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Crypto prepping continues

I spent most of today focusing on crypto and equities.

On the equities side I put trailing stops on several of my large positions, including Amazon, Tesla, NVidia and Netflix. All stops were calculated as a dollar amount equal to two percent of my total portfolio value. These positions are large enough that I don’t anticipate any of them triggering as part of any short-term movement, but they’ll serve as circuit breakers in the case of any major downturn.

I spent a good deal of time looking at all my positions and watch list, trying to see if there was anything to be gleaned from the TD Sequential setups. I’m using it as a guide, but haven’t developed any hard rules about it yet. Basically I’m looking for any positions that have moved above any sell signals, and am setting stops on those positions.

As far as crypto goes, my NEO position closed yesterday, after bag holding for almost two years I let it go at an eighty percent loss. It had a bit of a run lately, but I’m going to stick to tokens that I actually care about long-term. For that reason, I’m also preparing to unload my OmiseGo, Lisk, and Civic tokens, at some substantial losses. Also, I’ve put my Brave tokens, BAT, up as well, as its had a nice run lately. I’m almost flat on it and am holding a four-figure position on it. I’m also putting a stop limit up on 0x, which I once had high hopes for. Maybe DeFi will lead to some more growth, but for now it’s up on the block.

Since most exchanges don’t support trailing stops, I’m going to have to keep an eye on these positions, and adjust them accordingly. I’ll look for further TD Sequential sell signals, and tighten them as needed. However, I am investigating some automated tools to make this happen.

Right now I’m basically harvesting losses. I’ve used taxes as an excuse not to make any trades, but I don’t think that’s going to be a wise choice in the coming months. I might as well take some losses now and offset some of the massive gains that will be coming later on.

IDEX

Speaking of massive gains, my IDEX holdings have absolutely exploded. After being underwater for most of the last year since I started staking and running a node, it’s not only recouped its value but has gained almost six times over the past month. A few days ago it was listed on Binance and shot up forty percent almost immediately. I’m in a bit of a pickle. I’m staking and earning a small reward each month as a result. But the value of the tokens has appreciated so much now that it would be irresponsible not to take action. If I move the tokens to the exchange though, I have to wait another seven days before they can stake again.

I guess in this case it makes sense to lose the stake and prepare to take profits. I have a feeling that there’s going to be a lot more gains in store for IDEX in the near future, but I need to think about protecting my capital and taking some profits off the table.

It’s a hard decision.

There are other assets that I’m delaying action on.

I considered taking some off my GBTC position off the table today but decided against it since its slightly underwater. A full sixth of my IRA is in it right now, and even the slightest movements cause oversized actions to my balance. I can only imagine how it is going to look when we get to six-figure bitcoin. I’m used to it now, and hopefully I’ll be able to stand it as we make the next leg up to new ATHs.

I’ve also made a nice sum in ChainLink, all the way back to the ICO. I haven’t touched it the entire time, but recent pullbacks are making me consider pulling it to the exchanges and setting some limits on it. Not yet though.

I have some other tasks that I can work on in the meantime to delay any overreactions. I sense myself getting a bit manic about things right now, and the last thing I want to do is pull out of too many positions. There are some tokens that I’ve been wanting to get exposure too, thinks like Comos/ATOM, REN, and ALGO, but I’m hesitant to move anything out of cold storage to take it. So I’ll have to free up some funds elsewhere. All I know is that I don’t want to touch my ETH for now.

For now I’ll put stops on these gainers, sell off the rest of my losers, and then wait for buying opportunities in the others. I’m playing with a small stack right now, and I’ll use the next few weeks to solidify my rules. And making sure that I have the discipline to stick to my two percent capital preservation rule is key.

In the meantime, I’ll work on codifying my decisions into code, and wait for the opportunities to come to me.

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Getting ready for alt season

Making preparations for the coming bull run moon rocket trip

I spent a good deal of time this weekend getting my cryptocurrency affairs in order. More and more of my attention is getting pulled into the space, with the price of bitcoin hitting a yearly high, and insane price action happening in the distributed finance space. Altcoins are starting to make moves, and I needed to do some housekeeping to prepare for any possible parabolic runs.

I’ve got several dozen ERC-20 tokens associated with my Ethereum accounts that are easily accessible via my hard wallet, but a lot of tokens have their own softwallets, and I’ve many of them haven’t been accessed in months. Several are nothing more that backups of wallet files on old hard drives that I have laying around.

There are numerous stories over the years of people who have struggled to recover bitcoin funds after having forgotten about them for several years, only to find that their magical internet money is now worth millions of dollars. My favorite one is the guy that tried to dig up the city dump to find an old hard drive that he tossed out. I have no intention of being one of those guys.

Multicoin wallets

I’ve been debating whether I want to mess with syncing blockchains locally, or just doing it on a small AWS instance. A few days ago though, the subject of multicoin wallets came up, and spent some time Friday loading up Guarda, and figuring out how to import things into it. I managed to recover several chains successfully, but it doesn’t have everything that I need. There’s just too many coins and tokens out there for any one solution, so I kept looking at other solutions, like Coinomi.

I have a hard wallet that I’ve been using for my primary cold storage, and yesterday I found out that Exodus integrates with it. So I downloaded and gave it a go. It’s solid, allowing operations with the hard wallet directly through it’s UI. Operations still have to be confirmed on the device, but it allows operating on the Ethereum tokens without having to use MyEtherWallet or MyCrypto.

One problem that I have with it is that for many tokens, it doesn’t actually allow importing existing accounts, per se. It allows a “move funds” operation, which basically sweeps funds into Exodus’s (non hard-wallet) accounts. This leaves a bit of dust in the accounts. Guarda, by contrast actually stores the account keys, which means that they’re not moved.

Mental preparation

In 2017, my first bull run, I watched as bitcoin and various altcoins exploded in value, and my crypto portfolio increased ten times over in the span of a few weeks. I wasn’t mentally prepared, even after ten plus years of managing my own stocks. Nothing can prepare you for crypto’s parabolic runs. But just as quickly as things ran up, did they fall back down, and I watched what was potentially six figures of coins drop down to one-fifth over the following year. Now I’ve got strong hands, and didn’t sell anything, but I cursed myself for not taking profits when things were going crazy. I’ve spent the last two years of this dark crypto coming up with a plan for what I was going to do when bitcoin has it’s next bull run.

I feel that such a run is imminent. In the past, bitcoin’s runs have followed the four-year halving cycle, which passed earlier this summer. On chain metrics seem to be where they need to be, hashrate is at an all-time high, coins on exchanges at an all-time low, price action seems to indicate that we’re nearing the end of a long consolidation period; even Google trends seem to be indicating retail interest is picking up. And with institutional investors at the doors, there are all indications that this next cycle will be intense.

I had been dollar-cost averaging bitcoin weekly up until earlier this year, when I decided that the percentage of my net worth invested in bitcoin and adjacent public equities bordered on over exposure. I’ve set price targets on my equities based on value averaging protocols that I’ve implemented, and I’ve got a price target for bitcoin based on they Mayer Multiple, which tracks the price of bitcoin as a multiple of its moving average. My target is near the 2017 top, and when bitcoin hits it, I’m going to take some profits.

I also have a secondary target that I’m eyeing, which I’ve calculated as the price that bitcoin will hit that will give me financial independence, allowing me to pay off my car, student loan, and mortgage debt. I don’t have any plans to sell at this level, but when we hit this level (and I’m convinced that we will), I’ll be taking steps to make sure that this wealth is preserved.

Trading again

Since I’ve got all the fiat I can spare locked up in bitcoin for the foreseeable future, the goal now is to convert the other various cryptoassets that I’m holding into more bitcoin. Many of the other assets that I’ve acquired are doing quite well, but I’ve got a lot of others that have not. It’s time to clean them up.

Several tokens that I’ve been bag-holding for the past two years have had some signs of life lately. I’m still down eighty percent on some of these and they’re worth pocket change at this point, so it’s a perfect opportunity for me to get in the habit of selling. Carter Thomas was a big proponent of this during the last run. Selling small amounts and taking some profits, to make it easier to do so when the time comes to make life-changing trades.

There are many trading indicators that people can use to make decisions; the disciple is making it automatic, and not on emotion. I need to develop a system that I can write down and refer to so that I don’t mess things up and lose money. I’ve decided that I’m going to use the TD Sequential indicator, which is available through Trading View.

A couple of my tokens have hit new yearly highs, triggering this indicator, so I moved them to the exchange last night and set limit orders. Most exchanges don’t have trailing limits like most brokerages, so for now I’ll be keeping a tight eye on them while I research automated options. I could only bring myself to move the ones worth three figures in value. The ones worth less aren’t worth my time right now, and I can’t bring myself to touch the ones worth more.

Things quickly get serious when trades have a thirty or forty percent gain overnight, and you’re looking at a five figures trade. Having a plan is good, but when things take you unaware, then doing nothing is usually better than falling prey to emotion. Price may take a dive, but most times I’ve found things tend to consolidate, giving you time to think. This is more true of more established tokens. Many small cap coins are heavily susceptible to pump and dumps.

The important is not to get caught by FOMO and rush into a decision. The goal here is to buy low and sell high, not the other way around, so a plan is a must. While my long-term strategy is to accumulate more BTC, I’ve got several other tokens that I’m bullish on long term, and will be looking for entry points on these as I sell off some of my other losers. Getting caught up in some other shitcoin because of a recent pump is a no-no.

Risk management is critical, as is having a exit strategy. If I’m going to base entry on a position based on the TD Sequential, then I’ll makes sure I have a stop loss based on my two percent max loss rule, and will use the sequential indicator for when it’s time to sell. None of this fly by night trading.

…and Taxes

Taxes are inevitable. I’m aiming for life-changing gains in the next year or two, and I’ve got to make sure that the IRS gets their due. I’ve used CoinTracking during the last bull run, and renewed my subscription last night in preparation for my first sales in a year and a half. There’s going to be a lot of loss harvesting as I clean up positions, and CoinTracking will make sure that all my realized gains and losses are compiled into a nice report that I can use next April. It will pull the transactions directly from many exchanges through APIs, as well as public Ethereum transactions. I’ve got some work to do to get things cleaned up with my softwallets though.

It also tracks mining proceeds, but it’s a bit more difficult to keep that up to date. The proper guidance is to declare cost basis when the coins are mined, but keeping up with the sheer amount of transactions is impossible. Instead, I prefer to use cost basis of zero and record the transaction when coins are exchanged. I’ll admit that it’s a bit of uncharted territory for me, and a lot depends on what the coin is and whether they touch exchanges that I’ve KYC’d on, or addresses that may have interacted exchanges in the past. This isn’t a big deal for me since most of the coins I’ve mined, with the exception of some ETH or ETC, have never left the mining address.

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Fun times recovering BEAM wallets

I don’t always ruin my crypto wallets, but when I do…

So I had a little bit of a screw up last night that almost cost me several hundred dollars in $BEAM. I was working on my automated exchanger program, and wanted to set up the BEAM wallet-api. It wasn’t included as a release like the CLI node and wallet programs, so I had to compile from source.

I cloned the git repo and tried to compile, but I had older versions of Boost and CMake that needed updating first. This wasn’t much of a problem, but after I got things compiled I actually wound up with executables ending with -masternet. I thought this was slightly unusual, but I threw them in with my node and wallet database files and ran them. I didn’t know it, but I had already made two mistakes.

The BEAM developers took the unusual step of using the Git master branch for their development branch. I had missed it in the build docs. So when I ran wallet-api the first time it actually upgraded my DB to this development version. Of course there was a mismatch with the node, which I caught, so I ran the updated node software as well. I still didn’t realize that I was running on testnet, and of course the node blockchain wasn’t valid. I was stuck.

I’m not sure how I finally made the connection, it might have been another read of the build docs, but I eventually realized that I needed to checkout the mainnet branch and build from there. Once I did that, I was still stuck, as the node and wallet DBs were already upgraded past the current version. So I had to download the entire blockchain before I could try to check my wallet. Oops.

That was done when I woke up this morning, but I still had several problems before I could fully recover my funds. The wallet DB was no good, and my first attempts recovering the wallet failed. “Invalid seed phrase,” it said, although I was one hundred percent sure I had saved the original phrase correctly. I eventually found a github issue that indicated the proper CLI input for the seed phrase, and was able to recover the wallet.

Unfortunately there were no funds in it. Due to the way privacy and anonymity is implemented in BEAM, the UTXOs belonging to the wallet can only be rescanned from a node running with the owner key active. This is usually used to collect mining rewards from multiple nodes running the same wallet, so I had to restart my node with this key, allow it to rescan the entire blockchain, and then run my wallet with the rescan option. Then I was finally able to see my funds in the wallet.

Obviously the main lesson here is that I should make backups of my DB files before updating anything relating to nodes or wallets. I should know better, honestly. Still, it serves as a bit of a reminder just how complicated cryptocurrency and blockchains are. We are still early.

Still, there’s a lot that can be improved by the Beam team to make things a bit more user friendly. Obviously GUI users take precedence for the teams, but a couple minor changes could go a long way. Keeping your development branch in master just seems… strange to me. And a bit of clarification in the CLI --help option would go a long way for the recovery process.

And when I’m ready to start back up work on the wallet-cli application this weekend, you can bet I’m going to do it with a testnet implementation.

Update 8-23-2020

After recovering my wallet and funds, I found that exchange payouts from my mining pool were not occuring. Turns out that the wallet address created by the wallet software are somewhat non-deterministic, and will not be restored on import. I was facing the prospect of having to contact the exchange and asking them to payout funds to another address, which I was sure would be a hassle.

Instead I decided to recompile the masternet branch of the wallet software, and managed to run the export data command (against a wallet backup!) to get all of my addresses and other data as JSON. I was able to import this into my live wallet, and verified that the address was restored.

After a few hours I checked, and verified that the pool had paid out.

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Cryptocurrency mining auto-exchanger

How to convert mining pool proceeds to bitcoin

I haven’t done much programming lately, at least rather I haven’t written much code lately. I still rely on some things that I’ve written; my value average programs for my self-directed IRA is something I use every day. But I’ve been so tied up with other projects lately that yesterday was the first time I’d really sat down and started writing a program from scratch in a very long time.

It’s amazing how much I’d forgotten.

I’m writing a new Python program, this one to do some automatic selling of cryptocurrency mining proceeds. My little six-GPU mining rig has been chugging along for some two years now, and has yet to turn a profit, so I’ve decided that if I’m going to keep doing it I need to at least cover my electricity costs. I’ll be exchanging the proceeds for bitcoin, not fiat, of course. Plus it seems that market pressure is building toward another parabolic run, so I think it prudent to start converting some percentage of my proceeds that I’ve mined over the years so that I don’t wind up holding another dead bag. I guess I’ve moved out of the spec mining phase for the time being, and need to start making some real money.

So I sat down last night to start designing a system. I had already set up my environment during a previous session, and got started with my usual project flow, setting up dotenv files, a new git repo on my home lab, TDD with pytest. It was slow going, and felt like I had to do Google searches for every line of code I wrote. I caught myself dealing with premature optimization several times and had to stop myself from over complicating things. I was just building an API call using requests.

All I managed to do last night was get the rewards statistics from the mining pool that I’m using. It’s a list of dicts, and I’m not sure how I want to do my calculations, a percentage of rewards, or something based off of power consumption. I need to at least cover my rig’s 0.9Kw/h power consumption. I can’t get that from Simplemining since they don’t seem to have an API, so for now I’ll just have to go off that estimate, or plug in my Kill-o-watt. I killed the last one with a power surge over eleven hundred watts, so I can either run a test or just use SMOS’s estimate.

Either way, I can use my mining rewards for our preferred mining interval, get price data off Binance using the CCXT library, and then send a transaction to the exchange using the wallet API. Then I’ll have another call to the exchange, after the deposit has cleared, to initiate a market order. And then a final call to move the proceeds to my hard wallet.

Several of these components are going to be rather straightforward, but putting them all together is going to be a bit of a challenge. I could run this as a simple script as a cron job, but I could also leave this running as a service, with various components running in different threads. I’ve obviously got some design decisions to make.

I have decided that I want to move my blockchain nodes out of my house. I’ve got several of them that I need to have online, including ARW, XHV, RVN, and BEAM. Running all of them at the same time is a bit too taxing for the machines that I have scattered around the house, so I’m going to try and put my AWS training to work and setup various nodes in the cloud.

My XDNA node that is currently running in an EC2 instance is using less than 5% CPU as all of the work for Ethereum has been handed off to Infura. When I tried to put the BEAM node on this same instance it couldn’t handle it, so I’ve got to figure out what the actual requirements are for it. I’m hoping that it’s not going to be cost prohibitive.

I’m envisioning several instances with various blockchains stored on S3 volumes, nodes running on their own small instances as needed. My wallet files can either remain at my home lab or consolidated in another, secured instance. Cost will be a factor of course, but maintaining copies of several different blockchains locally is proving difficult to manage. And several of my wallets have been untouched for over a year or more.

I’m hoping I can build everything out in config files, Docker builds for the nodes, and the AWS configuration itself setup using Elastic files. I envision that some of the programs, like the one that I’ve described here, could even be run as Lambda functions.

Of course, a lot of this sounds like premature optimization. We shall see.

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Mining operation update

Mining BEAM cryptocurrency, and planning for profits

I started mining again recently, following a brief hiatus while I assessed my performance over the past two and a half years. I decided to take a look at BEAM, simply for the reason that it was listed at the top of the stats on WhatToMine and other calculators. So, I dove in and have been at it for a few weeks now.

One of the reasons that I stopped mining was that the rig management software that I had been using was discontinued. I’d given up Windows and Awesome Miner altogether some time ago and went with HashR8 OS, which was built on Linux. The software was cloud based, and free since I only have one rig, but it appears they were white labeling a product from RaveOS, with whom they decided to split. Rave was unfortunately able to support the influx of new users, as a lot of miners were unable to get support from them, myself included, so I decided to go with Simple Mining OS, (SMOS).

Previously, I’d held all my mining wallets on an old Windows 7 machine, but recently repurposed the hardware for Elder’s workstation upstairs. Having W7 is a security liability these days, and I don’t need the security risk. One thing I decided that I wanted to do differently is run nodes for the various cryptos I’m holding on my home server, so I set up a BEAM node on my Ubuntu 18 machine using Supervisor. 

# /etc/supervisor/conf.d/beam.conf

[program:beam]
command=/home/me/beam/beam-node
directory=/home/me/beam/
autostart=true
restart=true
stderr_logfile=/var/log/beam.log
stdout_logfile=/var/log/beam.log
stdout_logfile_maxbytes=5MB
stderr_logfile_maxbytes=5MB
stdout_logfile_backups=2
stderr_logfile_backups=2

BEAM is quite different from most cryptocurrencies that I’ve worked with in the past. Anonymity is a very important feature of it, and they way they’ve implemented it leads to a very different quirk. Usually, when transacting on a blockchain, the sender just broadcasts a transaction over the network. With BEAM though, the receiver actually has to be online in order to complete the transaction. It’s slightly weird, and causes some additional issues with wallet management. BEAM uses the term bulletin board to describe wallet addresses, and wallets have to be online in listen mode in order to receive a transaction. There are rules about running multiple wallets that have to do with the fact that transactions are only heard by one wallet node and are ethermeral, which can lead to divergences in the transaction databases. UXTOs and balances can be reclaimed if this wallet database is lost.

For a miner, this basically means that the wallet has to be online in order to receive mining payouts from a pool. In fact, after checking last night, I found that my wallet had not been running, and I had several weeks of mining proceeds on my pool. Thankfully, I restarted the wallet last night and it appears the payout was received. To rectify this, I am thinking about creating an additional supervisor service to keep the wallet running.

My entry into mining at the peak of the last bull run in December 2017 was obviously ill timed. While I have not sold any of my bags of RVN, XHV, ARW and others over the years, the value of my portfolio has remained at nearly a constant level, never actually surpassing the capital that we invested to get started. Granted, we bought our GPUs a the top of the market and practically FOMO’ed ourselves into getting some of them at outrageous prices, but I’ve still been dismayed at the performance. This was one of the reasons why I briefly considered shuttering operations last month. Indeed, when I calculate for the power consumption that I’ve used, roughly 800-1100W, (about $60/month) my costs up to this point are doubled.

All signs in the crypto markets point to the beginning of a new bull cycle, so I’m not going to stop quite yet. I have decided that I need a strategy to start taking profits instead of just holding onto coins forever, so I’m going to start taking some of the mining proceeds, and convert them to BTC. My plan is to convert enough to cover the month’s power consumption, and just tuck it in a wallet. This will of course only work for exchange-listed coins or ones with a healthy OTC market, but I’m far too busy to do the research necessary to keep up with spec mining at this point.

Last night I started working on a new Python program to manage this process for me. It involves getting the month’s payout from the mining pool API, calling the wallet command to send BEAM to my exchange, then uses the CCXT library to initiate a market sell order and send the proceeds to my hard wallet. I’ve got a lot of work to do to automate all this, but I think the time is close to take this mining operations from a speculative one to a profitable one.

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Morning pages

Lambo1, my six-GPU cryptocurrency mining rig, is operational again, fans running incessantly across the room. After a false start with RaveOS, I was able to get it up and running with SimpleMiner yesterday, finally getting it up and running mining BEAM, which is a new one for me. Getting it up and running was a bit of a challenge, both the node and the wallet. Apparently the wallet has to be online to receive a transaction, which is an issue with mining pool payouts. I’m not happy with my setup, running the node on my downstairs server with it’s old five hundred gigabyte SATA drives. I’m tempted to stand up a new cloud server to run all these blockchains, and I very may well do that since I have some Visual Studio Azure credits that I can put to use.

Bitcoin finally broke out a bit this week, ostensibly because off stimulus packages in Asia and the US. It’s a modest breakout, but we’ll have to wait and see if we threaten $10K again anytime soon. Patience.

Last night I combed through seven years of brokerage statements, making a spreadsheet of transactions that didn’t carry over from the Scottrade/TDAmeritrade merger. I want to add the activity to my total realized gains, so I can gauge my performance. My post-merger activity has outperformed the SPY by a significant margin since 2018, but carries a lot of purchases from before the merger, and I want to incorporate the gains and losses that I took before then. I haven’t finished calculating the numbers, however just looking through the transactions brought back a lot of memories, some good, some bad. There were a couple sales of some strong positions that I used to finance some other purchases that haven’t worked out well, so I might need to add some opportunity cost calculations to my spreadsheet. Also missing, dividends. There were just too many to go through, but I will likely need to incorporate it somehow. I’m wondering if there’s a proper application that I can use to incorporate all this historical data, or if I should write some custom software. After I figure all this out I want to dig up another, closed brokerage account going back to 2003. I’m sure I’ll be embarrassed by what I find there.

I finally registered my business as an LLC yesterday. I can’t even say how long that one has been on my list, but now I’ve got to prepare some documents before I kick off any of these new projects that I have to do. Only one of them is actually for hire, but I need to spend the time developing the documents for the next one, before I get sucked into another off-scope

Now that the last WordPress project is off my list, I’m enjoying being able to spend some time pulling whatever I want from my Kanban board. After having that project on there, staring at me for several weeks, it’s exhilarating to be able to work on something that’s not urgent. Seeing my rig sit there for weeks was starting to bother me, so I’m glad it’s back to work. There’s still a lot of work to be done. Being able to pull tasks from my backlog instead of having them pushed on me is a different type of feeling, and I like it.

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Waiting for the season… altseason

red vehicle

A couple altcoins are seeing action. Are they signs of things to come?

I don’t even know where to start this morning. It’s a new month, and it feels like I’ve got twenty things going on. I spent most of yesterday working on my client’s WordPress project until I was burned out, then I grabbed my iPad and started reading through the WordPress developer documentation until I was ready for bed. I woke up bright and early, and here I am.

I’ve got a lot to dig into today. For Zombie, LLC, I’ve got a remote worker who’s laptop is completely hosed that I’ve got to deal with, a Github implementation and server hardware replacement project that I’m trying to close, and I’m also trying to get onboarded with Apple Business Manager so that I can handle mobile devices for another client. That’s on top of the weekly call with my WordPress client. Plus, I’ve got several tasks for my other retainer client that I need to get on top of. Domain SSL cert renewals, end user email problems. This is the life I want, I suppose.

I turned off my mining rig for the second time in as many months. I had been trying to manage it remotely via HashR8 OS, but couldn’t figure out how to tell which mining pool it was working on. Answer: neither. HashR8 is apparently rebranding as RaveOS or something tomorrow, and I just didn’t have time for it yesterday so I just shut it off. My cards are two and a half years old 1070Ti, and I’ve just blindly been mining Arrow for some time now. I still haven’t dumped any tokens that I’ve mined since I started, and stopped tracking daily values months ago. I check it once or twice a month now, the values of the tokens have been sitting around one third of the original hardware costs for a year now. Apparently Haven has been on a tear lately, since they’re supposedly a month away from going live with their offshore features. We’ll see if they can keep this price action up for long.

XHVBTC price

The Mayer Multiple number (orange) in the bottom pane is the moving average of the current price divided by the 200-day exponential moving average. The current EMA multiple, over four, is quite significant. I went back through and look at the past couple years of the tokens that I’m tracking in my watch list, and most of the short-term parabolic runs only see about one and a half on the EMA multiple. There’s a couple exceptions though, ones that have gone higher, but my point is that those high numbers aren’t sustained for long due to the simple fact that the averages will eventually rise to meet the price level. If I was a trading man, I would probably unload some of my XHV right here and wait for a pullback till the price hits the current plot line. The price could actually be higher by then, of course, it all depends on whether this is the start of a new bull run or not. My position in XHV isn’t significant enough for me to take action at this point. We’ll see if there’s another alt season or 10-100x left for XHV.

While we’re on the subject of altcoins, I do want to note that I am having some serious FOMO around two other tokens, REN, and LINK.

RENBTC chart

REN, as you can see, had a nice run that peaked in mid February of this year, at a 1.8 EMA multiple. It then bounced off of this EMA multiple EMA, before launching again, where it’s currently just over 2x.

LINKBTC chart

LINK has been on a tear. I bought a very small amount during the ICO and really wish I had gotten more. My point to this discussion, though, is that again, is that each parabolic run is followed by a pull back, and one could have made some nice sting trades buying these dips to the EMA, and selling these peaks, around 1.8x.

In fact, my strategy for our next Bitcoin run, if and when it ever happens, will be triggered by Bitcoin’s price in relation to it’s EMA multiple. Most of the parabolic runs have peaked at about 1.5x, but the run in late 2017 that saw it go from five thousand to twenty in just forty days hit 2.88. Based on the current price, I would predict a fast, parabolic run would put us around $25,000-32,000. That said, I’m not planning on unloading all of my holdings. After holding all the way up through the last bull run and subsequent drop, I told myself that I wasn’t going to make the same mistake next time. A price value at 2.88 times the EMA multiple would likely be a local top, and I’m going to take some profits this time.

Generally speaking, I don’t have enough of any alts to worry about it at this point. I’ve got a lot of ETH locked up in BlockFi right now, along with a stake in IDEX that seems to be doing well right now. I don’t know if we’re going to see altseason again, but the action in XHV, REN and LINK are very promising. I’m just waiting for their granddaddy, BTC to show them the way first.

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BlockFi interest accounts as savings earners

Why leave cash languishing in a savings account when it could be earning six percent in a USD stablecoin account?

My head has been racing with ideas recently. I had trouble falling asleep last night and got woken up by Elder this morning when she crawled into bed with me. Neither of us could fall asleep after that, so here we are, up an hour before our usual wake up time, on the couch, both of us with our laptops open. She’s working on Typing.com, and here I am with you.

Yesterday I opened a BlockFi account. They’re currently offering six percent on BTC and eight percent on Gemini and Coinbase’s USD stablecoins, as well as another Ethereum based USD stablecoin called PAX. The rates seem seems really high until you consider their lending options: over nine percent on BTC-backed loans. (We’ll leave the discussion of that for another day.) So they’re taking a small origination fee and a two or three percent spread. Seems like a decent business model. BlockFi was the first product on the market like this; I remember hearing them on a podcast last year, but more and more competitors are springing up such as Crypto.com and now Blockchain.com

Source: BlockFi. 05/21/2020

BlockFi uses Gemini for custody, which is good, but they’re not FDIC insured, so there’s a risk that customer funds could be lost if they get hacked, but I rate that risk low, since Gemini is focused on providing crypto custody services to the traditional finance industry, and they’ve got good controls. Still, I’m not ready to go all in with my funds quite yet.

I think that earning interest on my long term BTC is a great idea. I’m not ready to hand them over the bulk of my hard wallet, but I’m willing to try a small transfer until I feel more comfortable. The account signup process was pretty quick, I was able to sign up as an individual in a matter of minutes, and only had to provide my address and SSN for KYC.

Compared to the rates that Compound is offering right now, BlockFi is way higher. Since Compound is an Ethereum smart contract platform, they use wrapped BTC (which could cause a taxable event) and there is inherently more of a risk of a block swan like a contract failure or hack. BlockFi is relying on more traditional cold-storage custody solutions.

I didn’t want to break out my hardware wallet yesterday to move funds over to BlockFi, since I’d rather use it as an alternative to a savings account, so I started a small transfer from my bank in order to deposit to a USD stablecoin. That will take several days to clear. In the meantime, I’ll probably be transferring all of my LTC over there, (since it’s basically worthless to me at this point anyways,) and most of my ETH. I haven’t decided what to do about my BTC yet, but will probably be putting a fraction of my funds there at some point.

The advantage to keeping funds in BlockFi compared to traditional banking account is obvious, if one is comfortable with the risk. Missus is not, and curtly said “we’re not keeping our emergency fund in blockchain,” when I raised the subject. I however, am less risk-adverse than her, so I’m looking at it as an option to keep cash available for long term goals while earning considerable interest on it. For example, I’ve been planning on funding my IRA this year, instead of using the money to dollar cost average into Bitcoin, but I didn’t want to actually move the money to my IRA until near the April 15 deadline next year. In the event that I do need the funds for an emergency, I don’t want to deal with the penalty and hassle of withdrawing it. Putting it in BlockFi will allow me to compound it, as well as easily withdraw the entire balance back to my bank account when I’m ready.

If you are sitting on a lot of cash right now, and you should be saving as much as possible during these times, you may want to consider giving BlockFi a try. Please use my referral code.

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Six Figure FIRE Update: Day 6

Job search, investing performance, and BTC reFIREment plan

So here I am writing at night again today, as getting up early just hasn’t been my thing lately. The girls are enjoying the quarantine bubble that we’ve formed with the family down the street, and they spent most of the day outside playing today. It was the most productive day I’ve had in a long while.

I applied to two jobs the past two nights, one, a fast-growing firm that provides AI-enabled insights for customer data, Outlier.AI, and a startup trying to “cancel the endless cycles of extractive capitalism,” Good Money.

Outlier is a rather large firm that has an office nearby and meets my salary requirements; Good Money is an unknown, but it’s a startup and the culture looks so awesome. I’ll keep applying to my dream list over the next few days: Square, GitLab, Stripe, Twilio. I’m also continuing my consulting gigs, but I don’t know that I can grow that fast enough to reach my goal. We shall see.

Other good news today is that the retirement account hit a new all time high. I was finally able to figure out my actual account performance by looking at my cost basis gains.

SecurityOpen dateClose dateGain(%)
APPLE INC (AAPL)12/26/201310/5/2018170.64
AMBARELLA, INC. (AMBA)12/26/20139/19/201819.05
AMBARELLA, INC. (AMBA)9/3/20159/19/2018(55.98)
AMBARELLA, INC. (AMBA)11/4/20159/19/2018(40.97)
AMAZON COM INC (AMZN)12/26/20139/6/2018383.27
AMAZON COM INC (AMZN)2/20/20149/6/2018457.70
ACTIVISION BLIZZARD INC (ATVI)12/1/201410/10/2018248.63
BAUSCH HEALTH COMPANIES INC (BHC)12/26/20139/13/2018(80.58)
8POINT3 ENERGY PARTNERS LP (CAFD)8/5/20156/21/2018(20.48)
8POINT3 ENERGY PARTNERS LP (CAFD)8/3/20166/21/2018(25.19)
3D SYSTEMS CORP (DDD)2/20/20149/5/2018(75.12)
3D SYSTEMS CORP (DDD)2/18/20159/5/2018(38.07)
FORTINET INC (FTNT)5/4/20179/5/2018112.83
NVIDIA CORPORATION (NVDA)2/10/201610/8/2018917.65
OCEANEERING INTL INC (OII)12/26/20139/18/2018(68.84)
Total:93.58
2018 Realized Gain/Loss

Obviously Amazon and NVidia were the big dogs here. My portfolio was imbalanced with the sheer amount that I was holding there, and I had a bad feeling about the economy. I wanted cash in hand, so I sold about half my position via a trailing stop. It looks like genius in hindsight.

2019 wasn’t too great from a gains perspective. On paper it’s only about 4%, but realistically it should be more since I was covering positions, covering my initial capital investment while retaining the rest of the position, risk free. I was able to take profits on GBTC, Paypal, RestoreBio, and Yext, but lost most of it in Aurora Cannabis and Cronos Group when weed stocks collapsed. I also got stopped out trying to play a very volatile penny stock involved in Bitcoin mining operations.

2020 hasn’t seen any major sells, my trading is automated now via my value averaging protocols. Very low volume, so to speak, and a modest 4.7 percent realized gains. My unrealized gains, however, are sitting at a whopping 38.54 percent! Most of that is Amazon (2014), NVidia (2016-17), GBTC, (2019-20; about one-third of my total portfolio,) and Netflix (2013). Major losers include Sierra Wireless, Hive Blockchain Technologies, FireEye, Overstock, and 3D Systems Corp. I’m currently holding thirty-one positions in all, seven of which I’m currently value averaging into.

Before I go tooting my own horn too much, though, I’ve got to acknowledge a bit of cherry picking here in the results. Due to my original brokerage being acquired, I don’t have access to my full trade history prior to the last four years. I’m sure it’s ugly. It’s not really fair to cout gains on positions I’ve held since 2013 while tossing out the ones I lost on during that time frame. I also closed out my traditional brokerage account, about one-fifth of my IRA at the time, and put it into bitcoin in 2017, before it broke 10K.

I am obviously putting my money where my mouth is with Bitcoin. Between my hardwallet and GBTC holdings, I have well more than half of my liquid net worth in the big orange coin, and a smaller bit more in Ethereum and other tokens. I’ve done the calculations and am looking at a BTC price target of $67K, at which point I will have more than enough to pay off all mortgage and student loan debt and establish my financial independence. My target date is sometime before the next halving, which I based off of the stock to flow model, which predicts BTC ranging above $100K before then.

There are lot of details to be worked out before we get there though. Obviously taxes is going to be the big one. I assume we’ll be looking at long term capital gains in the case of Bitcoin. GBTC gains in my IRA are untaxed, but withdrawing anything will be subject to income tax plus 10% early withdrawal penalty. So the best strategy right now is to continue to accumulate and hodl. Since I think BTC is going to accumulate price much faster than my four percent loans, it makes more sense for me to continue to accumulate BTC while making the regular payments.

One change I will be making moving forward is that I am going to resume contributions to my IRA, which I suspended in favor of buying bitcoin directly the past few years. I am missing out on the tax savings from my contributions, which is going to be a big factor next April given my expected increase in income. Once we’ve topped that bucket off, I can make a final decision on where my additional savings will go.

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Ternia Blockcard: pre-paid crypto credit card

The Devil’s in the details: fees, murky exchange rates and other issues mar what should be a promising crypto to fiat instrument

This sponsored tweet has been coming up in my feed a lot:

I’ve been very interested in crypto-backed credit cards for some time now, (remember TenX, anyone?) and thought I would take a deeper look at this. And since my wife and I are no longer that interested in hacking frequent flyer miles, I’m very interested in something that advertises six percent back in rewards. So I signed up for a BlockCard account and did some testing with it. Let’s just say there’s a couple hiccups with it.

The Blockcard is basically a pre-paid Visa card. You can deposit funds from 13 different tokens including BTC, ETH, LTC, and others, and while they say you can “stay in crypto” until you need to spend your funds, all deposits are converted to the Ternio utility token, TERN, upon deposit. What is TERN, you ask? That’s what I wondered as well, so I took a look at the whitepaper.

Ternio background

The paper, published sometime prior to the TERN token sale in April of 2018, describes it as “built to transform and ultimately disrupt the $224 billion per year digital advertising approach.” Basically, they’re building a platform to connect advertisers, publishers and users, providing scalability, auditing, and payments. Of course, TERN tokens are used for the payments, and must be front-loaded to participants accounts. According to the whitepaper, Ternio relies on an internal blockchain called Lexicon, a modified version of IBM’s Hyperledger protocol, and the public token, TERN, on the Stellar network. Lexicon purportedly runs over a million transactions a second, and was accepted by Amazon as an AWS Advanced Technology Partner a little over a year ago.

The rest of the whitepaper describes the projected use case for the Ternio netowork, token sale and airdrop and social bounty program. The BlockCard is also described. That said, the Ternio team seems to have dropped their focus on advertising, and now seem to be focused primarily on building a payment network and driving adoption of the BlockCard.

Using the BlockCard

The Fees

I signed up for an account a few days ago and was immediately struck by the fee disclosure. First off there’s a $5 monthly “subscription” fee if you don’t spend at least $750/ month. Deposits, withdrawals, and point of sale (swipe) transactions are free, but using the card as a debit, with a PIN transaction, will cost you, as will any ATM cash transactions, even declined withdrawals. They also charge ten dollars for a physical card, or you can get a metal one for fifty.

Source: BlockCard FAQ page.

To BlockCard’s credit, they claim that theses fees are required by their banking partners.

Conversion confusion

I needed to load at least ten dollars on the card to make it usable, so I sent eleven dollars of BTC over from Ethos wallet when I ran into what seems to be BlockCard’s biggest problem. BlockCard undervalued my deposit. I was surprised when the transaction completed and my card only had a total balance of $9.37. The transaction history actually showed the value at a more reasonable $10.71, but it still showed an inexplicable deposit amount of 1.52 BTC (I wish!) instead of the actual 0.00156. This still left me with sixty cents under the ten dollar threshold, so I went ahead and sent a transaction in ETH. There seemed to be less lost on the conversion, $9.98 sent versus $9.85 deposited.

In total, I deposited $20.99 cents to my account (not including on-chain transaction fees), after which my account showed a $17.99. This was quite concerning, but after a few more minutes the balance updated to show $20.56. Less dramatic, perhaps, but still a problem if one is expected to spend $750 a month on the card. That’s a lot of slippage, likely more than a $5 monthly membership charge. On top of all this, the UI for the website seems to be extremely slow to update the conversion. I noticed several times when I logged in and the balance didn’t update for almost fifteen minutes.

A few days after my initial deposit and my balance flipped back to eighteen. I’m not sure if this is the buggy UI or just fluctuation in the price of TERN. The FAQ indicates that the value of TERN is pegged against the USDD stablecoin and is “tied to TERN on the BlockCard ecosystem”, independent of trading on any other exchanges. “As users deposit on BlockCard, the value of TERN increases.  As people spend, the value decreases. TERN is never issued at less than $0.008”

This is all very problematic from a transparency standpoint and seems very ripe for abuse, especially since their use agreement allow up to 36 hours for deposits to clear. Without any clear exchange rates as part of the deposit process, users are basically at the mercy of BlockCard to treat them fairly. With no clear indication of the TERN/USDD price, users are left to do the math to make sure they’re not getting ripped off. Even by my own calculations, my current balance is being valued at 0.0069.

17.699 / 2570.33 = 0.006999, an immediate loss of 14% value on deposit.

So does this mean that incoming transactions are converted to TERN at the 0.008 exchange rate, but then immediately lose value upon being credited to a user’s account? If this is accurate, it seems like a very bad deal for users.

Rewards?

The marketing for BlockCard touts the six percent rewards on spending. While on the surface, this seems like a deal, until you find out that these reward levels depend on staking TERN.

Source: BlockCard Rewards Page

At the base rate of $0.008 TERN/USDD, that’s a minimum of $240 worth of TERN for the bottom tier, and almost twelve hundred dollars required for the top. Granted, one might be able to cut that quite a bit if one is able to acquire TERN at a discount on a exchange, but given the hype that BlockCard is putting on the rewards aspect of their card, it’s disingenuous not to mention the staking requirements on their marketing.

The main exchange market for TERN is BitMart, ranked 24th on CoinMarketCap and based out of the Caymans. Source: BitMart, Apr 22, 15:34EST

Conclusion

There’s other issues with BlockCard as well that are worth mentioning. For one, I’ve been unable to use the card since I don’t have the option to complete KYC on my account. I’m guessing I have to request a physical card to do that, but I’m hesitant to do so since it’ll cost me ten dollars. I’ll likely reach out to BlockCard for confirmation on this, and just to be fair I’ll give BlockCard’s CEO Ian Kane a chance to respond to this article and address any inaccuracies.

The last issue is related to taxes. Sending depositing crypto to your BlockCard account and automatically converting it to TERN qualifies as a taxable event. Spending the funds on the card does as well. Kane said in a tweet that they plan on adding CSV export for transactions, but for now users will have to copy and paste the details manually.

Finally, I want to be clear that this post is not just meant to be a complete dump on the work that Kane and the BlockCard team have done. They’ve done well so far to put together this link between cryptocurrency and traditional payments system. While I’ve yet to use BlockCard for a payment, it does seem to be one of the fastest ways to spend crypto to fiat. My concerns are mainly with the execution of the crypto components of the system. Using TERN as an intermediary currency, without clear indications of how either deposit or balance calculations are converted, is especially troublesome. And the prospects of their so-called rewards system is completely offset by the staking risk, which is again compounded with the lack of transparency in the exchange value.

For now, I’m going to hold off further judgement on BlockCard until they’ve had a chance to respond.