The crypto markets are extremely volatile right now, possibly approaching a critical moment of one form or another. How does this impact GAME and MobileGo?
On Friday 10 March, the SEC rejected the proposal for a rule change that would allow the Winklevoss twins to create the first ever bitcoin ETF. This new investment vehicle would likely have resulted in many tens or even hundreds of millions of dollars of new money flowing into bitcoin, resulting in a significant and rapid price rise.
In the immediate aftermath of the decision, bitcoin fell to $958 from a high of $1,336 just eight hours earlier, when traders were betting on a more favourable outcome. Many critics predicted the start of a new bear market, or at least even heavier short-term falls, as the SEC ended the possibility of the new fund. In the event, though, it wasn’t to be – and the market quickly returned to its pre-Friday levels, shrugging off the bad news that many thought would spell misery.
Typically alts suffer when bitcoin rallies, but something different appears to be happening this time. Immediately after that weekend, many alts were posting 20 or 30 percent gains – Ethereum, the second-largest cryptocurrency, rose in value by 33%. It appears that although crypto traders are booking bitcoin profits into alts, presumably expecting a fall in BTC, but enough new money is still coming in from the bump in publicity to shore up the price of bitcoin. Right now the broader market doesn’t seem to be anticipating the return of the bear.
Crowdsales often suffer in a bitcoin bull run, because speculators want to hold BTC rather than alts. They don’t want to tie up funds in a project that won’t release its tokens until the end of the period. MobileGo’s crowdsale is still a month away, and anything can happen in cryptoland in that time. But it’s worth noting a few general principles to inform investors’ decisions.
1) Speculative vs revenue-driven demand
Bitcoin is carving out a promising niche for itself as a store of value – ‘digital gold’ – but as with all cryptocurrencies its value is still predominantly speculative, rather than based on ‘real’ adoption and demand. MobileGo’s value will come from revenues generated from the gaming world, allowing a more traditional valuation to come into play (most stocks are valued at some multiple of annual revenues, the multiple depending on the sector and business in question).
2) Fiat vs crypto
Revenues for MobileGo will come chiefly in the form of fiat purchases of GAME from the new gamecredits wallet. Alts profits come from speculation, but are also linked to bitcoin’s price and the amount of money that flows into them from BTC. GAME has also traded against fiat as well as BTC for much of its history, in contrast to most alts, giving it an unusual profile in the crypto trading world.
3) Invest with GAME, ETH or WAVES as well as BTC
BTC and alts tend to enter their bull runs/bubbles out of phase with each other (bitcoin’s started months ago), and to end at different points too. There’s every reason to think that GAME will be included in any broader alts surge, as well as Ethereum and Waves (the other currencies accepted for the crowdsale). Traders can lock profits into MobileGo by depositing one or more of these if they wish, but hold other currencies in their portfolio if they anticipate further rises.
4) Calling tops (and bottoms) is a risky business
Bubbles burst, bull runs end. Smart and lucky traders might call the market right, but usually it’s only clear when that has happened after the event. The MobileGo crowdsale will last for one month – and after it’s done, you’re reliant on market price to get a good deal.
Bottom line: if you’re interested in the gamecredits ecosystem, you probably hold GAME, you very likely hold BTC and you may well want to pick up MGO, as well as possibly owning other relevant currencies like ETH and WAVES. The market is unpredictable and crypto markets all the more so. If you want to participate in the MobileGo crowdsale and wondering how to gain maximum bang for your buck, figure out a strategy, stick to it and look ahead with no regrets.