In this newsletter, we are profiling VeChain [VET+VTHO]. 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
Is VET undervalued as a top 20 digital asset as some speculate that it could be? Will VeChain, as a startup, beat out the large technology companies with the deeper pockets?
VeChain initially launched in 2016 and had the ERC20 token called VEN. In 2018, they switched to their mainnet with VET and VTHO (used for fee payments). The founder is Sunny Lu, the former chief information officer (CIO) of Louis Vuitton China. The project’s primary goal is to disrupt the supply chain industry by providing blockchain technologies to make every step in the process fully tracked, verifiable, and transparent.
The VET token, used for transactions, has a max supply of near 86.7 billion and has an impressive transactions-per-second rate of 10,000. VTHOR is generated based on VET holdings and is used as the network’s “gas token.” The issuance of the VTHO token is adjusted via their on-chain governance model to stabilize the supply chain industry’s fiat-denominated costs. Every VET token generates VTHO every 10 seconds at a rate of 0.000432 VTHO per VET per day, or 0.15 VTHO per VET annually. Smart contracts reside on the networks VeThor layer and are programmed via Solidity on their EVM.
Consensus is achieved via Proof-Of-Authority (PoA), specifically provided by 101 authority nodes. These authority nodes require to hold at least 25 million VET and are selected and approved by the company, hence making it not entirely decentralized. There are also economic nodes available for everyone else, which require only 1 million VET to be held and offer stability to the ecosystem.
VeChain has a robust four-layer technology stack, consisting of TouchingPoints, Connection, Blockchain Core, and Applications & Services, which can be abstracted into two major layers, including the business abstract and the blockchain abstract layer.
For any supply chain that chooses to adopt VeChain, all products are tagged either via bar/QR codes or RFID chips and are scanned at every step of the process with the data stored on the blockchain. Some of VeChains largest clients are IBM, Ford, Dell, Cisco and 3M, with PriceWaterhouseCoopers (PwC) providing its auditing services to 400+ out of the participating Fortune 500 companies. A complete list of partnerships can be viewed at https://vechaininsider.com/partnerships/a-complete-list-of-vechain-partnerships/.
Competitors, including IBM, who are currently partners, have started their own custom solutions. IBM has partnered with the shipping giant Maersk to create a global shipping management blockchain platform. SAP is also entering the blockchain logistics space and is working with shipping and pharmaceutical companies to develop a blockchain-based supply chain tracking system. Some worry whether VeChain can acquire a critical amount of partnerships and dependencies on their services before other large entities start taking chunks of the action away from them.
Blockchain ecosystems with a focus on direct real-world applications should always be a significant point of interest to investors. VeChain is currently one of the more prominent players in this arena.
In this weekly chart on the VET token showing the opening week back in July 2018, you can see that it takes a big drop, recovered some, and then continued going down until September 2019, losing 89% of its value. This is somewhat common for many digital assets coming off the crypto bubble early 2018.
Bitcoin surged 307% in June of 2020, going to $14,000. VET, like many other popular coins then, surged against BTC, going up 444%.
Most top 100 digital assets respond to BTC fluctuations. One of the risks you face when buying and holding something like VET is when BTC decides to make a massive correction of 60% or more; some digital assets will correct as much as 90%. A trader who stays on top of markets daily and knows how to manage risk should do well, but most are investors in for the longer term and have decided to hold. There are always the few long-term holders that panic when a market goes into a deep bear cycle, and they sell at the lows.
This next one is a 4-hour VET/BTC chart that goes back to mid-April. VET is heading sideways with about 20% movement between bottom support and top resistance.
Twitter user Simon Dedic shared his list of assets that he considers being over and undervalued from the top 20. He places VET as being an undervalued digital asset amongst the likes of ETH, ADA, LINK and SOL.
The Other Trend Lines
BTC/USD from a Tradingview user on the 4-hour chart. Will $70k be the next stop?
The idea was simple. As long as Bitcoin found Resistance on the Lower Highs trend-line (of the 65k High), it would pull back continuously to the 4H MA50 (blue trend-line), similar to the late March test of the (at that time) Lower Highs trend-line. The last barrier to break before the bullish break-out confirmation was the 4H MA100 (green trend-line), which it did, BTC successfully broke above not only the 4H MA100 but the 4H MA200 (orange trend-line) too.
** Phase 1, 2 and 3 leading to a Channel Up **
This study is based on that pattern but I am extending it a bit adding to the sequence the early March price action, which as you see on the chart also included a Lower Highs trend-line break-out.
What happened both on Phase 1 (early March) and Phase 2 (late March/ early April) after the Lower Highs break-out, was a re-test of that trend-line and the 4H MA100 as a Support, before a Channel Up (green pattern) started that led to new a All Time High ( ATH ). On both occasions the new ATH was around a 1.236 Fibonacci extension from the previous ATH. Right now this is approximately around $70000.
** The 4H MA50/100 Golden Cross and the RSI **
It is important to note here that every Channel Up started after a 4H MA50/MA100 Golden Cross (i.e. the MA50 crossing above the MA100) took place. Right now we are 2-3 days before a potential new Golden Cross. Also the RSI is above the soft Resistance (red) and since March when the RSI hit the red flag level, it either started the Channel Up (green curve on the RSI ) or pulled back near the Support (blue curve), which meant consolidation with the 4H MA100 supporting. Both cases lead to a Channel Up.
Credit: Tradingview user TradingShot and a link to the chart.
ETH has had a very strong push upward lately as it touches $3000 USD. You can see from this chart below we broke above the top trend line, and the Tradingview user who drew this chart is predicting ETH will have a small correction back to the resistance line to test if it will hold as a support line.
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 442% 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 $52,330 and $58,980 USD in value.
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 66% since the start. The USD fund value is up 481% since the start. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is up 10% against BTC. ETH is up 96% against BTC since the start. ADA has a gain of 272% against BTC and 1194% to USD.
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 has a gain of 118% against BTC since the start; LINK is up 21%, WAVES is up 118%, XMR is up 68%. Overall, against BTC, the fund is up 82% and 95% against USD.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets 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.
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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.