CRYPTO MARKETS DOWNTURN: A REMINDER THAT ANOTHER AND MORE SERIOUS APPROACH TO INVESTING IS POSSIBLE. AND NEEDED
During the last weeks the market of cryptocurrencies saw what a lot of members of the diverse community of crypto operators and investors, have defined as a “bloodbath.” The rates of Bitcoin, Ether and Ripple, among the others, have fallen to what until a month ago were unpredictable lows: Bitcoin in particular dropped below $10,000 on Wednesday 17, after hitting the $20,000 mark just in December.
A quick recover followed up the “bloodbath,” bringing back the Bitcoin again over $10,000, while the cryprocurrencies market as a whole bounced back, with Ether regaining the $900 mark in the last two weeks.
The downturn brought about a drop of the global cryptocurrencies market cap, down from over $700 billion to $400 billion, alongside a lot of questions regarding the sustainability of cryptocurrencies and crypto markets at large.
A lot of those questions, though, are not new to some of the operators in the crypto environment, actually bringing back the conversations to some of the basic issues that every company dealing with cryptocurrencies and ICOs had and has to face.
Or, better: to issues that should concern every serious operator within the trading and investing markets, both traditional and crypto alike. We say that these issues should concern every company and in particular FinTech startups, because, as a matter of fact, the proliferation of tokens that in the last year has exploded in hundreds of new coins being offered left and right, demonstrates that the issues affecting crypto markets are not a concern to whom is only speculating and trying to profit from the boom of cryptocurrencies and Initial Coin Offerings.
Those issues regard the sustainability of the crypto market as a whole and in particular the volatility that seems inherent to it and the solutions that should be adopted to control it, while making the issue clear to the investors.
The collapse of the crypto markets, in fact, is related to issues like volatility, the lack of transparency and regulations of the cryptocurrencies’ market and the proliferation of ICOs, and thus of “coins,” with no real value.
This is why those issues, as we said, should really concern all the investing companies and in particular those startups looking to fund their projects through Initial Coin Offerings. Because, and here it seems particularly worth reminding, ICOs were intended as funding operations for startups, not as speculative instruments. The related projects, thus, should have been always well-thought operations, with clear steps and goals, and they should have been presented to the markets and potential investors as such.
But, this doesn’t seem to be the case for an increasing majority of ICOs. What keeps happening, instead, is the proliferation of purely speculative Coin Offerings, without real projects to be funded and, even more dangerously, without real market fundamentals to back the tokens that are offered to the investors. This fact is bringing about an over-inflated market that is profiting from a widespread lack not only of regulation (which can be considered somehow “natural” at this stage of development of a still young market), but also from a general and widespread lack of transparency from too many actors on the scene.
Volatility can be considered as an intrinsic issue affecting cryptocurrencies like Bitcoin: thus it should not be a real surprise that the downturn occurred early this January, was linked to the uncertainty following the rumours coming from countries like Korea on alleged plans to ban cryptocurrencies. This kind of rumours are influencing the crypto markets’ volatility alongside the general regulation issues, that have lately caught the attention of national agencies in various countries, like the American SEC, originating a growing debate on the necessity to build a more regulated framework for cryptocurrencies and ICOs.
In these terms, we can consider January’s “bloodbath” as a costly reminder that there is another way to approach investing, both in the traditional and crypto markets. A harder and less glamorous path that considers transparency as a pillar and technologies like AI, Machine Learning and the blockchain, as the viable means to reach the goal of creating a new investing landscape. Where efficiency and transparency are instrumental for FinTech startups and represent the foundation to involve the community of potential investors in a more efficient and transparent way.
Elpis Investments is among those FinTech startups that have taken into consideration from the very beginning issues like volatility. When creating our AI-based investment system, we implemented our strategies to decrease volatility and control risk. To build our cryptocurrencies Back Test trading model, we have used daily data from different time series (Dollar Index, Gold), avoiding the use of exclusively endogenous data. The resulting trading activity consisted in buying and closing long positions, while short positions were not opened. As soon as a long position was opened, real-time protection levels were activated: if the price drops below those levels, the position is closed immediately. Embedding in our algorithms real time stops helps to quantify the risk that is in line with both our clients profile and expectations: that level could change as a function of money management models.
This is a just an example of how the issues posed by the new crypto markets can be tackled by the operators themselves. But only as long as they have a vision for that market and the will to shape it, organically using the available technologies and the ones they are creating, to give both the traditional and the crypto markets a more efficient and transparent structure.
Elpis Investments has taken seriously the challenge of answering, from the very beginning, the task of contributing to create a more regulated market, offering investors the possibility to invest into a token that we are treating already as a security, setting in place KYC and AML best practices. Moreover, our tokens will be baked up by a defined amount of shares: we are offering the investors a real chance to invest into our project, our team, our vision, with a token that has real market fundamentals.
For us at Elpis, January’s “bloodbath” is a just another reminder that a new approach to investing is not an easy task and that to be successful in the long run, you cannot cut angles. Unless you are just another speculator trying to get away with murky practices at the expenses of the investors, transparency is the only way to go. There is no need to wait for third parties to impose transparent practices in the future. The more direct and efficient way to shape a more sustainable market is to build more sustainable, transparent and efficient investing systems. Our AI-based investing system is transparent by its very nature. This is our contribution to avoid more “bloodbaths” in the future: through transparency and technology we are giving the investors the instruments to evaluate our project, its consistency with our core values, the team that is working on it and the technologies we are developing to make it work.
If you want to join the investing revolution, check our Crypto-equity ICO Fundraising at www.elpisinvestments.com, to know more about Elpis ICO.
Chief Editor of Elpis Investments, The first AI Crypto-Assets Investment Fund: www.elpisinvestments.com, email@example.com
Originally published at medium.com on January 22, 2018.