0xKyle's Weekly Market Narratives #3
Dalai, Nuke, Chop, Wash, Dalai. 23 Jan - 29 Jan, 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.
Happy Chinese New Year everyone! Welcome to the third week of weekly market narratives, the only substack in the entire crypto space that covers narratives in the markets. I hope everyone’s doing well in this bear market rally - remember, don’t overtrade!
Cheers, Kyle
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Executive Summary
$BTC 7D: +10.1% | $ETH 7D: +6.8% | TOTAL 7D: +6.41%
This week was characterized by a strong nuke in the middle but ended with a bang as we saw an incredible rally on Friday into the weekend. Once again, the strongest performers from last week continued to perform strongly, with coins like $APTOS hitting ATHs and going into price discovery. However, what I find more pertinent to discuss is the price action that we’re seeing play out. Last week I put Hsaka’s Tweet as the tweet of the week, and this week is no different:
Why? Well - this morning I was forced to liquidate a big chunk of my profits from the past few months. I’m not a god-tier trader - just a student of the markets (just being transparent here). But the reasons for my liquidations were:
Over-leveraged
Bad price
And I would like to emphasize - as sidelined money feels more “FOMO” from being stuck, they (like myself) will be prone to longing at a bad price - and using too much leverage to “make back on what they lost by not being active before”. In doing so, a drop in price causes a mini liquidation cascade, and many of these late longers get rinsed.
This piece of knowledge is, in my opinion, essential for us to understand if we want to make money in this mini echo bubble. I have since added more rules to my rule book, namely:
To make more spot buys - overleveraged longs will get rinsed, whilst spot buys can ride out choppy PA
To set more limit bids for good entries;
To only use leverage in specific scenario (like news catalysts) - leverage for majors will likely get rinsed
Hopefully, this advice will be useful for you.
Smart Money Stablecoin Flows
26% last week → 25% this week
Current / Upcoming Market Narratives
APTOS HITS ATH, SOL LAGS BEHIND
$SOL 7D: +7.2% | $APTOS 7D: +58.7%
Aptos sees continued strength to ATHs this week as Hsaka continues to be a big believer in the coin. Aptos continues to be a dark horse amongst everything, with incredible strength on retracements and late-longers perpetually fomo-ing in. I would look for a good spot limit bid to capture the remaining upside, but just recognise that a big part of the move has already happened (probably).
Solana seems weaker than Aptos now (I previously believed that Aptos was following SOL). This could be a good place to long, but I believe that better opportunities lie elsewhere with tokens that have upcoming catalysts instead.
AVAX SEES RENEWED STRENGTH
$AVAX 7D: +6.7%
With Amazon AWS and now Shopify partnering with Avalanche, it seems positioned to be the “new” Matic in 2023 in terms of having crazy business developments. While the 7D gains aren’t impressive, Avax saw some pretty crazy candles during these announcements.
I personally always thought that AVAX had a lot of potential with their subnet technology, and am just glad that they’re going through with it. Might not be a bad idea to pick up a few spot longs for the longer term (couple of years).
OPTIMISTIC ATHs
$OP 7D: +23.2% | $VELO 7D: +44.0%
Optimism saw ATHs this week into price discovery - however, it has retraced since then and seems to struggle to break out of its current range. Personally both Aptos and Optimism have shown to be incredibly strong coins this cycle, so I wouldn’t count it out just yet.
The secondary thesis would be that it remains the only L2 with a token - an L2 season starting would most likely see a large buy pressure on the token.
Also, Velodrome on Optimism has seen renewed strength as more people pile into the ecosystem. It might be worth checking out the rest of the tokens on Optimism!
LSDs STILL ALIVE AND KICKIN
$LDO 7D: -5.3% | $FXS 7D: +41.4% | $RPL 7D: +10.8%
The LSD narrative is still very much alive, and I’ve noticed that retracements on $LDO have always been quick to revert back higher. Smart money, on the other hand, has been exposed for selling $LDO in the millions recently - however, the continued strength despite this is something to take note of. Bullish selling?
Personally, I’m more biased towards $FXS because you’re not just betting on LSDs - you’re also betting on FXS as a whole. In the final days of Luna, Do Kwon even mentioned that they were working towards Frax’s model of being partially collateralized whilst maintaining algorithmic pegging. I have high hopes for the protocol, and believe that 2023 might be the year we see some integration with IRL products.
v3?? v4?? WEN APP-CHAIN
$dYdX 7D: +8.2% | $SYN 7D: +17.9%
This has been a recurring theme in my newsletter as well, but the continued strength of these app-chain tokens still carries on. However, the longer that this drags on, the less bullish the announcement might be, as traders continue front-running the announcement. I could be wrong, but still - be careful!
NFT INDEX
$APE 7D: +10.9% | $LOOKS 7D: +18.5%
APE as an overall index of the NFT space + a bet on Yuga and whatever they’re cooking these days - APE is seeing renewed chatter on Twitter as people remember that there’s a way to bet on the overall NFT market by buying the NFT coin.
I expect this to trickle down to other NFT coins as well, such as $LOOKS or $x2y2 - however, the one catalyst I am waiting for is the $BLUR airdrop. C’mon, launch already!
DEFI COINS
$AAVE 7D: +9.6% | $CVX 7D: +37.3% | $CRV 7D: +36.8%
Aave v3 rumored to be coming soon could be a nice catalyst - but as for CVX and CRV, I gotta be honest with you guys - I have no clue what’s going on. Probably something gotta do with bribes, though. And possibly a stablecoin.
BAG OF NEW COINS
Lots of coins mentioned here are already talked about above (e.g OP and APTOS), but just wanted to add this section in because it’s an essential element to remember in the crypto space - New > Old.
Others
Other coins:
$STG saw renewed attention as it rallied +48.7% in a day, on news that a family office wanted to TWAP $2 million worth of $STG. Tweet here.
$MAGIC is up +66.6% as the Treasure team shows to have shipped a bunch of products + bullish unlock of a huge chunk of $MAGIC on the 1-year mark.
Chinese coins as a possible narrative - hasn’t seen much activity yet, but certain tokens to look at are $FIL / $OKB
$HOOK seems to be the new CT darling, with multiple narrative traders citing low float and price nearing price discovery
$INJ saw a mini pump of +16.8% on the weekends as a famous trader announced that he was buying
Events:
FOMC on 1st February
Bank of Japan to continue easing - bullish buying
Genesis owes more than $3.6 billion to top 50 creditors.
NFTs (I’m not active, but these popular ones even found their way to my ears):
Createra Genesis Lands - China Minecraft metaverse land, apparently
Redacted Remilio Babies - Miladies v2, or something
The Memes By 6529 - A punk6529 collection, it has been on the rip recently
Useful Tweets:
