DISCLAIMER: The information contained in this newsletter is for informational purposes only and should not be considered financial or investment advice. Any opinions expressed in this newsletter are solely mine.
Welcome to the eighth week of weekly market narratives, the substack gets you up to speed with the narratives I’m looking at. Last week I wrote my decade-long thesis on digital assets. Read it here.
Executive Summary
$BTC 7D: +0.3% | $ETH 7D: +2.5%
The weekend was characterized by USDC fud as more truth about the SVB situation came to light. Market participants with past trauma from FTX / LUNA rushed to the exits - we saw USDC go as low as 0.88.
But anyone who kept their head and thought logically saw that this was a no-brainer long; the calculations showed that even in the worst-case scenario, USDC was probably not going to go underwater - this was one of those “free money on the floor” situations.
Moving forward, I find it highly likely that we will soon be seeing a period of Quantitative Easing - the Fed is stuck between a rock and a hard place. On one hand, they’ve constantly said that they are adamant about restricting inflation, and will only halt hikes when inflation has shown consistent signs of slowing down. On the other hand, the old adage that “the Fed will tighten until something breaks” rings true - with increasing pressure by the entire VC ecosystem on bailouts, the Fed can’t just sit around anymore.
So, what’s the most likely outcome? Well, they’ve already given us a sneak peek - the Fed has said that they would “make additional funding available to banks” - all whilst still pushing a “no inflation narrative”. TLDR - QE will come in a different form, but the overarching narrative by the Fed will still be “no inflation” for them to kill two birds with one stone.
The coming weeks will be extremely important for us to monitor - with CPI and FOMC coming up soon, the numbers that come out will set the foundation for market action in the coming weeks. I’m thinking that we will see a period of bullishness in crypto-assets.
On the shorter term, I’m bearish because everyone seems overly euphoric, but on the longer term I’m expecting more bullishness in the markets soon. Position accordingly.
Market Narratives
Stablecoin Alts Look Overextended
$TRUEFI 7D: -9.7% | $LTQY: +34.1%
These coins saw an incredible pump amidst the stablecoin fud. Known as the “decentralized alternatives” to stablecoins, I’m seeing a golden shorting opportunity in these assets - mainly because their charts look incredibly tasty. I particularly like shorting over-extended alts that have gone past their prime, and LQTY is no exception. With people in the markets starting to put market cap comparisons, it looks to me like peak euphoria is in. Take note - you’re trading countertrend to current market conditions (as of 14 March) with this; it is not for the fainthearted
CZ Saving The Day?
The key here is identifying what projects were previously known to have been bankrupt. These alts would make extremely good longs in the short term, and you can expect such alts to outperform ETH in this scenario.
$ZERO
I’m still waiting… With the recent tokenomics change of STG and how the team seems to suddenly be alive with activity, I’m eagerly looking out for LayerZero to drop their token.
Decentralized Leverage Perpetuals
$KWENTA 7D: +28.9%
With Kwenta going on an absolute tear, I expect other decentralized perps to follow the same - in the order of the ones on Optimism, then Arbitrum (GMX), then perhaps BNB’s Level. But the highest EV trade here remains the ones closest to the main chain - i.e GNS / LYRA, or the token itself. I personally am not touching anything related to this because I know nothing about the project and can’t build a solid thesis around it.
Old Narratives Revive
LSDs
AI
Arbi
China coins
IMO, these are the 4 narratives that are most likely to see a resurgence - with LSDs being at the top of the list because of the upcoming Shanghai upgrade. China coins in particular because FIL is leading the pack - and with the EVM launch coming up, I believe that we can see a trickle down effect in that sector.
But I think what’s more important is seeing how FIL reacts to the launch of the EVM - if price shoots back down, it means that the market isn’t ready for a risk-on approach yet.
Useful Tweets
first time read, i like it