The Fowl Five Index of Cryptos moved up a little for the month of July as Bitcoin and other major cryptos recovered slightly from the lows of June. Uncertainty still lingers in the market as the last few days have seen most cryptos giving back a bit of the recent gains.
This chart (especially in the context of the performance of recent months) indicates the very low levels that the Fowl Five Index of cryptos fell to as an across-the-board June rout on cryptocurrency valuations saw Bitcoin, Ethereum and many others fall to lows for 2018.
Not much has changed as May has come and gone and the cryptocurrency markets have traded sideways and downwards again. The benchmark Fowl Five Index of Cryptos (the formula for which is now available as an NPM module) went down from around 1185 to the low 1000s as the month went on.
The major cryptocurrencies have been moving sideways over the last few weeks. While Bitcoin got near 10,000 and the Fowl Five Index was briefly over 1300, the market then dipped back to the kind of levels seen in late April.
A spike in the cryptocurrency markets over the last couple weeks has run into what appears to be a round of profit-taking over the last day as some investors appear ready to cash out after a run-up that saw Bitcoin go from below $8000 to over $9000 before settling back down around $8750 as of this writing. The Fowl Five Index of cryptocurrencies moved from down below 1000 to up over 1200 before receding to around 1175 right now, its big move helped by the recent surge in price of Bitcoin Cash.
The crypto market's bearish year continues. The Fowl Five index is nearing all-time lows as it currently hovers around 1022 (though to be fair "all-time" currently dates back to February) as the values of Ethereum (below $450), Litecoin (below $140) and many other prominent altcoins have fallen precipitously over the last week. The factor preventing a return to the sub-1000 reading of early March is the relative strength so far of Bitcoin, which has not fallen quite as quickly during this micro-downturn and currently sits above $7900. The flurry of news and rumors about regulation seem to have a grip on the market's attention while technical analysis seems to be creating self-fulfilling predictions about further falls.
Open source Internet-connected Bitcoin wallets could be rock-solid software in many cases, but a system-level attack threatens to make their application-level precautions irrelevant. The recent Meltdown/Spectre hack targeted the chips inside PCs, highlighting the dangers that anyone using a computer connected to a network can suddenly become vulnerable to. Security of cryptographic assets is of extreme importance; thus having ways of securely archiving wallet data offline is a desirable option.
One way is a traditional paper wallet which at its simplest is a printout of the keys associated with a Bitcoin address. Of course, anyone with physical access to that printout can compromise the account.
I have developed an experimental tool, built with React and server-side-rendered with NextJS, for saving the backup data from online Bitcoin wallets such as Electrum.
Paper Umbrella is a browser-based “paper wallet” that does not need a network connection to save user data locally and can be run in an “air-gapped” context. It allows the saving of an arbitrary number of accounts, with each entry containing fields for the wallet’s name, seed data, public keys and private keys. This data is encrypted using the password provided by the user and then saved in a JSON file. When the user later selects that wallet to view it, they must enter the same password in order to get back the private keys and seed data.
☂️⤵️ The code for Paper Umbrella has been released under the free and open source ISC License and can be checked out from a GitHub repo. It is currently in pre-release and is not yet recommended for use with production cryptocurrency data.
Paper Umbrella's main component is called Tracker. It contains all the core front-end functionality that, when paired with the NodeJS server for persisting data, makes the app work. Also included is Fowlfive, a component that looks up the prices of five major cryptos and then calculates and displays the Fowl Five market aggregate index which is also featured here on the Block Fowl blog. In addition a few components sit at the bottom and provide disclaimers and links.
The readme for Paper Umbrella includes simple instructions for getting the app started using your Mac, Windows or Linux computer's command line terminal.
Cryptocurrency exchanges continue to face actions by regulators including Japan’s Financial Services Agency and America's SEC. What further rules these agencies might make could be part of the reason for the modest dip in Bitcoin price and in the Fowl Five market aggregate index.
The Fowl Five Index of cryptocurrencies has stayed largely between 1250 and 1450 over the last few weeks as the prices of Bitcoin and other major crypto assets have shown an atypical level of price stability. While it tested levels below $9000 and briefly hit a monthly high of just above $11500, Bitcoin has mostly traded in the range between $10000 and and $11000 over this period. In contrast Bitcoin Cash has weighed on the index as it has seen a steady decline from $1500 to around $1185 recently.
After the rout of early February and the beginning of the year in general, crypto prices could be stabilizing after the excesses of late 2017 and the correction of early 2018. But why would the prices find an equilibrium here, other than a possible balance between new speculation coming in and previous speculation going out? Until valuations are better understood in terms of benchmarks and ratios, the proportions between the share of the market that is speculative and the share based on underlying network demand [as I see it, the key problem in crypto valuation] will probably remain unclear.