Neo Price Analysis – ICO tokens soon to be released

At US$3.4 billion, NEO (NEO), is now the sixth largest among cryptocurrencies and assets. Formerly know as Antshares, and dubbed by many as the “Ethereum of China,” NEO has risen sharply since its ICO, rebrand, and heavy marketing effort in late 2016.

NEO was founded by Da Hongfei and Erik Zhang. Unlike any other cryptocurrencies or assets, NEO uses neither Proof of Work (PoW) or Proof of Stake, but a consensus mechanism known as delegated Byzantine Fault Tolerant (dBFT).

This mechanism separates nodes into two categories. Bookkeeping nodes, which are delegated by the network and earn a deflationary cryptocurrency called GAS through the block reward. Other nodes are simply users of the network. Users can earn GAS by holding NEO in a wallet, a process similar to staking.

Much like Ethereum, NEO’s main use case is a decentralized smart contract network. Smart contracts are essentially if-then statements which carry out desired rules without a third party intermediary. The network also has the capability for atomic swaps, decentralized exchanges, on-chain governance through NEO token holders, and off-chain governance through the NEO council, which consists of founding members of the project.

The NEO ICO raised a total of 6119.53BTC, from August 8th to September 7th 2016. The ICO created 100 million NEO tokens – 50 million split among the crowdfund, and 50 million distributed to the NEO council. The NEO council tokens will be unlocked on October 16, 2017.

The network boasts 15-20 second block times, although the number is currently ~26 seconds on average with 8 GAS being distributed as a block reward. All GAS will be distributed over 22 years with a deflationary curve.

Over the past month, the network has averaged about 10 transactions per block. With a 25 second block time, this yields 3600 transactions per day on average. In contrast, Ethereum has been averaging 283,000 transactions per day.

On September 4th 2017, China announced an ICO ban and NEO released a statement shortly after promising investors “sustainable development under existing laws and regulations.”

NEO was then listed on Bitfinex September 7th 2016, which gave the asset increased legitimacy, visibility, and provided a liquidity boost for speculators who bought the ICO.

On September 29th, 2017, NEO was listed on the South Korean exchange CoinNest with a South Korean Won (KRW) pair.

Exchange traded volume is led by the BTC pair where volume is shared between Bittrex and Binance, an exchange based in Shanghai and Tokyo.

Technical Analysis

NEO’s ICO is now just over a year old and provides ample price data to assess a trend and price targets.

Using Fibonacci retracement levels and extensions, which act as potential reversal zones for price, the 50% retracement has been tagged. This is a common phenomenon known as Dow Theory. A breach of all time highs would suggest a move toward the 1.618 Fibonacci extension, a target of 0.0202BTC.

There was also a multi-week bull flag which broke down unexpectedly on August 29th. This may have represented insiders selling the ICO ban news made public on September 4th.

The Ichimoku Cloud on the daily chart, using singled settings (10/30/60/30) for quicker signals, shows price moving through the Kumo Twist. This is a region where no support or resistance exists, and if momentum should present itself, price often touches or pierces this zone.

On balance, signals are far from bullish. Price is below the cloud and future cloud is bearish. A long entry signal would trigger when both metrics flip bullish.

The Ichimoku Cloud on the daily chart shows mixed signals, using doubled settings (20/60/120/30) for more accuracy. Price is nearly above the cloud, with a bullish future cloud. Both bullish signs. The TK cross, however, is not bullish and likely will not be for many days.

The Ichimoku Cloud on the four hour chart shows nothing but bullish signals. A long entry occurred on the Kumo Breakout (green arrow), which was confirmed by the 50/200EMA cross a few days later (yellow arrow).

There was a bearish divergence, a reversal signal, with higher highs in price on lower momentum, which is currently playing out now. Kijun support is currently at 0.007BTC and would trigger a long re-entry with a Kijun Bounce.

Lastly, there is a Cup and Handle bullish continuation chart pattern forming on the one hour time frame, with a measured move of 0.01BTC. The 1.618 fib extension suggests 0.097BTC.

Conclusion

The Antshares rebrand and ICO just had its one-year anniversary. When 50 million NEO council tokens are unlocked in 13 days, a significant supply shock may have a bearish influence on price should any council members want to sell their holdings.

With limited network statistics to help determine the growth of the network, it is difficult to evaluate the true value of the network beyond speculation. China’s ICO ban certainly dampened price simply by association, but expect NEO to rebound strongly on a ban reversal or more supportive regulations.

Technicals suggest that the trend is likely to experience bullish continuation, to between 0.01BTC and 0.02BTC in the near term.