Overview:

Neo is slated as the Ethereum of China.   I get a lot of requests to provide my thoughts on coins like ONT,  DBC and RPX along with many others.   My question is, why own these when you can own the platform they run on?   This is one reason I like NEO but the other is they are working with Chinese regulators.   Though China promises to “open its doors” we know from history,  if you want to do business in China you use Chinese companies and products.   NEO  may end up being the preferred platform here and one I want to add to for the long term.

Value Proposition:

The first thing we ask in investing in cryptos is  “what value do I get from buying a coin”?   I look at something at some coins and think,  what am I buying?   Do I get a share in the company or am I funding someone else’s idea where I have no ownership?

NEO provides voting rights on the platform.    If your intent is to be a “book keeper” (miner) then you must own and maintain a certain amount of NEO.   As the platform becomes more used,  the price of GAS goes up,  making it more desirable to mine or be a “book keeper”.    So there is a potential value proposition in owning NEO.   As demand increases for use of the platform GAS goes up hence the value of NEO MAY increase as ownership is crucial to be a “book keeper”.    It also kicks out a dividend in GAS which a user pays to run on the platform.   I love dividends!

NEO has the advantage of being organically Chinese.   The implementation of China’s “digital signature act”  provides first mover advantage for NEO when it comes to meeting Chinese regulations.   Hence  Microsoft partnering with the founder,  OnChain in creating Legal Chain.   As other Dapps look to enter the Chinese market and require a “digital signature” NEO may have a first mover advantage which could lead to future growth and value. 

Why guess which Dapp will be worth something when you can own the primary platform.   Wabi runs off ETH,  Elastos (I will write an article on this) will run on NEO along with Legal Chain,  ONT,  RPX and DBC  and so far about 30 others.

Unfortunately Neo is not divisible which makes it unlikely to be used as a fiat type coin.   Ethereum has dual usage,  as a platform and as a fiat type currency.   Sure you can use GAS eventually, but walking into a 7 eleven to buy a coke with NEO is unlikely to happen without converting to another currency.   This is one negative in owning NEO and one of the reasons I like ETH along with a handful of other coins.

NEO does have a potential value proposition to owners,  in theory at least.    Moving forward,  and with the assistance of Kara Haas (CPA),   we will look deeper into Dapp and other coins with the most potential for growth in our opinion.

If you are a technical wizard and I have mis-understood the NEO platform by all means please provide your insight as comments are greatly appreciated.

Technical:

Weekly Chart:

Currently we are consolidating within the 61-68 support levels from a broader term perspective.    Initial resistance levels are shown on the charts,  with a mid term target of 197 which overlaps with the previous all time high.   Longer term the initial target levels are between 660 and 920.     Now charts are void of fundamentals, and these numbers are 10x’s the current price. 

There are a total of 100 million coins.   At 660 the market cap of NEO would be 66 billion dollars,  at 920 the market cap would be 92 billion.    Currently Ethereum is trading at a 70 Billion market cap,  and this is around 40% off its high.   So these levels are feasible.   EOS currently trades at a 3x’s market cap of NEO and they are still a few weeks out of having their own main net. 

Short Term Daily:

Neo is testing the lower level of the support area,  and a breakdown through the 57.45 area brings 49.41 into play and a level to look for.    Neo is odd in that the pullbacks are often more significant then the common retracement levels,  and something I have realized over months of charting it.   Just a side note there.

If we do get a bullish reversal,  the initial target area is 75 to 80 with a high of around 89.   Initial resistance is found at 69.50.   The upper resistance level remains the same.

Summary:

For the longer term investor there are a couple notes to keep in mind.    Adding at these levels with a small position is not without merit.   We have bounced off an extreme low and currently have pulled back to below the 0.618 retrace level of the overall bullish swing.    However,  as the market is still correcting it is not wise to start adding too much at one time.    Picking a coin or two and adding a small 1/4 or 1/3 position over time provides lower risk and more options if the market moves against you.    Reduce exposure by staggering buys into lows in one or two coins, not a bunch. 

For the trader we still have no solid reversal signal yet,   but the initial framework and structure for a trade setup is likely as long as the current low stays intact.    If there is a setup in our opinion we will post accordingly.

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