technical

Markets signaling "risk on" and the case for NEO

The flow of capital back into the alt token market post fork points to "risk on" behavior which is favorable for projects like NEO. 

Grossly oversimplified the blockchain market behaves into two main patterns:

  • Risk on: Market participants in a bull market look for opportunities to diversify into smaller projects with higher risk/return. This creates a levered effect for alt token returns. 
  • Risk off: Conversely in a bear market participants "flee" into Bitcoin and other large market capitalization tokens as a safe haven. While bitcoin also falls in value during bear markets, the drawdowns are less due to the inertia a higher market capitalization provides. 

For the time being the entire blockchain token market is intimately tied to Bitcoin price action, though as the market matures this will become less of an issue. Given the pro alt token backdrop presented, let's examine our largest holding NEO (formerly Antshares) from a fundamental and technical perspective.

Fundamental

NEO continues to gain traction in western markets with Bittrex accounting for 40%+ of volume in recent days. CEO Da Hongfei continues to grant more interviews in English, and updated technical documentation gives a clear direction forward. 

Key takeaways from the updated documentation

NeoX: Cross chain protocol to connect blockchains together into an "internet of blockchains". Other projects focused on this area include Ark, a Lisk offshoot delegated Proof of Stake system with cross chain support at the core of their value proposition. Potentially the largest competitor in the cross chain space is the upcoming EOS token.*

NeoQS: Quantum resistant security. This shows NEO is one of the few forward thinking blockchains concerned about the implications of quantum computers brute force attacking the mathematics that underpin transaction security. Nexus (another large AlphaBlock investment) is one of the few other tokens in the space focused on this issue.**

NeoFS: File storage on the blockchain. Not only does this potentially disrupt storage projects such as Burst, Storj, and Siacoin, but unlocks the key to true scalability. 

"In the future, the old block data can be stored in NeoFS, so that most of the full nodes can release the old data for better scalability and at the same time, ensure the integrity of historical data." 

Pruning the blockchain as it becomes excessively large is crucial to both scaling and decentralization. By storing old block records into the file system each individual node will not need to store the entire blockchain. Thus book keeping nodes will remain affordable to run as each node does not need to store the potential thousands of terabytes of data the blockchain will create at scale.

This gives the added security benefit of onchain transactions, without the downside of excessive chain bloat or need to explore offchain solutions like segwit/lightning network. As the fundamental value proposition of NEO is storing critical transaction data such as property titles and birth certificates, understanding how NEO hopes to achieve onchain scalability is key to fundamental analysis. 

Technical

NEO exhibits the strongest bullish technical indicators possible on the one day candle chart.

  • A bull cross above the cloud
  • RSI crossing 50 
  • Further moving average verification from the MACD crossing the signal & histogram switching from negative to positive.
  note NEO still traded under symbol "ANS" on Bittrex for time being. MACD/Ichimoku presented with fast SMA in red and slow SMA in blue.

note NEO still traded under symbol "ANS" on Bittrex for time being. MACD/Ichimoku presented with fast SMA in red and slow SMA in blue.

Notes

*The EOS platform does not exist yet with EOS currently offered as an I.O.U. on the Ethereum network tradeable for the real EOS tokens when the platform launches. EOS marketing literature claims millions of transactions per second in theory though it is AlphaBlock policy to not invest in ICOs before they prove network viability.

**Nexus approaches the quantum problem from a more traditional proof of work/proof of stake architecture focused on providing onchain transactions at scale through advancements in lower level database architecture, and security through 1024bit hashing and 571bit private keys. 

ETC short term bear case

Using Ichimoku cloud entry to project short term bear case for ETC to 12.5 USD.

Once inside the cloud with a bearish TK cross, signs point to support at the bottom of the cloud.

ETC Ichimoku cloud short term bear case by AlphaBlockCapital on TradingView.com