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Basic Attention Token Price Analysis – Fundamentals rising

Fundamentals, based on Brave active users, publisher numbers and on-chain metrics, suggest a continued and sustained utility of the Brave browser and BAT token over the course of this year.

Basic Attention Token (BAT) has gained more than 300% in the past few months, but remains down 61% from the record high established in January 2018. The market cap currently stands at US$486 million with US$2.08 million in trading volume over the past 24 hours.

Over the past few years, Google and Facebook have dominated the online advertising industry. Together, the two companies and their advertising networks collect over 73% of all online digital ad revenue, and accounted for 99% of growth in U.S. online ad budgets from 2015 to 2016. Moreover, not only has the market turned into an effective duopoly, ads have significantly increased website load times. More and more users have also opted to use ad blockers, which has lead to decreasing revenue for the majority of online publications.

BAT is an Ethereum (ETH) based ERC-20 token, designed to be exchanged between publishers, advertisers, and users. Brendan Eich, founder and CEO of BAT, is also the creator of Javascript and co-founder of Mozilla and Firefox.

To tackle page load times, as well as provide BAT with more utility and provide his investors with a return, Eich created the Brave web browser. The Brave browser decreases page load times by blocking all ads by default, enables micropayments between publishers and content creators, and provides an alternative to ad-based revenue streams.

The traditional revenue cycle for content creators and online publications has also given rise to publisher-specific subscription models. This has created a diminished user experience across the web broadly, as users need to manage these subscriptions individually on a site-by-site basis. The Brave/BAT combo, on the other hand, creates a seamless payment experience which occurs invisibly in the background while surfing the web. Brave users can also enable direct payment support for YouTube and Twitch streaming.

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The Brave platform saw three rounds of seed funding; a November 2015 raise of US$2.5 million, an August 2016 raise US$4.5 million, and a January 2017 raise of an undisclosed amount. Notable investors include Digital Currency Group and Pantera Capital. According to CoinDesk, Brave is looking to raise another US$30–US$50 million at a valuation of US$133 million.

The BAT token ICO occurred in May 2017 raising US$35 million in 30 seconds with 130 participants. Each of the one billion ERC20 tokens available for the crowdsale was sold at a price of US$0.03. The BAT team holds 500 million tokens and, according to the team, the total supply of BAT will never exceed 1.5 billion tokens.

In January, Brave announced opt-in ”Brave Ads” within the browser’s Brave Rewards settings. In April, Brave rewards were released on Android as well. The function allows users to be paid for viewing and interacting with ads curated by the Brave platform. Brave claims that users will receive 70% of the gross ad revenue. Brave has also partnered with Cheddar, a news and media organization, to provide free subscriptions to premium Cheddar content.

Creators and publishers do not need to use Brave to collect BAT payments, but can complete the verification process on Uphold, a payment processor, where audience contributions are kept in escrow. BAT can also be automatically converted to fiat currencies and transferred to the creator’s bank account on Uphold.

Brave recently reported 20 million downloads and 5.5 million active users, with 20% of users on desktop and 80% on mobile. In comparison, as of November 2016, Google’s Chrome browser reported two billion installs. However, in repeated head-to-head testing, Brave had the quickest load times amongst competitors Chrome and Firefox. The Brave platform also has almost 140,000 registered publishers listed to collect BAT funds from Brave users on YouTube, websites, and Twitch.

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Early on, Brave began collecting BAT donations for unverified publishers without their knowledge. YouTuber Tom Scott was angry to learn the platform was collecting donations on his behalf =and called for all BAT to be refunded, which is impossible because the donations are anonymous. Scott also sent Brave a formal right-to-be-forgotten request under GPDR guidelines.

Eich responded by pointing to the BAT terms of service which acknowledges that funds donated to an unverified publisher are held for no less than 90 days before being sent to BAT’s user growth pool. Eich further acknowledged that no BAT has ever been clawed back thus far for this reason.

Additionally, there remains no opt-in option for publishers as, according to Eich, the feature would kill user-driven growth. Brave has changed the rewards system to make it clear which creators haven’t yet joined through the verification process, and has no images of unverified creators in the platforms tipping panel.

There was further controversy a few months ago, regarding Brave’s ability to remotely inject headers in HTTP requests. Eich responded on Reddit by acknowledging that the custom HTTP headers are sent to Brave partners, with fixed header values. He added that this does not represent a privacy backdoor and that there is no tracking hazard.

Brave also offers private Tor browsing on desktop, and DuckDuckGo for private mobile tabs, as well as an integrated ETH browser wallet, MetaMask. Brave is also the default web browser for the recently released HTC Exodus1 blockchain phone.

On the network side, the number of BAT transactions per day (line, chart below) cleanly broke above the previous record high in early March and have continued to soar. Transactions per day are currently above 4,500. The previous spike in October and early November was likely due to speculative demand and/or transactions from a Coinbase listing at that time.

The sustained growth suggests ongoing speculative as well as continued utility. At the same time, the average transaction value (fill, chart below) has decreased substantially since December. Average transaction values should continue to decrease as micropayment utility for the token increases.

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The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has risen from below 30 to over 100 in the past few months. A clear downtrend in NVT is bullish and suggests the coin is undervalued based on its economic activity and utility, whereas an uptrend should be considered bearish. Inflection points in NVT can be leading indicators of price reversal.

Daily active addresses (DAA) have increased to nearly 4,000, a new ATH (fill, chart below). A sustained increase in DAA, similar to rising transaction per day metrics, shows increasing utility for the chain, as opposed to a spike in DAA which largely suggests short-term speculative demand. Active and unique addresses are important to consider when determining the fundamental value of the network using Metcalfe’s law.

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Turning to developer activity, over 20 developers have contributed a cumulative over 1,000 commits to the 46 BAT repos in the past year. Most of the BAT related commits have occurred in the publishers repo (shown below). This week, Brave released browser version 0.64.75.

Most coins use the developer community of GitHub where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

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BAT exchange-traded volume in the past 24 hours has predominantly been led by the Bitcoin (BTC) and Ethereum (ETH) pairs with the Coinbase’s USDC pair representing 12% of total volume. BAT was first listed on Bittrex in June 2017, followed by a Binance listing in November 2017, a Bitfinex listing in January 2018, a Poloniex listing in August 2018, and a Coinbase listing in November 2018. BAT/USDC and BAT/ETH are the only pairs listed on Coinbase Pro, but BAT can be purchased for USD through Coinbase’s retail platform. Earlier this month, Binance added BAT/PAX, BAT/TUSD and BAT/USDC trading pairs.

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Google Trends data for the term "Basic Attention Token" shows a continued rise in interest over the past few months. A spike in early November 2018 corresponded with the Coinbase listing. Searches also spiked near the ICO date in May and June 2017, as well as in late 2017 when all crypto-related searches increased broadly. Spikes in Google searches often correlate with spikes in market prices. A 2015 study found a strong correlation between the Google Trends data and Bitcoin price, while a May 2017 study concluded that when the U.S. Google "Bitcoin" searches increased dramatically, Bitcoin price dropped.

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Technical Analysis

The fiat markets for BAT are fairly new and lack price data, therefore charting the BAT/BTC pair is the most prudent. As BAT continues to range, the volume profile of the visible range (VPVR), exponential moving averages (EMAs), and Ichimoku Cloud can help determine optimal entry points. Further background information on the technical analysis discussed below can be found here.

On the daily chart, the 50 and 200 day EMAs had crossed several times over the course of 2018, with no sustained long term trend emerging. In early 2019, a 50/200EMA cross led to a 180% move as price exceed the historic range above 5,000 sats. Price has returned to the 5,000 sat zone near the 200EMA. The VPVR shows, unsurprisingly, most of the volume has occurred at both extremes of the 2,000 sat to 5,000 sat range. There are no active bullish or bearish volume or RSI divergences.

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Turning to the Ichimoku Cloud, four metrics are used 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, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

The status of the current Cloud metrics on the daily time frame with doubled settings for quicker signals (20/60/120/30) are bearish; price is below the Cloud, the Cloud is almost bearish, the TK cross is bearish, and the Lagging Span is above Cloud and below price. A traditional long entry will not trigger until price is above the Cloud with a bullish TK cross.

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On the BAT/USD pair, which rose nearly 400% from February to late April, the trend metrics suggestive of a continued bullish trend with price above both the Cloud and 200EMA. Above US$0.50, VPVR shows very little volume resistance, suggesting bullish continuation is likely if price exceeds this level. A 1.618 fib extension from the most recent high to low stands at US$0.65. There are no active bullish or bearish volume or RSI divergences.

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Fundamentals, based on Brave active users, publisher numbers and on-chain metrics, suggest a continued and sustained utility of the Brave browser and BAT token over the course of this year. However, the circulating supply of over one billion BAT tokens are likely to continually provide downward pressure on price until active Brave users, active addresses, and daily transaction amounts increase dramatically.

Technicals for the BAT/BTC pair suggest renewed ranging between the 2,000-5,000 sat levels, until the range highs or lows break again. Based on the daily Cloud, a bull trend will not return until price is above the 6,500 sat level. Technicals for the BAT/USD pair suggest an active bullish trend with an opportunity for bullish continuation above the US$0.50 zone. The beginning of a bearish trend would likely begin with any candle close below the Cloud at US$0.30.


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