Coinbase announcement drives price » Brave New Coin

Developed by Brandon Eich, the creator of Javascript and key cog in the development of Netscape Navigator and Mozilla Firefox, the Basic Attention Token (BAT) is the native token of the Brave web browser. Designed to address issues in digital advertising like spam, mis-targeted ads and frustrating user experiences, BAT has achieved mainstream exposure in the last few days on news that Coinbase would explore the possibility of adding it to its online trading platform.

Since the announcement on Friday afternoon (GMT), the price of BAT has risen from $0.2765 (Index) to 0.35306 (Index) a 27.67% jump. The positive movement looks to continue buffered by a recent Bloomberg report that Coinbase received FINRA approval to purchase three companies that, once integrated, should theoretically enable Coinbase to trade securities.

 

The graph shows the normalized USD price, and volume, of 5 different BAT trading pairs over 7 days.  BAT/BTC, BAT/ETH, BAT/BNB, BAT/TRY and BAT/LA. The orange line represents an Index of the prices, blue is BAT/BTC, yellow is BAT/ETH, green is BAT/BNB, navy is BAT/TRY and BAT/LA is turquoise. The verticle bars represent total trading volume in USD.

Trading pairs and exchanges

 BAT pairs

The most popular trading pairs for BAT are currently crypto to crypto with Bitcoin/BATpairs and Ethereum/BAT pairs, making up over 90% of daily trading and over USD10 million worth of 24 hour volume. The most popular fiat onramp option is the Turkish Lira/BAT pair, exclusively offered by the Vebitcoin exchange. As well as the 5 listed pairs, there are also USD, Tether and Korean Won onramps available for BAT.

 BATBTC pairs

The most popular exchange for trading BAT/BTC by some margin is Binance, handling close to USD 5.28 million worth of daily trading volume for the pair. The exchange has also begun a rebate for users who were affected during the SYScoin related outage two weeks ago, meaning we could see a surge in usage of the platform in the next few days, as users make the most of the ‘gifted’ tokens. Other popular exchanges for the BAT/BTC pair are major industry players Bittrex and Huobi.

‘Fixing’ digital advertising markets

“The days of giving digital a pass are over. It’s time to grow up. It’s time for action… [We don’t] want to waste time and money on a crappy media supply chain.” 

Michael Pritchard, Chief Brand Officer, P&G

BAT leverages the value of the basic human resource, time. The primary goal of the Brave ecosystem is to solve what it describes as the ‘problem’ of the online advertising supply chain. Dominated by ‘’exchanges, audience segmentation, complicated behavioral and cross-device user tracking’’ BAT argues that the system has become difficult to track and navigate. Internet users, when dealing with online advertising, face,  malware, privacy violations and a great deal of wasted time because of slow page load times.

The BAT position is that advertisers are struggling to target specific audiences and collect meaningful impressions, while online publishers have faced diminished profits due to the ineffectiveness of the current digital advertising model.

Certainly big digital players like Facebook, Google and Linkedin would dispute the BAT stance that the online advertising supply chain has any problems — and compared to other mediums like radio, free-to-air television and traditional print, any messaging delivered via the internet is, in fact, infinitely more targetable and measurable.

Nonetheless, the Brave web browser seeks to reorganize internet advertising, by aligning the incentives of the user, publisher and advertiser triangle of stakeholders.

If an advertiser wants a specific type of viewer to connect with its content, the publisher, using the Brave web browser, is able to deliver ads to a categorized audience.

The advertiser is willing to pay to ensure its ads go to the appropriate category of users and to confirm that these users have been exposed/interacted with the content. For users, a ‘No Ad’ option is built into Brave, or they can be paid in BAT to interact with ads. Additionally, they can donate to sites they enjoy using, and altruistically fuel the ecosystem.

BAT exists as an ERC20 token but has additional smart contract utility as a currency integrated into all in-browser transactions. Brave has considered the challenges of balancing payments between advertisers and publishers, and its whitepaper outlines proposed revenue streams that it is hoped will incentivise respective stakeholders.

 BAT value flow

Source: BAT whitepaper

Similar solutions to clean up the digital marketing pipeline without leveraging the blockchain exist, like Google Contributor. However, blockchains have the key attributes of trustlessness, and the recording of data on distributed ledgers, that make BAT a novel solution to the digital advertising problem. By layering itself on top of the Ethereum blockchain, as an ERC20 token, Basic attention token transactions occur autonomously and are constantly verified by miners on the Ethereum blockchain.

Challenges

The biggest challenge for Brave and the BAT ecosystem will likely be adoption. Despite growing to 3 million active monthly users (up from 1 million in December), These numbers are dwarfed by the market share of major browsers like Chrome, Firefox and Edge, whose monthly users are likely in the tens of billions.

For advertisers to choose to participate in the Brave ecosystem, it needs to be worth their time and they will likely require some assurance that their content will reach a wide enough audience.

network effect exists within the web browser ecosystem, with the more popular and visible a browser like Chrome becomes, the more likely it is that new users will flock to it over smaller alternatives. Even with the supposed spam and advertising delivery issues affecting the larger browsers, it is unlikely that they will give away their market share quickly, or more feasible, they will develop their own technology to deal with any abrasive digital content issues.

While Brave’s increasing numbers are admirable, if it hopes to become a truly disruptive, industry-changing, digital advertising solution, it has a long way to go to catch up with existing institutions. However, the recent positive news of a potential Coinbase listing could go a long way in creating a new raft of liquidity, and attract curious new users to the ecosystem.

Coinbase and BAT: A match made in heaven?

 BA BAT

Brian Armstrong from Coinbase has been a longtime fan of the BAT project, posting this tweet in March and saying BAT is, exactly the sort of token we’d like to support on Coinbase and GDAX over the coming year, make it easy to buy/sell these with gov currencies.”

It is no surprise, therefore, that BAT is one of the ‘Coinbase 5’ tokens currently being considered for trading on the platform. Other historical connections between the two include Coinbase partnering with Brave to integrate Bitcoin wallets and purchasing tools for the Brave ledger, and a former product manager of Coinbase, Ankur Nandwani, now working with the BAT project as an advisor.

Coinbase also owns the Earn.com platform, which lets users earn crypto by answering emails and completing simple tasks like joining communities or reading white papers. This is an economic model similar to Brave’s own, where users also earn rewards for completing passive tasks. It seems possible that in the future, if listed, BAT would be easily integratable into the Earn.com platform.

The initial Coinbase blog post was met with some skepticism from the digital asset community. How coins like BAT and ZRX, which don’t exist on native blockchains and are hosted on the Ethereum network as ERC20 smart contracts, and ADA, which currently operates as a highly centralized blockchain, met the strict Coinbase guidelines was questioned.

Technical analysis

The price of BAT has been on a tear since the announcement from Coinbase that it fits the criteria for listing on its trading exchange. Since then, price has lept ~28% which has introduced the notion of a new bull trend, albeit tepidly.

Exponential Moving Averages (EMA) with Long Term Trends

On the 1D chart, the bullish EMA cross (not shown), or Golden Cross, has not occurred which confirms BAT’s negative, linear price trend (Pearson’s R Correlation between time and price is 0.55) within a two standard deviation band (regression channel). At the time of writing, price is climbing towards the upper standard deviation boundary which could lead to price stalling out around the $0.46 level.

 BAT TA1

The “stalling” notion appears to be confirmed by the overbought SWTO (black circle), which may lead to a resumption of the downward linear trend in the near future (extended channel / arrows); with the long term mean of ~$0.17 being a target.

 BAT TA2

Ichimoku Clouds with Slow Wave Trend Oscillator (SWTO)

The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).

The status of the current Cloud metrics on the 1D frame with singled settings (10/30/60/30) for quicker signals is mixed; price is above the Cloud, Cloud is bearish, the TK cross is bullish, and the Lagging Span is in the Cloud but above price.

A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan, Kijun, or Senkou A as their trailing stop.

BAT is currently sitting at ~$0.38 after price successfully completed a Kumo breakout on July 16th above the Cloud resistance level of $0.36. The SWTO is approaching overbought territory (black circle), which may suggest that this Kumo breakout will not hold. The support levels are $0.30, $0.24, $0.20 (dashed lines), while price targets for a continued Kumo breakout are $0.42, $0.52, and $0.63.

 BAT TA3

The status of the current Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals is mixed; price is above the Cloud, Cloud is bearish, TK cross is bearish, and the Lagging Span is beneath the Cloud but above price.

Again, BAT has successfully completed a Kumo breakout and currently holding around $0.38. However, the current SWTO level coupled with approaching the two standard deviation, long term price level, may stall price appreciation and reverse the Kumo breakout. Price will need to break above the flat Senkou B level of $0.42 and preferably above the two standard deviation level of $0.46 to truly increase the probability of a new, solid uptrend.

BAT TA4

Conclusion

BAT has an engaging solution to what it argues is a problem that affects almost every user of the internet today. Its mainstream appeal and its connections to blue-chip infrastructure like Coinbase and Dow Jones, make it one of the most exciting investments in the crypto marketplace. However, it faces challenges usurping existing institutions which could simply retool their current products to achieve solutions functionally similar to Brave and BAT.

The technicals for BAT are mixed with the SWTO and two standard deviation trend band offering bearish sentiment while the Ichimoku Cloud is presenting bullish sentiment. Both, the prudent short-term trader (10/30/60/30) and longer-term trader (20/60/120/30) would view the current TK cross, Kumo breakout, and price hold above the Cloud as a buy signal, but should be mindful of the conflicting data in their risk management approach. The support levels for these traders are $0.30, $0.24, $0.20 with potential price targets of $0.42, $0.52, and $0.63.

Disclaimer: This analysis has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.

About the authors

BNC Christopher Brookins headshot pic4Christopher Brookins
Christopher Brookins is the founder and CEO of Pugilist Ventures, a quantitative investment firm focused on digital assets and blockchain technology. Chris has a deep knowledge and unique perspective on digital assets formed by his polymath experience in equity trading, credit investing, and business development at two West Coast startups (one acquired). He has been involved in the blockchain community since 2014. 

 

Aditya Author Profile

Aditya Das
Aditya Das is Brave New Coin’s in-house market analyst. Raised in Dubai, UAE, he holds a post-graduate honors degree in Economics from the University of Auckland and a BA in Economics from the University of Sussex. Prior to joining BNC his most recent roles were as a researcher and Economics tutor at the University of Auckland. 

 

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