In this newsletter, we are profiling Hedera Hashgraph [HBAR]. In previous newsletters, we have profiled Bitcoin, Cardano, Stablecoins, Uniswap and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
HBAR is quickly moving up in the ranks of top crypto assets by market cap. As of this writing, it is at #35. Is there more momentum left to shoot it into the top 20? What are the corporations doing with Hedera?
Created by Dr. Leemon Baird (of Carnegie Mellon University) and led by Mance Harmon as the CEO and co-founder, Hedera Hashgraph launched in late 2019 as yet another Ethereum-killer, this time with a focus on serving corporate interests.
Like a few other cryptocurrency systems we’ve profiled, Hedera does not utilize standard blockchain but rather directed acyclic graph (DAG) technology, which they call “Hashgraph.” This is much like Iota, with their “Tangle,” and like Nano, with their “Block-Lattice.” Using a DAG allows for a much more scalable solution, usually at the cost of requiring validator nodes that are not always truly decentralized. Despite their claims of having a “truly decentralized governance model, “the validator nodes are run by the Hedera Council, a governing body consisting of sixteen large corporations such as Google, IBM, Boeing, and LG. Because these entities run the main validator nodes, they are the only ones who can vote on changes to the network, although anybody can send suggestions for review. The validator node code is not open-source, with Swirlds Inc. owning the patents on the technology. This was done to prevent forks, as nobody has the right to use their code and start up a similar network.
Hedera Hashgraph, with their native currency, HBAR, claims to be able to process 10,000+ transactions per second with a 5-second finality. There is a maximum supply of 50 billion HBAR. Consensus is determined by Proof-of-Stake (PoS) utilizing random “gossiping” to achieve asynchronous Byzantine fault tolerance (ABFT). Currently, only council members can run validator nodes, although non-node users (the general public) will eventually be able to proxy-stake their HBAR. The original large investors (SAFT holders) have been promised compensation of extra HBAR (over what was originally stipulated) for holding instead of dumping in an attempt to stabilize the price.
Hedera has smart contracts as well as many services geared toward corporate usages, such as token/NFT creation, extra layers of consensus, quantum computer proofing via signature, and decentralized file storage. They allow service plugins like Hyperledge Fabric and Quorum, among others that can be seen at https://hedera.com/integrations. The Hedera network has been used to track Covid-19 cases and vaccine distribution. A list of companies currently using Hedera can be seen at https://hedera.com/users.
Purists might not trust Hedera Hashgraph since it does play nicely with large corporate entities, something that cryptocurrency was originally invented in order to circumvent. If you are coming at this from an investing viewpoint, Hedera might be just the ticket you are looking for in a smart contract and corporate services-centric ecosystem.
HBAR Trend Lines
On the daily chart, we see how HBAR has performed in 2021. In January it had a move of 277% over a 2 week period. For the next 42 days, it coasted along till in March when it started a push up of 220%. We will have to see if there is more momentum left in this latest upswing or is HBAR ready for some correction. Take a note of how much correction there was after it peaked in January. In February it was down 42% from the top reached in January.
The Other Trend Lines
BTC, as we all know, is on a trend up. Starting in December, Bitcoin went on a bull run of 134%. In January has a correction of 30% and then continued up for another 100% gain. In late February, we see the second correction of 26% as it touches the support line. This third bull run reached the current all-time high of $61,844 on Binance against USDT. That was a 44% run-up. Today we see the beginnings of a possible third breather. If we head to support or a tad below, it could be about a 20% correction down to about $49,000. However, it is anyone’s guess where it bottoms. Our guess would be about 2 to 4 days of correction before it continues upward.
Video gaming is huge, so it is important to know which crypto assets are part of the gaming industry, such as ENJ. On February 1st, we published our newsletter on the Enjin Coin. A couple of our posted charts in that newsletter showed ENJ going up big time, with one of them showing it going to 7500 sats very soon, which would be an 1800% gain with a big drop afterwards. ENJ has made great gains for many in the last several weeks. If you invest after a huge run-up such as this, make sure to manage your risk so you do not get caught losing big.
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 422% since October 1st, 2020. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week bitcoin has been ranging between $51,790 and $61,840 USD in value. Bitcoin is back to hitting all-time highs this week. The last all-time high was February 21, 2021, at $58,350, about 3 weeks ago. During the past 3 weeks, BTC had a 26% correction down to lows of $43,000.
FUND 3 started on November 16, 2020, with $1000 USD in value and invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has a gain of 33% since the start but down once again from last week. USD is up 349% since the start. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is in the minus by 15% against BTC. ETH dropped from last week of +23% down to +14% against BTC since the start. ADA also lost ground from last week’s 254% down to 192% against BTC.
BLWX Fund started on February 22, 2021. They all are assets we have profiled in the last few months, and we are interested in how they will perform in 2021 against BTC. BAT is up 29% against BTC since the start; LINK is down at -13%, WAVES is -17%, XMR is -7%. Overall, against BTC, the portfolio is down at -2.36%.
Overall, Bitcoin should be your first choice as an investment in crypto, though many altcoins can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some. Madbyte does have its own token called MADX and is available within our member website.
Managing your risk as a trader is key to not losing all your funds. Here are a couple of tips for you.
First is the stop-limit or loss orders that should always be used when trading. Learning to limit your risk allows you to use more of your portfolio during a trade. In turn, your potential profit can increase. Read through this linked article to understand stop-limit orders better. Also, watch the video below on how to use a Stop-Limit order on Binance. Once you have read the article and watched the video go test out a trade.
The next tip is the 1 percent rule. As a trader, you should not risk more than 1 percent of your portfolio. Again, I suggest you go read this: “Why Day Traders Should Stick to the 1-Percent Risk Rule”. This doesn’t mean that you can only trade with 1% of your portfolio, but you should not risk more than 1%. You can even trade with more than your portfolio’s worth by using leverage trading and still stay within the 1 percent rule.
MadCapX research newsletter is written by the Madbyte Team. You can learn more about Madbyte and MadCapX on our websites. This weekly newsletter is a paid subscription and supports the team and the Madbyte projects. The regular cost is $5/month or $50/year. Cancel anytime.
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Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.