Cryptomarkets Week in Review: October 23rd, 2014

This has been one of the blander weeks in recent memory for cryptocurrencies. The cryptomarkets week started off with a disappointing move from the co-founders of Coinbase, Brian Armstrong and Fred Ehrsam, who put together a very entertaining and simple video AMA recently. You can take a look at the full hour-plus conversation with them here – it’s very nice to get a chance to see them as two fairly casual, young guys; complete with “Back to the Future” and “Return of the Jedi” movie posters behind them, despite their significant success. The entire presentation was jovial and direct, perhaps even heralding an age of corporate governance with a generation of founders more directly connected to social media and more comfortable connecting directly with their customers as Fred and Brian are doing. It’s well worth a watch; they’re bright, funny, and honest guys.

Litecoin

The disappointment came early on when they began to discuss Litecoin. They made quite clear that at this exact moment, while they have considered it, there are currently no direct plans to add it into Coinbase.

Their reasoning for this is that Bitcoin itself is ludicrously complicated for the uninitiated. Fred and Brian quote 3-4 months as the amount of time it takes most people to understand it, though I suspect that they may be underestimating how much swifter their minds are than those of the general population – I’d suggest six or more months worth of exposure is going to be what most people need before they really “get it,” as it were. With how complex Bitcoin is, even for banks, investment banks, regulators, and other financial industry professionals that Fred and Brian deal with regularly, adding Litecoin is just going to add more confusion into a situation that already has an overabundance of it.

They’re right about that, but I’d suggest that anyone who draws the conclusion from that that adding Litecoin to Coinbase will never be a possibility is incorrect – as is the conclusion that Litecoin becoming a part of Coinbase in mid-late 2015 is impossible. Once public awareness and understanding of Bitcoin rises up enough that its basic features and functionality are commonly understood, then Litecoin is a good “first” altcoin to introduce people to. It serves the same function as Bitcoin – Bitcoin introduces digital currencies as competitors to fiat currencies; Litecoin introduces competing digital currencies while still remaining similar enough to Bitcoin to be well within most people’s grasp. Worth noting as well is that Fred and Brian stated quite clearly that they are in no way philosophically opposed to adding altcoins to Coinbase – merely that this was not the right time to induce turmoil into a poorly understood, nascent marketplace such as the one we now find ourselves in.

The AMA seems to spark a slight sell-off in Litecoin itself, with the LTC/BTC ratio making a gradual descent down to 0.01 from a recent peak of 0.0107, before the market evened out and hovered in the 0.0103 and 0.0104 range. This seems to indicate strong price memory of 0.01, and also that that is now locked in – psychologically – as the “minimum” price for LTC–1/100th of a Bitcoin.

The BTC/USD market retreated from a brief stint above $400 to hover between $370 and $390, making unsuccessful attempts to burst out back above $400, before taking on a precipitous drop during which I’m currently writing. The drop has sent the price down to the $350 price point so far, and threatens to perhaps bring it just barely under that psychological point. I would suggest we’re likely to see the price threaten to head lower, but not manage to break $340, and to bounce up to $400 when this drop abates. Whether we break through the psychological barrier of $400 a second time is up to the market, but I’d be wagering on that we won’t retain a price over $400 the first time we break it. If I had to make a prediction, I’d be calling for a price between $410 and $430 this time next week, with a rather sudden surge sometime over the weekend pushing us up over $400.

Dogecoin

Past BTC and LTC, the altcoin market has had an odd time this week. Spurts of volatility occur in a few of the bigger alts – DOGECOIN and DARKCOIN (DRK), to be specific – but the market as a whole has been stagnant. Well, as stagnant as altcoins ever are.

DOGE experienced a rather precipitous drop followed by a slow rise – from around the mid-70 satoshi mark to the 50s, and back up to around 70. Something slightly fishy might be going on, and while I like DOGE, I don’t trust altcoin markets to be devoid of manipulation. This could just be normal market movement, but DOGE has had a very bizarre recent price history.

DRK, on the other hand, seems to be in a generalized recovery from the bursting of the bubble that occurred several months back. The recovery comes in fits and spurts, as markets tend to do, but the past few days have been a clean and steady (for an altcoin) upward trajectory. I’m excited to see where it moves to.

Until next week.

DISCLAIMER: The content of this article is not intended to constitute professional investment advice, or a recommendation to buy, sell, or otherwise interact with any security or investment product. The author may have a material relationship with assets mentioned in this article, and while he attempts to remain objective, appropriate caution should be taken by readers when considering making any investment in assets mentioned or discussed above. Cryptocurrencies are an extremely volatile marketplace in which even experienced investors should take great caution.