Numeraire (NMR) is a cryptocurrency with a $38 million market cap that did more than $18 million in volume over the last twenty-four-hour period. On an average day, this coin doesn’t reach more than $30,000 or $40,000 in daily volume, so a huge spike in volume like this has caught our attention and driven us to ask – what’s going on?
Let’s try and figure it out.
For those not familiar with Numeraire, it was launched privately back in February to incentivize data scientists around the world to contribute artificial intelligence to a hedge fund set up by the token’s parent company – Numerai.
A few months later, in June, the Numeraire smart contract was deployed to Ethereum, and over 1.2 million tokens were sent to 19,000 data scientists around the world.
The idea is to create a hedge fund that’s set up as a sort of collaborative effort fund, which sort of flies in the face of the current fiat system which is extremely adversarial and has various funds working against each other in order to try and achieve superior gains.
The way Numeraire was set up, at least initially, was as a reward system for any data scientists that can prove their approach to generating returns is successful. The higher the rate of return on a particular strategy, the more Numeraire the data scientist or scientists in question receive as a reward and the higher the exposure said scientists have to the hedge fund and – by proxy – its returns.
The idea is neat and it’s one that has drawn a considerable amount of speculative attention since its initial implementation. It also picked up some big-name backers along the way, boasting an investor roster that includes Union Square Ventures, Joey Krug (Augur), Juan Benet (FileCoin), Fred Ehrsam (Coinbase), and Olaf Carlson-Wee (Polychain).
None of this explains why the company has just picked up a huge amount of volume against the backdrop of relatively low daily volume historically, however.
So, we’ve got to look at whether there is any major news or events that have hit press that might be driving interest. For this, we can jump over to the company’s major communication channels – Twitter, Medium, Reddit – and see if there’s anything fresh that might be bringing volume.
In two words, there isn’t.
There are some mentions of a revised reward system on the company’s Twitter account and a few old posts on the latter of the above three mentioned outlets, but nothing groundbreaking and certainly nothing that is going to drive volume to the scale that we have seen over the last 24 hours.
There is also nothing fresh on the company’s website and today doesn’t really mark any preplanned event date that might be piquing market interest in the same way that a binary catalyst might do in the biotechnology sector, for example.
So, in the absence of anything fundamental driving price, we can only really come to the conclusion that this one is being pumped from somewhere. With this in mind, the recent gains are almost certain to turn around near term as the pumpers offload pre-loaded positions.
With that said, however, this doesn’t mean that we don’t like this token and, by proxy, the company, longer term.
The idea is incredibly smart and is one that could genuinely revolutionize the way that hedge funds achieve returns and – at the same time – the way that artificial intelligence is integrated with the financial space.
As a long-term play, then, any reversal of the current run might be a nice opportunity to pick up some discounted tokens ahead of a return to the longer term upside action – just don’t get in too early.
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Image courtesy of Numer.ai
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.