Dec 28, 2020
In this newsletter, we highlight Monero (XMR), #15 on CoinMarketCap.com and the number one privacy coin. In previous newsletters, we have profiled Bitcoin, Ethereum, Litecoin, Polkadot and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
Privacy is what sets Monero apart from many other crypto coins, so much so that even the IRS (Internal Revenue Service of the USA) has placed a $625,000 bounty on cracking it.
This portfolio section gives you an idea of what sort of return you can get when investing in cryptocurrencies. Over time, we will introduce other portfolios with different crypto assets.
- The BTC Hold is up 150% 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.
- The BTC/USD fund is up 98% since November 2nd. This past week bitcoin has been ranging between $22,300 and $28,400 USD in value. Once again seeing a new all-time high this week.
- 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 2.46% since the start. Against USD, it is up 65.78% since the start. We will hold these positions to see how well it does against our BTC-only portfolios. LTC is performing the best of the 3 altcoins with a gain of 13.67% against BTC. ETH continues to not perform well at -0.76% against BTC. ADA is is only up 1% since the start against BTC. Over the last couple of weeks, ADA has gone down 20% and could head even further down over the next few weeks as altcoins continue to struggle against bitcoin.
Probably the most untraceable cryptocurrency, Monero (XMR), was developed with a focus on security and privacy. Originally launched in 2014 using the CryptoNote protocol and after several tweaks to remain ASIC resistant, in November of 2019 it was switched via hard fork to RandomX. Choosing to use Proof-of-Work mining protocols and staying ahead of the ASIC hardware makers by continually changing the protocol seems to be a working strategy for them.
Monero has a block time of two minutes and has a varying mining reward, which slowly degrades over time. In May of 2022, it will freeze to a constant 0.6 XMR going forward. At that time, the supply will be a little over 18 million XMR, with ongoing annual inflation of about 1%.
So how does Monero handle privacy? Whenever you send someone coins, there is no way for the recipient or any 3rd-party to see it unless you specifically opt-in to allow it to be visible. Technically, this is achieved via a cryptographic mechanism called a ring signature. One-time stealth addresses are used extensively, generated by the Dual-Key Stealth Address Protocol (DKSAP).
As you can imagine, government and policing entities do not much like Monero because of it’s untraceability. It has been known to be frequently used to fund illicit activities and by extremist groups. Historically, Monero’s rival privacy-based cryptocurrency is Zcash with newer, even more secure coins, such as DAPS set to challenge them.
Development is mostly community-oriented, with at least 30 active developers. Check out their Monero Research Lab and get involved by going to https://web.getmonero.org/community/team/.
To try and facilitate scalability, they have recently implemented the option to prune unneeded data from your local wallet node if desired. There is ongoing work to secure node metadata and obfuscate the user’s IP addresses using bundled software called I2P-zero.
If you value privacy and security above all else, you should definitely hold some Monero in your wallet. With the world becoming much more surveillance oriented, making transactions with XMR can definitely assist in drawing away unwanted attention.
This 6-year chart shows XMR/BTC with best gains from August 2016 till April 2018. For the next 1.5 years, it lost 80% of its value, similar to most altcoins. For a little over a year, it has flattened. Has XMR found a bottom in around the 0.006 BTC region?
This next chart is by ForecastCity, showing all of 2020 for XMR/BTC on the daily. It was posted on December 23rd with the pink section showing how it has performed since then. You can see how it went down further into the buy zone. Here is some technical analysis from ForecastCity related to the chart:
There is a divergence in RSI and price between the trough at 0.0064 on 2020-11-21 and the trough at 0.00625 on 2020-12-21, the probability of downtrend continuation is decreased and the probability of beginning of uptrend is increased.
A trough is formed in daily chart at 0.00625 on 12/21/2020, so more gains to resistance(s) 0.00705, 0.00755 and maximum to Major Resistance (0.00815) is expected.
Mastershark is predicting that Monero will go up 76% when trading XMR/USD, that is if it holds the support on the BTC pairing.
With institutional investors buying Bitcoin, some analysts believe that a couple of things will be different this time around. First off, the profits from Bitcoin won’t cycle back into altcoin markets. Secondly, is that the pullbacks will be smaller than we had in the last 2016-2017 bull market.
Not only are the larger investors coming into Bitcoin, but Ethereum is also seeing the likes of Microsoft coming into use blockchain for gaming.
Ethereum started a downward trend in value when paired against BTC in September of 2020. There could be some buying opportunities coming for those interested in ETH in early 2021 if that trend reverses.
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. Subscribe for free and get a limited-time complimentary paid subscription and access to all our archives. The regular cost is $5/month or $50/year. Cancel anytime.
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.