CryptocurrencyInvesting

Trade Like A Crypto-Ninja With These Pro Tools

By March 21, 2018 No Comments

Relentless Firehose of Inscrutable Data  

The crypto-universe is nuts  - how is it that one top coin sells for $9000 and another for 69 cents?  How can one have a max supply of 21 million, another of 100 billion, and yet another have an unknown maximum?  What do these numbers even mean?  You don't have to be a math wiz or a code geek to use these pro tools right now to start untangling these perplexing puzzles, and rationally analyze the relentless firehose of inscrutable cryptocurrency data.

Moon This Week? Fork Last Night?

Start with the simple, clean interface of livecoinwatch.com.  I like it mainly because it allows you to put multiple tiny thumbnail charts in a single line of the spreadsheet.  Set up your home screen with 3 columns to include a 7, 30 , & 90 day trend chart so instead of trying to remember which coin was supposed to moon this week or fork last night you will have a clear visual of all your coins and their short and intermediate term price action right in front of you on a single page.

Notice that EOS, Ethereum Classic, and Quantum were moved up in ranking by the US-dollar volume sort (they are #7, 16, & 18 by market cap). Livecoinwatch also lets you put multi-time frame trendlines on a single line of the spreadsheet.

Notice that EOS, Ethereum Classic, and Quantum were moved up in ranking by the US-dollar volume sort (they are #7, 16, & 18 by market cap). Livecoinwatch also lets you set up multi-time-frame trendlines on a single line of the spreadsheet.

Comparing Coins Is Tricky

Comparing coins is tricky.  The easiest way to start is with percentage price performance and US-dollar volume traded - so choose a column for the 24-hour and 7-day percent return, then sort your coins by US-dollar volume.  You now have a single snapshot of short and intermediate term price trends and you can easily pick out the coins that have made significant price moves over the past day and week in the green and red percentage columns.

Down The Rabbit Hole

When you spot coins that are moved up the ranks by the dollar-volume sort as in the example above, that means they are trading outside their expected range based on market cap - that's where the action is, so they merit further investigation.  Click on the "news" tab and head down the rabbit hole.

The NVT ratio assigns a value to on-chain transactions - these are the 10 cheapest coins by NVT ratio.

The NVT ratio assigns a value to on-chain transactions by dividing the current market cap by on-chain transaction volume - these are the 10 cheapest coins by NVT ratio.

A Bit More Esoteric

If you're ready to get a bit more esoteric with your cross-currency comparisons, let's move on to the slightly more advanced terrain of onchainfx.com.  Here you can incorporate a few easy-to-understand mathematical ratios to normalize prices and pierce the fog of crypto-confusion.

A Veritable Zoo

Circulating supply is the number of coins currently in circulation.   From there it starts to get complicated.  Some coins, like bitcoin and its progeny, have a "fixed-eventual supply" and a mathematically predictable distribution curve.  Others have a "tail-emission" after a certain point, while some have an as-yet-to-be-determined economic distribution model.  There are models in which the ICO development team holds a certain amount of coins, and models in which coins are destroyed.  There are even smart-contract time-based release of coins into circulation.  EOS issues new tokens in part based on a median bid of block producers.

This veritable zoo of economic models makes a consensus on the total eventual supply fraught with discord.  Onchainfx makes a heroic effort to tame this menagerie with their "Y2050 Supply", which gives an investor a good approximation of the extent of asset dilution over the next 33 years.

If all of your team's github commits are bug fixes then they're not spending enough time adding value by developing new features, so you should probably invest your money in another team.

If your team's Github commits are all bug fixes then they're probably not spending enough time adding value by developing new features, so you should consider investing your money in a different team.

An Easier Comparison

An easier way to make the comparison of today's prices between coins is the "Price if BTC-Normalized Supply" which poses the question: if the exact same amount of money invested in this altcoin were invested in the bitcoin blockchain today - how much would each bitcoin be worth?"

Network Value to Transaction-Volume (NVT) Ratio

NVT is a calculation of the value the market assigns to each on-chain transaction - just divide market cap by transaction volume. The caveat here is that you can only make comparisons between coins of similar transaction type.  Bitcoin and its progeny are "UTXO-based" - transaction inputs are unspent outputs from previous transactions, and outputs include "change" that goes back to the sender, thus inflating the overall on-chain volume.  Also, the potentially large volume of off-chain transactions is excluded from the ratio.

You don't have to be a code-geek to ask the development team you're investing in: "what have you done for me lately" - DarpalRating's code audit makes it easy and investor-friendly.

You don't have to be a code-geek to ask the development team you're investing in: "what have you done for me lately" - DarpalRating's code audit makes it easy and investor-friendly.

What Have You Done For Me Lately?

You no longer need to be a code-geek to audit the development team you're investing in - DarpalRating has made it easy for you. Although this data has always been available on Github and more recently on cryptomiso, I've never seen it compiled and summarized in a more investor-friendly way than by the DarpalRating team.

Most germane to investors is not the number of commits but the type.  Fixing bugs is great but if you're investing money in a development team you want them to be spending their time on adding value by steadily developing new features - an A1 rating in DarpalRating's book.

The findings are nicely summarized in the ranking above, which covers 133 blockchain projects and ranks Lisk, EOS, Cardano, Aeternity, and Ethereum at the top.


Images via Shutterstock, livecoinwatch.com, medium.com/@Darpalrating, onchainfx.com

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