annual reports estimating the energy consumption and carbon emissions underpinning the creation of BTC acquired by the fund.
The ETF is currently aiming to invest 0.15% of its liquid assets into carbon credits and eco-friendly technologies every year. The fund was launched on the B3 Brazilian Stock Exchange late last week under the ticker BITH11.
According to a rough translation, Rogerio Santana, relationship director at the São Paulo-based B3 exchange, stated:
“The new ETF offers investors exposure to variations in the world’s main digital asset, with all its growth potential and value reserve, in a regulated, secure manner and under sustainability goals,”
Hashdex is an issuer of regulated crypto investment funds, having launched its first crypto-focused ETF, HASH11, in April of this year. Over the past month, HASH11 has gained 33% according to Bloomberg.
In addition to HASH11 and BITH11, Hashdex also offers a weighted Nasdaq Crypto Index (NCI) fund tracking BTC, and its Bitcoin Risk Parity Gold Fund.
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In the future, ZBG will continue to expand its global market and provide stable, safe and fast blockchain project listing, diversified crypto assets and blockchain derivatives investment services to more blockchain enthusiasts around the world.
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August 9, 2021