Bitcoin - Forex Combo Strategy: Monero’s Fight Against ASICs
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Bitcoin - Forex Combo Strategy: Monero’s Fight Against ASICs
Written by: PaxForex analytics dept - Wednesday, 12 June 2019 0 comments
Welcome back everyone! Before we dive into today’s exciting edition of my Bitcoin - Forex Combo Strategy, let’s give it up to support levels in Bitcoin which repelled the bearish attack on price action. There is still a chance for another push to the downside, but as I outlined in last week’s update “Bitcoin - Forex Combo Strategy: Neo Upgrade”, I don’t see any sustained move below $6,380. At current prices, I am not adding to my existing Bitcoin position. In the event that a second bearish wave will pressure price action below $6,500, I am most likely taking advantage of this as I would happily add 400 Bitcoins to my existing portfolio.
Speaking of exiting portfolio, here is an overview of what happened with the cryptocurrency part of my dual trading strategy. I hodl 100 Bitcoins which I bought on January 14th 2019 at $3,500 and currently have a price target of $10,500 at which point I am likely to exit my holdings. This is not a price target as Bitcoin may rally further, but it is the target where I am happy to book floating profits. Ethereum appears to be stuck in an emerging trading range after I sold 10,000 Ether on May 15th 2019 at $220. Price action flirted with profitability, but has since then advanced. Patience my fellow traders! I am looking to short another 15,000 Ether if price action moves towards $330. I am very bullish on Ripple and don’t think twice about my 5,000,000 Ripple long position which I took on May 23rd 2019 at $0.3700. The three images below show what happened to my three holdings.
Now let’s see how Monero plans to keep ASIC operators at bay and favor CPU miners. The key to their efforts is a new mining algorithm called RandomX. Howard Chu, the Founder and CTO of Symas Corporation, laid the foundation for the new code which could go live as soon as October. He also created the Lightweight Directory Access Protocol which is the type of database Monero currently operates on. According to Chu, RandomX is currently undergoing four different audits for a July code freeze. Monero was launched in 2014 and has taken the top spot among privacy focused cryptocurrencies with a valuation exceeding $1.5 billion.
Why does Monero fight against ACIS operators? Mining rewards on its blockchain are estimated at around $62 million per year, but the majority is located with ASIC miners. In order to have a truly decentralized system, you need to have plenty of decentralized operators, such as hobby miners using their CPUs at home. In order to accomplish this, a level playing field is required which is why Monero favors CPU miners over ASIC operators. Until now, in order to combat ASIC miners, Monero was conducting hard forks. The developers underestimated the time and speed at which ASIC operators could make adjustments and produce new chips which made hard forks irrelevant long-term.
Monero may be at a crossroads as if RandomX fails, it may move towards an ASIC friendly approach in order to remain in the lead. Justin Ehrenhofer, a Monero Community Contributor, noted that “ASIC manufacturers can make equipment far faster than we expected. It takes maybe a month for them to have chips designed and in production so they generally can still make a return on investment even within a six month period. So I think we’ve ultimately come to consensus in general that RandomX is what will be implemented. It’s our best shot to preserve Monero as it was founded. And if this fails then Monero will probably move to an ASIC-friendly algorithm.”
RandomX is not just favoring CPUs over ASIC, but also over GPUs. Chu added “Practically everyone in the world now has a smart phone in their pocket with a CPU and memory that’s capable of mining RandomX.” CryptoNight, the curerrent algorithm used by Monero, was intended to give CPU miners an edge. It turned out that it gives GPU miners an advantage to which Chu stated “It’s really again kind of an accident of fate that CryptoNight turned out to work fairly well on GPUs. Nobody expected CryptoNight to be good on GPUs and it was anyways. The fact is today GPUs have so much memory and so much massive memory bandwidth that it’s not very much of an obstacle when it comes to CryptoNight, which was designed back in 2013 or so.”
Ehrenhofer added “I’m not concerned about a community split here because RandomX is the closest algorithm that we can pick that retains a vast majority of monero’s ideals.” One audit has been completed at a sot of $80,000 paid for by new Monero partner Arweave and conducted by security firm Trail of Bits. Three more audits for a total cost of $130,000 and
funded through community donations will take place over the next few weeks, followed by intensive testing of RandomX before its planned launch in October. Will Monero manage to favor CPU mining over GPU and ASIC operators and bring hundred of million of new computers to its blockchain? I think Monero is doing the entire community a favor and take a risky step in the right direction. Even it RandomX fails, it shows that Monero is not afraid to test something new in order to remain true to its founding ideology, rather than sell out to motivated by money.
The right direction is where my Bitcoin - Forex Combo Strategy continues to move after yet another fantastic trading week. I have been trading out of positions, boosting my cash reserves and preparing for the next big trades. On June 7th 2019 I decided to get out of my Gold trade at $1,340.00 for a net profit of $650,000. While I think that Gold is likely to extend its run, partially powered ahead by central bank buying, this was a good time to book profits. I am looking to re-enter if price action tumbles below $1,300. The image below shows my completed Gold trade.
Now let’s take a quick look at my forex investment, where I traded out of my EURJPY position and keep on waiting for a good exit opportunity in my EURGBP trade. On June 10th 2019 I closed both of my EURJPY long trades totalling 600 lots at 122.750 for a profit of $365,657. Unfortunately, my EURGBP short position continues to drift higher. I am still holding on as I expect a price action reversal. I have a 200 lots EURGBP short position taken on May 14th 2019 at 0.8680 for a margin requirement of $44,730 with a pip value of $2,568.48 and a 400 lots short position taken on May 22nd 2019 at 0.8830 for a margin requirement of $89,357 with a pip value of$5,061.60. The two images below show my closed EURJPY trade and my open EURGBP trade.
On June 10th 2019 I bought 250 lots in the GBPJPY at 137.750 according to this trading recommendation “GBPJPY Fundamental Analysis – June 10th 2019”. The margin requirement was $63,744 with a pip value of $2,306.91. On June 11th 2019 I bought 250 lots in the GBPUSD at 1.2675 for a margin requirement of $63,744 with a pip value of $2,500.00. The trading recommendation can be found at “GBPUSD Fundamental Analysis – June 11th 2019”. I stated last week that I won’t add to my British Pound trades until I close my EURGBP position, but the entry levels were too attractive to pass on. Earlier today, June 12th 2019, I added a 250 lots long position in the NZDUSD at 0.6570 according to this trading recommendation “NZDUSD Fundamental Analysis – June 12th 2019”. The margin requirement was $32,878 with a pip value of $2,500. The three images below show my new addition to according to my forex trading strategy.
Here is the summary of my Bitcoin - Forex Combo portfolio: I hodl 100 Bitcoins worth $794,710, a 10,000 Ethereum short position worth $1,864,900, a 5,000,000 long position in Ripple worth $1,932,500 and a total cash portfolio worth $9,375,583. In addition I have the following forex positions on my portfolio: a 600 lots EURGBP short position worth -$747,140, a 250 lots GBPJPY long position worth $112,189, a 250 lots GBPUSD long position worth 208,744 and a 250 lots NZDUSD long position worth $50,378. My total Bitcoin - Forex Combo portfolio is worth $13,591,864, up $363,373from last week’s value of $13,228,491 and at a new all-time high. As my cash balance is approaching $10M I am preparing for a great second-half of 2019. I run several prime accounts at PaxForex which enables me to earn more per trade due to excellent trading conditions. Open your own PaxForex Trading Account today and join a fast growing community of profitable forex traders. Feel free to comment below with any questions you may have and I will be happy to help you get started with my Bitcoin - Forex Combo Strategy!