DASH Price Analysis – Marketing budget supports technical upside potential

DASH is currently the sixth largest cryptocurrency by market capitalization, with a market capitalization of US$2.54b. The asset was recently selling for a record high price of ~US$400, before dropping to ~US$200 and recovering, which has given investors more than a 15 fold increase since February 2017.

Founded by Evan Duffield, an American programmer based in Phoenix, Arizona, DASH was first released in January 2014 as XCoin, rebranded to DarkCoin, and then renamed again in 2015.

A protocol feature called “PrivateSend” lends DASH to be labelled as a ‘privacy coin,’ along with Monero and ZCash. PrivateSend is essentially a coin mixing service which combines identical inputs from multiple users into a single transaction with several outputs.

The cryptocurrency uses a two-tiered PoW (PoW) and Proof of Stake (PoS) consensus model. PoW mining verifies the ledger and receives most of the block reward. Only ~18,000,000 total DASH will ever be mined with block rewards decreasing by 7% a year until no rewards exist.

PoS occurs through Masternodes, of which there are currently over 4500, that perform additional higher functioning tasks. A protocol feature dubbed “InstantSend” allows the Masternode network to confirm transactions near-instantly, bypassing block confirmations through miners.

Masternodes  require 1000 DASH as collateral, in order to prevent Sybil attacks or “ballot stuffing,” during governance functions. This collective hybrid consensus model is an attempt to separate those who care about the future success of DASH from those who are simply coin agnostic and mine the most profitable coin at the time.

DASH also uses a dynamic block reward, split 45/45/10% between miners, masternodes, and a “treasury.” Miners currently contribute 107.5 GH/s to the network, which has experienced dramatic growth recently.

The Masternode governance model also provides a decentralized voting mechanism. Dash related projects, and their related budgets, are voted on by masternodes. Each project, if it passes, is added to the total budget and paid directly from the blockchain to the person doing the work.

While mechanism has resulted in various projects being funded by the network, a substantial amount of proposals focus on marketing, from sponsoring events to radio ads. Masternodes currently cost US$339730, and return 8.31% P.A.

Courtesy of Dash Force News

DASH funded USD$859,647 worth of projects and PR campaigns in August, including its own conference, which concluded in London yesterday, and a commercial, which appeared in-flight on American and Virgin America airlines.

In January 2016, DASH stakeholders voted to increase max block size from 1MB to 2MB. A DASH block has never exceeded 20KB. There are also further plans to increase block size to up to 400MB. Duffield discusses the economics of scalability further here.

The DASH network currently facilitates 9.5k transactions a day, up sharply from earlier this time last year. This compares favourably to Monero’s 4k/day and ZCash’s 5.4k/day, while Bitcoin currently processes 203k/day and Ethereum’s 260k/day.

DASH exchange traded volume is led by trading in the Korean Won (KRW), where Bithumb and Poloniex facilitate the majority of trading.

Technical Analysis

DASH is currently near all time highs and in a pattern of consolidation, with weekly volume declining since April, there is a high likelihood that it will push higher

Measuring the uptrend with a Pitchfork, price has remained in a diagonal channel below the median line (ML) for several months.

The ML represents the mean of the trend, thus giving the current price position plenty of room for both continued bull trend as well as some pullback. The diagonal above the ML sets resistance at ~0.25BTC.

Also on the weekly chart, there is a bullish continuation pattern forming. A pole with a horizontal price channel and descending volume profile is known as a pennant. The pattern yields a measured move of ~0.240BTC and a 1.618 fib extension of ~0.200BTC.

On the daily time frame, with Ichimoku Cloud using singled settings (10/30/60/30) for quicker signals, price recently underwent a bullish TK cross with all other cloud metrics including price position relative to cloud, future cloud, and lagging span also being bullish. This indicates a long entry signal despite the months long channel DASH has been confined.

On the daily time frame, with Ichimoku Cloud using doubled settings (20/60/120/30) for signals with higher accuracy, all Cloud signals are decidedly bullish. There is a TK disequilibrium forming which is suggestive of either a pullback or slowing of the trend before further continuation. A stab down could occur to the level of the Kijun, at 0.07BTC.

The 50/200EMAs on the daily have been crossed bullish since late January, with no threat of a bearish death cross. The EMAs have also been gently sloping upward, suggesting a smooth bullish bias.

On the four hour time frame, with doubled Ichimoku Cloud settings, price experienced a Kijun bounce, which is essentially a mean reversion of trend. This can occur at any time but has the highest probability to occur after a TK disequilibrium forms.

Lastly, there is a Cup and Handle bullish continuation pattern currently forming. The pattern is invalidated if a candle closes below 50% of the formed cup, or 0.083BTC. The volume profile is ideally descending throughout, which is not apparent here but is more obvious on the weekly time frame. The measured move and 1.618 fib extension yields targets of ~0.111BTC-0.121BTC respectively.

Conclusion

The DASH network handling <10k transactions per day is underperforming for a currency with a ~USD$2.5 billion market capitalization. However, the PoS component partially contributes to the inflated market capitalization by removing DASH supply from trading supply on exchanges.

Although the 1000 DASH collateral in Masternode stake can be removed at any time, currently 4556 Masternodes soak 4,556,000 DASH or 60% from total supply.

However, the marketing and PR budget has increased substantially as the price of DASH has increased. This allows DASH to target further market penetration, increase adoption, and attract more speculative investment.

Technicals appear strongly bullish with a months long period of bullish consolidation ending soon. Near term targets are ~0.111BTC-0.121BTC with longer term targets of ~0.200BTC-0.240BTC.