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Basic Attention Token Price Analysis – Publisher growth explodes as Ethereum fees hamper on-chain activity

Transactions per day have decreased substantially since June, which is likely due to the substantial increase in on-chain Ethereum fees.

Basic Attention Token (BAT) is an Ethereum (ETH) based ERC-20 token, designed to be exchanged between publishers, advertisers, and users.

Brendan Eich is the founder and CEO of BAT, and is also the creator of Javascript and co-founder of Mozilla and Firefox. The token is designed to put a value on user attention. The BAT market cap currently stands at US$288 million with US$20 million in trading volume over the past 24 hours.

Watch a summary of this analysis on YouTube

The project encompasses an open-source, decentralized ad exchange platform, designed to address fraud and opaqueness in digital advertising. The BAT ecosystem also includes Brave, an open-source, privacy-centered browser designed to block trackers and malware. The Brave browser decreases page load times by blocking ads, while enabling micropayments between publishers and content creators, and provides an alternative to ad-based revenue streams.

When a user opts into Brave Rewards they start seeing Brave Ads and accumulate BAT, which they can claim on a monthly basis via the integrated wallet. Users can customize how many ads they’d like to see, 1 to 5 per hour, or choose not to see any ads.

Brave Ads don’t replace current web page ads, they are separate and uniquely different. Users see them as offers in the form of notifications. When users click to engage with these notifications, they’re presented with a full-page ad in a new ad tab of the Brave browser. Because ad matching happens directly on the user’s device, the user’s data is never sent to anyone, including Brave.

Users can donate the BAT earned from viewing Brave Ads to their favorite websites, YouTube creators, or Twitch streamers. Soon they will also be able to redeem BAT for real-world rewards, such as hotel vouchers and gift certificates via TAP Network’s 250,000 brand partners.

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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. Earlier this year, Brave announced that users will soon be able to directly withdraw BAT from the browser, after verifying with Uphold.

Brave released v1.0 in mid-November and reported 15 million active users in earlier this year. 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 now registered over 926,000 registered publishers listed to collect BAT funds from Brave users on YouTube, Twitch, Twitter, Reddit, Vimeo, Github, SoundCloud, and other websites. Over 50% of all registered publishers originate from Youtube and all categories have seen continued growth over the past year.

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Source: batgrowth

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Source: batgrowth

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Source: batgrowth

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Source: batgrowth

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Source: batgrowth

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Source: batgrowth

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Source: batgrowth

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 as the donations are anonymous. Scott also sent Brave a formal right-to-be-forgotten request under GDPR 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 states 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 last year, 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.

In May 2019, Dr. Johnny Ryan, Chief Policy & Industry Relations Officer at Brave, testified at the US Senate Judiciary Committee hearing on “Understanding the Digital Advertising Ecosystem and the Impact of Data Privacy and Competition Policy.” Ryan echoed Brave’s commitment to user privacy.

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

Despite Brave’s concern with user privacy, one user noticed exchange referral links being auto-completed in the search bar. Eich apologized saying, “the auto-complete default was inspired by search query clientid attribution that all browsers do, but unlike keyword queries, a typed-in URL should go to the domain named, without any additions. Sorry for this mistake, we are clearly not perfect, but we correct course quickly.”

Earlier this year, the Brave browser added a Gemini exchange trading widget. Content creators verified with Brave can also custody crypto assets in the Gemini Creator Wallet, including BAT. In March, Brave also integrated a Binance trading widget and partnered with BitFlyer in July.

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The Brave platform has completed three rounds of seed funding; a November 2015 raise of US$2.5 million, an August 2016 raise of US$4.5 million, and a January 2017 raise of an undisclosed amount. Notable investors include Digital Currency Group and Pantera Capital. According to a May 2019 CoinDesk article, 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 over 156,000 ETH, or US$35 million at that time, in 30 seconds from 130 participants. Each of the one billion ERC20 tokens available for the crowd sale was sold at a price of US$0.036. According to wallet data, BAT spent 6,000 and 7,000 ETH in May and June 2019 (shown below), with no remaining ETH in their ICO wallet. The BAT team holds 500 million tokens and, according to the team, the total supply of BAT will never exceed 1.5 billion tokens.

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Source: sanbase

On the network, the number of BAT transactions per day (line, chart below) briefly increased to just under 10,000 in late June, a new all-time high. Transactions on the network spike once a month when BAT rewards are distributed to creators. Overall, this metric has increased considerably since September 2019. However, since July, transactions per day have decreased substantially, likely due to the substantial increase in on-chain ETH fees currently.

Average transaction values (fill, chart below) have largely remained below US$4,000 since January 2019. Average transaction values tend to spike with any price spike of the token and can be inversely related to transactions per day, as micropayment utility for the token increases. The recent spike in average transaction values is likely related to BAT rewards distribution.

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Source: CoinMetrics

The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has decreased to 15 over the past few weeks. This metric has remained well below historic levels, suggesting increased token utility since mid-2018. 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.

Monthly active addresses (MAA) have recently increased to 4,500, surpassing the multi-month high in May 2019 (fill, chart below). However, since July, active addresses have decreased by more than 50%. A sustained increase in MAA, similar to rising transaction per day metrics, shows increasing utility for the chain, as opposed to a spike in MAA 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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Source: CoinMetrics

Turning to developer activity, the BAT project has 165 repos on Github. The Brave core repo has had over 3,500 commits over the past year from 58 developers (top chart, shown below). The Brave browser repo also has 381 commits over the past year from 52 developers (bottom chart, shown below). Recent updates have included; improved privacy integration, Wayback time machine access, and opt-in Brave ads.

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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Source: Github – brave-core

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Source: Github – brave-browser

Worldwide Google Trends data for the term "Basic Attention Token" have slowly been increasing since January, suggesting grassroots interest in the coin. 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 broadly increased.

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, the Bitcoin price dropped.

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Technical Analysis

BAT has mainly been held to a wide but defined range since trading began in June 2017. To determine the existence or strength of any trend, Exponential Moving Averages, Volume Profile of the Visible Range, Pivot Points, Relative Strength Index, and the 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-day Exponential Moving Average (EMA) and 200-day EMA crossed bullish on June 4th, the first such cross since March 2019. However, over the past 50 days, the BAT/USD spot price has declined nearly 50% and fallen below the 200-day EMA. Over the next two weeks, a bearish Death Cross will likely emerge, suggestive of bearish continuation.

Volume Profile of the Visible Range (VPVR, horizontal bars) shows strong support at the US$0.19 zone and now strong resistance at the US$0.26 zone. Yearly pivot resistance also stands at US$0.26, US$0.42, and US$0.66. Additionally, a growing bullish divergence has begun on RSI, suggestive of weakening bearish momentum in the near term. This divergence will continue so longs as the spot price continues making lower lows with a higher low on RSI.

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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 (20/60/120/30) are bearish; the spot price is below the Cloud, the Cloud is bearish, the TK cross is bearish, and the Lagging Span is below the Cloud and below the spot price. The trend will remain bearish so long as the spot price remains below the Cloud, currently at US$0.25. The Cloud also shows a growing TK c-clamp suggestive of oversold conditions.

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On the BAT/BTC pair, trend metrics are bearish with the spot price below the 200-day EMA and the daily Cloud. Strong VPVR resistance now sits in the 2,000 sat zone, with further overhead VPVR resistance strongest at the 5,000 sat zone. Upside targets also include the 4,500 sat zone near the yearly pivot. Should the current 2,000 sat support zone fail, a revisit to the all-time low at 1,000 sats is likely.

Additionally, a growing bullish divergence has begun on RSI, suggestive of weakening bearish momentum in the near term. This divergence will continue so longs as the spot price continues making lower lows with a higher low on RSI.

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Over the past two years, the Brave Browser has continued to post strong active user numbers and an increase in publishers across multiple new-media platforms. The total number of registered publishers on all platforms has quickly approached one million.

On-chain data, including transactions per day and active addresses, increased substantially in Q3 but have decreased almost equally in recent months. The decline in on-chain activity is potentially directly related to the substantial rise in ETH transaction fees over the past few months. Also, a rise in active addresses may be a direct result of the increase in subsidized publishers, and not necessarily an increase in BAT holders and users. Additionally, the circulating supply of over one billion BAT tokens are likely to provide continued downward pressure until active Brave users, active addresses, and daily transaction amounts increase dramatically.

Technicals for both the BAT/USD and BAT/BTC pairs are definitively bearish. Over the past 40 days, both pairs have declined over 40%. The trend litmus test for both pairs, a spot price below both the 200-day EMA and the daily Cloud, confirms a bearish trend. A bullish divergence is present on both pairs, suggestive of weakening bearish momentum in the near term. Support stands at US$0.19 and 1,000 sats for BAT/USD and BAT/BTC, respectively. Speculators may look to begin catching falling knives, with special attention to any further bullish divergence over the next few weeks.


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