Basic Attention Token (BAT) is a Utility Token that we have been paying attention to since its public release in 2017.
For us, when deciding which assets to buy into – we like to see that there is an overall level of reliability that exists. Usually, this is difficult to ascertain – but, in the case of BAT, our decision was a simple one.
This is a solid track record that has been built over a span of nearly 25 years.
Unlike the string of other digital asset developers who seemed to appear out of thin air, the BAT project is both managed and endorsed by individuals who will have a lot to potentially lose, if they were to engage in financial foul play.
For this reason, BAT is an asset that we are very interested in as there are many factors that allow us to have confidence in its potential long term viability.
However, unlike assets such as Binance Coin (BNB) – the operators of BAT are not endowed with an untapped reservoir of continuous liquidity – this is the only factor that gives us pause.
But this is a situation that may change in the future.
The storm that lies ahead
The team responsible for the maintenance of BAT have created a web browser: Brave.
Through this browser users are rewarded (with units of BAT) for contributing their attention to content, and publishers are rewarded for producing content that is able to draw the attention of users.
This obviously boosts the utility value of the token, however – there are arguments that can be made as to whether or not this will cause continued selling pressure since users will obviously have to cash in their rewards via dumping BAT onto the exchanges.
This is a genuine concern.
However, based on the level of capital that the BAT team is able to contribute toward counterbalancing this threat by absorbing this inevitable flood of sell side pressure – it may not be as much of a risk.
The main risk here is the ability of the BAT Team to remain well funded enough to continue to prop up the price of their token.
In any case, the Brave Browser’s reward system isn’t at all widely used at this point – never the less, if it’s popularity were to increase then this issue of immense sell side pressure will become the ‘main’ threat to the project.
For now though, we can enjoy the calm before the potential storm
Technical Analysis, the right way
Since BATs 2017 release, the trend has been upwards. This is an asset that has essentially been undergoing a bull run for nearly a year and a half.
We enjoy assets like this.
Assets such as BAT that are endorsed by individuals that have a lot to gain by maintaining a proper public image are usually good bets.
Just look at the BAT/BTC monthly chart.
The price of this asset is being managed in a controlled and purposeful manner.
No wild swings.
The daily chart illustrates how the price is gradually pushed upwards over a span of several weeks and subsequently, controlled declines occur over a similar time span – making for a very reliable asset.
We added to our position in January, based on the thesis described throughout this article.
Exploiting recurring price patterns
Its first week of trading on the Binance Exchange saw prices close at 0.00001983 BTC per BAT.
Two months later BAT was trading at a high of 0.00006670 BTC, An overall gain of more than 230%
But what goes up must come down.
By March of 2018, the price had fallen to 0.00002125 BTC per token.
This is a decline of 68%
Just a month later BAT was trading at a high of 0.00005821 BTC.
An expansion of value by 174%.
This was followed by a decline which culminated in August of 2018 as prices fell to 0.00002056 BTC.
A 65% loss of value.
By November of 2018, value expansion had occurred and taken BAT to a price of 0.00005992 BTC per token.
This is a 191% gain.
Then, another round of value extraction – which caused prices to slide downwards.
By February of 2019, units of BAT were again being sold on the cheap. In fact, if you were interested in making a purchase – you could have scooped up some tokens at 0.00002970 BTC a piece.
51% cheaper than it’s previous high.
As you’re aware by now – value extraction is followed by value expansion, and vice versa. This is a movie that we have all seen before.
Just last month the price reached a high of 0.00009400 BTC per token.
A gain of 216%.
The devil is in the details
Basic Attention Token has had 3 somewhat major declines in value. And, all three times the price dipped by percentages within the 50 – 70% range.
This is how we ascertain whether an asset is overpriced or not. We look to the history of its price movement.
Important questions are; when was the last decline? How many declines have occurred? Typically, what percentage of value does the asset lose when value extraction occurs?
The answer to the above three questions is same as the answer to: Is it time to buy, or sell?
Hence why we have begun the process of exiting our BAT position – for now.
BAT is overpriced currently in comparison to its historical, recurring patterns of price movement.
The orderbook is showing how thin the spread is, which is usually a sign of enormous buy side interest – which is too tempting for those that are in control of BAT to ignore.
Based on the recurring patterns we have described, we anticipate a round of value extraction is on the horizon.
Nevertheless though, as mentioned at the start of this artictle – BAT remains one of the safest bets in the market.
Basic Attention Token is an asset that we feel has immense long term viability. It’s an asset that can be relied upon in ways that others cannot.
We’re always interested in this particular asset. When the time is right, we’ll be revisiting this asset.