OmiseGo Price Analysis — an ICO unicorn







From an ICO price of $ 0.502 (Index price), OMG tokens are currently valued at $11.20 — a handsome return of 2,131.08% for initial investors who have HODL’ed.

OMG price since launch

Exchange trading and trading pair activity

OMG Trading Pairs

The most popular pairs for trading OMG are crypto-to-crypto, with OMG/BTC, OMG/ETH and OMG/Tether making up close to 90% of the volume in the market. There appears to be a small premium on the OMG/KRW pair.

OMG exchanges

The most popular exchanges for trading OMG are IDAX, Huobi and Binance. IDAX is based out of Mongolia, mainly serving the Chinese market. Huobi and Binance are both popular exchanges renowned for cheap transaction fees, offering rates of 0.2% and 0.1% the value of a transaction respectively.

Real world problem solving

OMG tokens exist as an expansion of the Omise company. An already established, and successful, fintech group based in Thailand. Omise is an online payment solution for merchants aiming to optimize sales options and OmiseGo is an extension to this project.

OmiseGo aims to use the open-to-all, secure nature of the blockchain to solve a real-world problem, financial empowerment in South-East Asia.

There are millions of unbanked in the region, and because of infrastructure issues like challenges completing paperwork to create an identification document, it is likely to remain this way. Because of the difficulties performing any form of financial transaction, OmiseGo looks to offer an accessible, permission-less payment option and this fits well with the initial ideals of blockchain based solutions.

The SEA region is also highly interconnected, with an individual in Malaysia, more than likely having family in either Singapore, Hong Kong or India. Thereby co-ordination between cross-border financial entities becomes another issue. Individuals often face high exchange/bank fees when having to make payments like remittances.

OmiseGo aims to be the financial clearinghouse in the region and offer fast, cheap and safe payment transfer solutions for any sort of local or cross-border payment. The product already has some appeal to observers looking for disruptive fintech that may be a factor in solving the money transfer issues in the region.

Unique tech

So why OmiseGo over any other blockchain based payment solution like Bitcoin? It stands out because of its electronic wallet system built on the OMG blockchain, and its integrated Decentralized Exchange (DEX) solution for OmiseGo network users. These features, though not yet live, are intended to permit fiat values to be traded across payment platforms and between E-wallets, in real time.

The network will act as a hub and facilitator between OmiseGo e-wallets and Electronic Payment Processors (EPPs). Meaning a clearinghouse between regions and various fiat-on ramps, with OmiseGo maintaining a ledger of the various OmiseGo e-wallet transactions providing security and permission-free transactions via its blockchain.

This is a complicated solution to provide. OmiseGo is advertising that it will be able to manage multiple fiat-to-fiat, fiat-to-crypto exchanges facilitated instantly, cheaply and between EPPs (across border financial entities). Any blockchain is likely to struggle with verifying this sort of mass transaction load.

There are two solutions for this problem. Firstly, liquidity pools for small transfers, where EPPs will hold a pool of liquidity for small amount transfers between their most popular destinations. Secondly, for larger transfers, an amount of ETH will be bonded via smart contract to the OmiseGo blockchain and this will allow for a large Yen-Baht transaction to happen via a Yen-to-Ether, Ether-to-Baht route, facilitated on the OmiseGo network. There is no reason for why Ethereum needs to be used, but the network’s size and robustness make it a natural choice.

Additional to the instantaneous, cheap currency exchange & transfer, the OmiseGo team have also considered scalability and have attached themselves to Plasma. This will allow for a lot of transactionary operations to happen off-chain.

Through Plasma, every EPP on OmiseGo will enter a smart-contract with ETH, which will funnel a supply of liquidity onto its own, off chain centralized network, allowing it to operate smoothly, without flooding and compromising the decentralized OmiseGo network.

Private blockchains entering public blockchains

The OmiseGo blockchain brings centralized EPPs that already exist within the region a route to blend into a decentralized blockchain. Potentially allowing for a permission-less solution that lets the unbanked integrate into mainstream financial systems.

The OmiseGo solution does not seem overly disruptive. It is an embedding, rather than a ripping apart, quite different from many solutions provided by other DEXs.

Part of this solution is the recently launched e-wallet open source SdK (Software Developer Kit) which at this stage will allow for simple integration into the OmiseGo platform. Being open-source as well, the progress the OmiseGo team is making on its e-wallet solutions are available to be viewed and commented on.

OMG token use case explained

The OmiseGo business model is built to be an across platform exchange solution, bringing together digital currencies and fiat, between platforms, using the blockchain. In the future, It will likely compete with crypto exchanges like Kraken and Coinbase.

The OmiseGo E-wallet application isn’t just a regular e-wallet. The device it is attached to will act as a node, verifying transactions occurring on the OmiseGo blockchain. However, it is not enough just to have a wallet open and installed, there needs to be value in the wallet, and this is where OMG tokens and the PoS mining model comes in.

A Proof-of-Stake(Pos) block reward model works by giving greater rewards to miners who have larger investments in the blockchain. So, having more OMG tokens means access to more miner fees which positively correlate with an increase in the usage and activity on the network.

The greater reward stems from miners with more OMG taking more risk. If the network turns out poorly, and the tokens will start losing value, the miners with higher stakes are worse off.

In the present market, the price of the OMG token is propped by market beliefs of the future success of the OmiseGo blockchain. Once the OmiseGo mainet launches, even if an investor is not interested in being a node on the blockchain, having OMG gives them a chance to sell their stake in it, to someone who does.

Special endorsements

Another reason why OmiseGo has gained significance is its connection and support from two of crypto’s most valued and visible thinkers, Vitalik Buterin, the creator of the Ethereum network, and Joseph Poon, who both act as advisers to the OmiseGo project.

Joseph Poon was one of the co-authors of the Bitcoin Lightning Network whitepaper and has been with OmiseGo every step of the way, being the main mind behind the Plasma smart-contract solution as OmiseGo have built a structure for their decentralized exchange.

Technical Analysis

OMG has been one of the more remarkable token stories of 2017 with total gains well in excess of 3400% since its ICO. It has not been immune from the 2018 bear market, but has shown surprising buyer support at lower price levels for such an early stage token with limited progress on their product roadmap; especially considering those levels are still ~800% above its original ICO price.

Exponential Moving Averages (EMA) with Long-Term Trends

On the daily chart, the bullish EMA recross, or Golden Cross, using the 50/100 day EMA, has recently reversed. Unfortunately, EMA crosses are poor at spotting market inflection points but do provide a decent gauge for the overall price trend, which remains bearish and has been trading within a band of $8 to $20 since February.

Additionally, using the daily chart, the price range appears to be narrowing into a falling wedge, which could breakout higher in the future. If this does occur, then we expect volatility to shrink using bollinger bands which will precede the breakout. Furthermore, the last time OMG experienced a similar falling price wedge coupled with declining bollinger band volatility (black arrow), price experienced an upward breakout that peaked at the 2018 highs (black rocket ship).

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 daily time frame with singled settings (10/30/60/30) for quicker signals is bearish; price is beneath the Cloud, Cloud is bearish, the TK cross is bearish, and the Lagging Span is in the Cloud and below 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 or Kijun as their trailing stop.

OMG has found consistent support around $8 (price consolidation + 0.236 fibonacci retracement level from all-time highs) and after the post “end of tax season bottom,” price attempted to break above the Cloud, but failed to hold the level after meeting resistance around $20. Since then, the positive TK cross has reversed, price has fallen back beneath the Cloud and erased 100% of the previous 150% gains. However, the SWTO recently turned bullish from oversold territory which may help buoy price in the short term, thus enable OMG to retest a Kumo breakout with the key resistance level to watch being ~$14, the flat Senkou B level (red line). A breach and hold above the Cloud would signal a long entry with potential price targets of $17.75 and $20. If price fails the Kumo breakout attempt, the key support levels to watch on the downside are $10 and $8.

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

Again, price attempted to breach the Cloud but failed at $20 and is currently sitting at ~$11. Furthermore, the SWTO has turned bullish from oversold territory, thus offering a bounce opportunity to price from these oversold levels. Ultimately, price will need to break through the Cloud and hold that level to reignite an upward price trend, with the Senkou B of $14 being a likely resistance level. If OMG fails, price is likely to retest lower support levels of $12, $10, and $8 (critical level to hold). If price successfully achieves a Kumo breakout above the $14 - $15 level, then $16.50 (high probability), $17.75 (high probability), $20, and $24 become price targets.

Conclusion

OMG may only exist as a concept, but it is certainly a robust and well-rounded concept. The team behind the network has covered bases with respect to solving issues like scalability, token-use and clientele so it is not surprising to see the high valuation of OmiseGo despite it being at such an early stage of its product lifecycle. Additionally, the problem OmiseGo is trying to solve is relatable and likely to bring feelings of empathy from many investors and enthusiasts.

Decentralized crypto exchanges are a becoming more popular and visible, and the OmiseGo e-wallet appears to fit well into that space. There may be an issue with the utility of the OMG Token. It only seems to have tangible value to those interested in becoming network nodes.

It should be noted that OMG can be classified as an asset because it has an underlying demand based on its use to miners in the network. But an individual interested in using the OmiseGo DEX solution to exchange currency and make cross-border payment should be able to do so without ever having to purchase OMG tokens and claiming a stake in the network.

The issue here may not be with network design, but with regulation. With entities like the SEC taking a dim view of public token sales and how ICOs are marketed to the public, the lack of practical purpose within the OMG token may mean it will have to face regulatory questions in its future. This is not a slight against the OmiseGo DEX solution, which remains a solid idea in concept.

The overall technicals for OMG are bearish, but price is currently experiencing a short term bounce from oversold levels. Both, the prudent short term trader (10/30/60/30 settings) and longer term trader (20/60/120/30 settings) will await a positive TK cross, Kumo breakout, and price hold above the $14 - $15 range before entering a long position.

Given the current oversold levels and support, a near term price bounce back to $14 is likely. If a Kumo breakout does succeed, then $16.50, ~$18, and $24 become the new price targets. However, given the bearish technicals, a resumption of the downtrend, post-bounce, is probable; especially without significant new buying volume entering the market. The downside price targets are $10 and $8 (critical to hold or $4 comes into view).

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

Christopher 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. Follow @chris__brookins

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. Follow @Quartlifecrypto

‏Source bravenewcoin.com





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