Weekly Update Diversification Protocol Week 27 - Multiple 0.72 - 53.55% Undervalued - Long Term Extremely Bullish - 100% In BTC - Living Off Gold

in #bitcoin6 years ago

Today is the 15th weekly update of the Diversification Protocol. This protocol is designed to allocate a weekly income or funds to be invested mostly to BTC when it is undervalued and mostly to gold and optional stable coins when BTC is overvalued. It also tells you to spend gold for living when BTC is undervalued and BTC for living when it is overvalued. This will create higher returns on your investment through a full cycle and reduce stress in a bear market. HERE you can read the protocol in dept.

The valuation is done by using the Mayer Multiple and compare it to historical values. The Mayer Multiple is the current BTC price divided by the 200 day moving average. We use data from mayermultiple.com. When you want to be updated on the multiple several times a day you can follow THIS twitter account.

Because I just started the protocol, I didn't accumulate gold and stable coins yet. In this update I will exactly follow the protocol, but since I only start saving gold and stable coins from a multiple of 1.6, I will only be able to execute it 100% according the rules after that point is broken. Funds invested in BTC today will eventually at least partly be converted to gold, since the BTC accumulates in the same wallet and a percentage of the total BTC in this wallet will be allocated to gold at higher valuations.

The current multiple

multiple27.png

Weekly allocations of funds

allocation27.png

The protocol will be slightly boring till we get to a multiple of 1.6, till then we allocate 100% in BTC because it is undervalued. With the current 200 day moving average we need a BTC price of over 14,943 USD to start allocating to gold and Stable coins. This can take days or months, but it is good to be prepared already.

Important news of the week

Coinbase custody service

The most important news this week is that the custody service of Coinbase is officially launched the 2nd of July. It is estimated that 10 billion dollars of institutional money is waiting on the sidelines for a solution like this, so huge amounts of money could flow in soon. At the moment the service is open for European and American institutional investors to invest in BTC, ETH, LTC and BCH. Later also Asia will be included and more alt coins will be added.

https://cointelegraph.com/news/coinbase-custody-targeting-institutional-investors-now-officially-open-for-business

Swiss crypto exchange

SIX, the entity behind the Swiss Stockmarket is planning to create a cryptocurrency exchange. This will greatly improve the reputation of cryptocurrencies and make them more accessible. In Switzerland it will soon be as easy to buy Bitcoin as it is to buy stocks, this will obviously accelerate adoption among investors.

https://bitcoinist.com/switzerlands-stock-exchange-is-launching-a-cryptocurrency-exchange/

Building on Bitcoin conference

The 3rd and the 4th of July the Building on Bitcoin conference took place in Lisboa, Portugal. This conference was not focussed on hyped ICO’s and the ‘Blockchain but not Bitcoin’ narrative like the Consensus conference, but purely about Bitcoin and projects build on top of and around Bitcoin. When you watch all the presentations of these two days you will realise that the biggest innovation is still on Bitcoin and that functions of 1st and 2nd tier alt coins now already start to be disrupted by projects on top of Bitcoin. This conference really shows that Bitcoin has a great potential to grow out to the internet of money.

Lightning keeps growing

Lightning Network, the instant and scalable payment system on top of Bitcoin keeps growing fast. In the last months the capacity went up from 23 to 38.6 BTC, this is a 68% rise! This rise suggest that more people start using it, but probably also that people are comfortable with having more funds in the network. BULLISH!

Lightning network.png

The Bitcoin price is slightly up again this week

The Bitcoin price went up 420 dollar this week from 6390 to 6810. Along with the 2nd week of gains good news came out hinting on further adoption among main stream investors. The sentiment is slowly turning bullish again, but the positivity is still very fragile. Personally I feel that something is brewing and an price explosion is imminent, but the question is how long the market need to build pressure through strong fundamentals to make this happen.

price27.png

Fundamentals and valuation

In the history of Bitcoin the multiple was lower than today only 10.29% of the time. Since the multiple today is 0.72 while the moderate is 1.55, there is 53.55 % discount on BTC according to this valuation method!

Long term the prospects are still extremely bullish. Lightning Network and Segwit adoption are growing and improving faster than expected and can boost adoption for day to day payments, micro transactions and Dapps. Wall Street, governments and central banks are on the sidelines to come in and could inject huge amounts of money. Furthermore, the Mt. Gox selling fear is off the table. Short term sentiment is neutral to bullish, but for the long term almost everything is very bullish.

Disclaimer
This is no financial advice, just my view on the market.

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Hi Michiel as always, it is great to see you posts. As I have also expressed before, I am very interested in the Mayer Multiple. However, I just have one thought, that I hope to bounce off you:

Given that the BTC peak of late 2017 is now more than 200 days behind is, wouldn't your MM automatically rise even if the current price stayed the same? If yes, how big of an issue do you think that this is with MM as an indicator?

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