0xKyle's Weekly Market Narratives #4
All eyes on FOMC. 30 Jan - 5 Feb, 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 fourth week of weekly market narratives, the only substack in the entire crypto space that covers narratives in the markets. If you don’t know, I’m writing a short series teaching you how to trade narratives. Check out the first post here.
I also removed the smart money stablecoin flow and the total market cap chart as I felt like they weren’t very value-additive.
Executive Summary
$BTC 7D: +1.5% | $ETH 7D: -2% | TOTAL 7D: +1.58%
I’ll just say it - the past week felt like what you would feel near the tail-end of a bull cycle - quick jarring impulse moves up, but with momentum dying out quickly. And this is reflected in the daily chart of BTC and ETH as well - we’ve been consolidating very nicely over the past week. For reference, last week’s narrative newsletter saw $BTC 7D at +10.1%, whereas this past week we saw an increase of +0.5% only.
This makes sense when you consider that the market is basically getting ready for FOMC. While many people are expecting low rates, I’d argue that the downside risk is far greater than the upside in this circumstance. As such, it might be time to take a step back and reconsider your positions. We’ve had a nice run-up for the month of January, so take profits if you’ve made some good moolah.
Personally I plan to lay flat into FOMC, as these volatile events have seemed to whipsaw in the past few times that they’ve played out. I’m not going to bother making bets into FOMC to hope to capture the volatility - it seems a lot more intuitive to me, to instead trade the market that comes after FOMC.
This Tweet Of The Week (TOTW) is an apt reminder to all of us that this too, shall pass. I found myself thinking a very boomerish thought - that “this time is different”, and that the regime has changed. Erase such thoughts, for the fundamental basis of any boom or bust cycle is human emotion, and that will never change. Extend your time horizons, and you’ll find yourself in a much better frame of mind.
TOTW:
Market Narratives
CT Darlings Rise Up
$HOOK 7D: +59.1% | $CANTO 7D: 124.6%
Hook and Canto finally saw their time to shine as my timeline exploded with chatter and buzz about them. These two coins fall into the “new coins > dino coins” thesis, and Canto in particular is a favourite amongst De-Fi influencers. Launched back in September 2022, every De-Fi influencer - from Brent, to Nani, to Sisyphus constantly talked about it. Now, Canto Longnecks (A PFP collection on Canto) have brought over a new wave of NFT influencers - with people such as DeezeFi and Sobyslife bridging over. I myself have talked about Canto quite a lot - I believe that it has the perfect pumpanomics - high mindshare, solid project fundamentals, etc. In particular, it’s idea of being the “people’s chain” and the recent “contract secured revenue” upgrade are all extremely novel mechanisms that make it worth to keep an eye on.
Hook is another token shilled by the narrative traders’ subset of CT - and for good reason. Not many people seem to know that Hook protocol has a game, and that game was ranked #1 in Google Play Indonesia for 9 days straight. You can read Tyrogue’s thread on it here. Safe to say though, the possibility exists that this becomes the next $GMT.
The Degenerate Gambling Thesis
$RLB 7D: 175.8%
As GCR famously said, “I'm long humans being desperate, greedy, degenerate, lonely, and trapped in the metaverse”. The thesis here is simple - we’re assuming Rollbit obtains even a sliver of the market share that Stake.com has and going long on that assumption. Personally, I think the asymmetric upside here is obvious - with 1000x leverage, easy user-onboarding, and smooth payment top-up options, Rollbit is an easily accessible bet on the gambling thesis.
You can read noblemillions’ thesis on Rollbit here, or shitcoin surfers’ thesis here.
The Long Awaited Scalability Narrative
$OP 7D: -4.1% | $MATIC 7D: +16.4% | $LRC 7D: +12.2% | $METIS 7D: +53.4%
With OP being an extremely strong token for the month of January, I was wondering when the L2 narrative would appear, and it didn’t disappoint. Tokens of scalability solutions saw great performance this week, although I personally am not a believer in the continuation of momentum for this narrative. In general, scalability isn’t one of those narratives that can continue pulling in more buyers, because it just isn’t marketable enough. There are other fish in the sea, and other narratives that offer greater EV.
CFX Ticks All The Boxes For Being A Proxy To Chinese Social Media
$CFX 7D: +151%
China’s Instagram ported over to Conflux Network this week, causing a huge pump as it ticked all the boxes of being a Chinese coin early in time for the CNY pump. In my opinion, this might become the De Facto “China coin” that we can keep our eye on in future pumps. Whilst CNY is ending soon, I believe that the China market is a blue ocean in terms of economic activity - as such, I’m naturally bullish when a token or project manages to bring in Chinese buyers. I hold the same opinion for Azuki’s recent partnership with Bilibili - I think that if a project can obtain mindshare from the Chinese populace, they stand a good chance of being heavily invested into. TLDR: Chinese Buyers = good pumpanomics.
Read more on the announcement here.
NFT Index Still Remains Intact
$APE 7D: +8.8%
$APE saw a nice pump on the weekly due to its successful launch of DookeyDash, but quickly tumbled back down upon news that its cofounder had serious health conditions. The NFT thesis is still in tact, however, with $BLUR airdrop coming on the 14th of February.
I still believe that APE remains the best way for traders to bet on the overall “health” of the NFT ecosystem, as long as BAYC remains a bluechip in the NFT world. I do think that in terms of beta and correlation, I have observed that other NFT marketplace tokens do see less of a pump than APE when it comes to bullish NFT news that would naturally affect the entire ecosystem.
Individual Tokens:
The persistent narratives:
$APTOS is up +30.1% on the week despite influencers saying that they have dumped it. But at a $2.81 Mcap with nothing to show, how much further can it run? It’s not a bull market, after all. Here’s what lightcrypto has to say about it.
The LSD narrative seems to be slowly losing momentum, and as the main ringleader, $LDO is down 7.3% on the week. The market has shifted its focus towards more degenerate thesis (like gambling), so it makes sense.
$dYdX announced a delay of their highly inflationary unlocks, which saw the token soaring +32.7% on the week. Bullish locking.
$MAGIC saw a +40% increase this week as bullish unlocks happened - with over millions of Magic being unlocked yet price not budging, market participants saw it as an indicator to keep on buying and holding this token that has constantly shipped out projects. They also announced MagicSwap v2, you can read that here.
$INJ launched a $150m ecosystem fund to support De-Fi protocols, which saw a 46.3% pump upwards in the past week.
$GNS pumped to ATHs this week, and with their recent launch on Arbitrum + peoples’ belief that this follows a similar performance to $GMX, it’s worth looking into. Read the thread explaining GNS here.
Useful Tweets:
