0xKyle's Weekly Market Narratives #2

SOLANA. SUMMER. 16 Jan - 22 Jan, 2023

Jan 15, 2023

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 second week of weekly market narratives! The only substack in the entire crypto space that covers narratives in the markets. This is still a WIP where I’m constantly working on a good format, so if you see something you like / can be improved on, don’t hesitate to let me know!

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Executive Summary

$BTC 7D: +22.0% | $ETH 7D: +20.4% | TOTAL 7D: +18.27%

What an incredible week! Ever since the yearly open, the market has been performing well, and with inflation data in-line with consensus, we’re seeing a much-awaited bear market rally. The past week has been chock full of narratives and so far the 2023 predictions by some of the bigger funds have rung true - 2023 is shaping out to be a year of narratives, where outperformance will be made through keeping a close ear to the ground instead of apeing the most random of tokens launches.

Solana has remained to be the best outperformer in my eyes, from a risk-to-reward perspective. Optimism is another token that has caught my eye, and in these market conditions, I’d argue that it’s still very much PvP, not PvE. What this means is that liquidity doesn’t trickle down as broadly as compared to the bull market, so you’re probably better off longing the strongest tokens instead.

Lastly, GCR’s tweet - these are prime conditions for projects to announce their successful launch, so I’m going to focus on the more significant projects that have something in the pipeline.

Tweet Of The Week by GCR & White Wolf :

GCR @GCRClassic

Some of the best performing coins will be the ones with the worst tokenomics, from the most predatory teams Lot of teams that launched in peak bear have been waiting desperately for more favorable conditions so they can deploy their bag of tricks and do some market manipulation

Hsaka @HsakaTrades

I see we're back to the ltf chop suey slow grind up, burj khalifa, followed by dalai lama, ad infinitum pa, before the breakout candle. A 2018 classic.

Now on to the rest of the newsletter!

Smart Money Stablecoin Flows

From 30% last week → 26% this week, we can see smart money slowly unstabling. Perhaps what’s more interesting is that in the past 7D, smart money has been selling $LDO and accumulating $dYdX.

Key Macroeconomic Events

With FOMC on 1st February, January could be shaping up to be a very good month with the lack of any key macroeconomic catalysts to push us to the downside. While this analysis is shallow, I’d argue that the past 6 months have more often than not, shown us that it’s much better to be cautiously optimistic in such circumstances than to constantly harp that “nothing has changed, inflation is still high".

Such a statement disregards the fact that the market is forward-looking and could be pricing in a bottom, knowing that the economy is a lagging indicator. Of course, it could very much be wrong; but I’d argue that such corrections only really happen in the presence of a key catalyst.

So until then, ride the wave.

Current / Upcoming Market Narratives

SOLANA SUMMER FT. APTOS AUTUMN

$SOL 7D: +74.7% | $APT 7D: +90.2%

In my previous newsletter, I talked about the $SOL shitcoin scene. I’m not quite up-to-date with SOL shitcoins, but with $SOL being up 74.7% in the past 7d, I’d argue that you’d have much better returns and emotional clarity just longing $SOL instead.

Suddenly, you have a token whose biggest dumper is gone, and was once a top 5 token with one of the largest user bases in crypto, at the same price as $AVAX. That doesn’t seem right, does it? With such huge mindshare, SOL still remains an enticing buy at these prices.

But in classic crypto fashion, the market doesn’t want to “buy something that has already pumped” - hence, the Aptos trade. I’d argue that both Solana and Aptos are thought of in the same “vein” - both with predatory VC tokenomics.

Optimism is OP (Overpowered)

$OP 7D: +53.7%

Optimism’s Bedrock upgrade on January 12th could have been a potential catalyst, but in all honesty, I believe that $OP’s relative strength to $ETH in the past few days is just a function of $OP having been a relatively strong token in the past few rallies.

Rotating into Layer 2 assets seem like a far-flung narrative in my eyes - I’d argue that the meat of the mindshare doesn’t lie in the “Layer 2” argument, but solely in $OP as a token. But the great thing about this trade is that if $ARBI decides to launch, you can most definitely believe that $OP will be sent.

Stablecoins Rule Everything Around Me

$AAVE 7D: +33.6% | $CRV 7D: 43.2% | $BTRFLY 7D: 7.1%

With $GHO / $crvUSD / $DINERO being announced a few months back, now would be a great time for the team to announce a launch of some kind. If so, we could expect further pumps in their native governance tokens.

The problem with this trade is the holding period - without knowing an exact date, you might end up eating a loss if the bullish sentiment reverts. Low leverage spot with wider stops might hence be the better play so that you’ll be able to absorb larger fluctuations.

Sn/Fr-axgener 200x @napgener

$CRV finally launching crvUSD this month. Llamakek.

The App-Chain Thesis

$SYN 7D: +46.7% | $dYdX 7D: +24.3%

This part is quite self-explanatory - big token with big mindshare launches big chain with big announcement, pamp. I’m genuinely bullish on what they’re doing and know that if they manage to announce a successful launch in these market conditions, we might see a giga pump.

AI Tokens

$OCEAN 7D: +24.1% | $ROSE 7D: 27.8%

The AI narrative is as strong as ever, and every day I hear of a new AI shitcoin that pumps. I’m not sure what is the “full basket” of AI coins, but the notable ones are:

$PHB | $OCEAN | $ROSE | $FET | $AGIX | $CTX | $RLC

owen @owen1v9

ai will be a strong narrative the whole year imo worth to keep an eye on

Metaverse Tokens

$GALA 7D: +102.1% | $MANA 7D: +62.6%| $SAND 7D: +42.1%

The metaverse rotation seems to be slowly cooling down, but it’ll be a good basket of tokens to keep your eye on. As I wrote last week, these have low unit bias and an incredible ability to news-pamp, so it’s always good to keep your finger on the pulse for these tokens.

Liquid Staking

$LDO 7D: +54.3% | $FXS 7D : +32.6% | $RPL 7D: +37.6% | $SWISE 7D: 26.0%

Liquid staking is a narrative that seems to be cooling off as well, but it’s always good to track. With the Shanghai Upgrade coming soon, it might not hurt to pick some bags for long-term exposure to the upgrade.

NFT De-Fi

$LOOKS 7D: +14.9%

If Blur follows the same book as announcing their token in this mini bull-run, I expect exchange-related tokens to run as well. Recent NFT volume has been doing well too, so I can see a non-zero possibility that we get a confirmed $BLUR airdrop sometime soon.

Low Float Meme Coins

$FTT 7D: +91.0% | $CEL: +20.6% | $FTM: +40.5%

$FTM marches to the beat of its own drum, while $FTT has extremely thin order books and has more or less become a shitcoin. I’d stay away far away from it but play at your own discretion.

Real-World Assets On The Blockchain

Real-world assets on the blockchain aren’t so much a narrative as something interesting to keep an eye on. As we approach more traditional adoption methods, I expect more and more De-Fi companies will come up with creative ways to bridge TradFi products to DeFi.

Just this week, Ondo announced tokenized US bonds, which you can read more about here.