SELL ALERT: Ethereum
25th September 2019 |
Action to take: sell Ethereum
Price when we recommended: $250
Closed at: $163
The cryptocurrency market pulled back in a big way on Tuesday and the majority of people are casting around for a reason behind the move.
The IPO ETF broke down and companies like Netflix and Amazon were weak as well. These are both examples of instruments that are highly dependent on access to additional liquidity. The fact that they suffered when the world’s central banks were providing that additional liquidity is indicative of broader underlying market weakness.
The outperformance of defensives like utilities is notable because it tends to be a late stage development in market cycles. However, I do not believe this is the reason for the decline in cryptocurrencies.
Instead the news that Google has achieved quantum supremacy late last week is probably the animating factor behind the decline. Here is the important portion of the news story: “The difference was stunning: while the quantum machine polished it off in 200 seconds, the researchers estimated that the classical computer would need 10,000 years.”
That has everyone asking the question of whether the crypto market is going to be able to deal with the threat of quantum computers busting their security. The good news is that blockchain is software so it can be adapted, but the short term is highly uncertain and that is why I am recommending you close your position in Ethereum.
The other side of this trade is the news is highly positive for Google which is another one of our holdings.
All the best,
Eoin Treacy
Investment Director, Frontier Tech Investor
