0xKyle's Weekly Market Narratives #7
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 seventh 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: -4.8% | $ETH 7D: -4.7%
Let’s talk about the elephant in the room. On 3 March 2023, we saw a huge liquidation candle that nuked market activity back to pre-mini echo bubble levels. During the weekend Bitcoin traded in an almighty range of ~600 dollars, somewhere between 22.1k and 22.7k.
Naturally, alts nuked harder upon this reaction. In the picture above I put some of the fan favourites that we’ve seen this run - LDO as the leader of Liquid Staking narratives, MAGIC for Arbi, Matic for zk-EVMs, etc.
So, tell me - why exactly are you trading in this scenario? A trader literally lives on volatility - and the largest volatile move was that liquidation candle we got. During the weekend we had PA drier than the Sahara Desert - as poordart would call it, “price inaction”. Guys, as always, I very often shill this advice - STOP FORCING TRADES. Look, 6 months of trading during 3AC to FTX pales in comparison to that 1 month in the bulla of January 2023.
That’s the advice for you guys who have the inability to sit on your hands - the market is a machine that transfers money from the impatient to the patient. It doesn’t matter how much money you made in January if you’re incapable of keeping your profits! Stop trading for the sake of it - only do it if you have a clearer thesis.
Next, I would like you to turn your attention to the chart above. For the permabears that read my substack, I would like you to please - zoom out. Realise that in every one of these “black swan” events, you would have been better off buying the blood - after all, a black swan event is by definition something so instantaneously bearish that it makes price go much lower than intended.
And so, what I’m trying to say is that this is the glorious dip-buying opportunity CT has been calling for during the entire echo bubble. Let not your mind be clouded by the impure thoughts of “if it nuked, it can still go lower”. I think this tweet by DegenSpartan really takes the cake in demonstrating my approach when it comes to this:
TLDR; traders can take a step back as volatility mutes, but this is a good buying opportunity for the investooors
Market Narratives
It is precisely at these moments that looking into possible future narratives pay out the most. I think these are some recognisable ones that could see a future pump.
Liquid Staking Derivatives (God, these again?)
$LDO 7D: -17.7%
The playbook for this is similar to pre-Merge - long into Shanghai, dump before others. I for one, am not playing this because I don’t feel like I have an edge - but I do know of many people taking this exact trade. Do with this info what you have to.
Artificial Intelligence Coins
$AGIX 7D: +7%
Another narrative I’m not in, but I have to admit that it’s extremely resilient towards market structure changes. AI has been the one narrative that’s like a cockroach - it always seems to roar back to life after some time. But I’m not surprised - given that the whole world is now talking about ChatGPT and AI opportunities (i.e the next ponzi), I believe that we’ll continue seeing renewed strength in this sector.
I think what will convert me is the ability to get into the next AI product early, rather than to continue betting on the market leaders for this sector. In my head, there is lesser asymmetric upside in longing the leaders for AI alts than to just bet big on the next AI project (similar to imgnAI). The risk duration you hold in waiting for the next AI catalyst is one that I’m not comfortable holding on to.
Arbitrum & Casinos
Yet another one that just keeps resurrecting. Arbitrum szn always comes back to life when some misguided influencer says something along the lines of “someone told me something’s happening soon” and the entire ecosystem just giga pumps. Personally, though, I like to bet on projects, and I think that the newest ecosystem that’s being built on Arbitrum has the highest upside - seeing as how it also falls under the “Decentralized Casino” narrative.
Just as I’m typing this, Arcadeum has hit range highs; I’ll wait and see what happens in the next few days. I’m not in any hurry though, seeing as how I still have midterms coming up…
BSC Heats Up
Radiant Capital is moving to BSC - and I believe that the recent rally in BSC coins (such as $LEVEL) is an incredible indicator of how much of a “dark horse” this ecosystem is. Known to everyone as being incredibly scammy and PvP, many CT natives avoid this network (myself included). But do you want to make money, or do you want to be right? I think that there’s more work to be done in this space, and that there’s a slight possibility that BSC szn might dawn on us.
In preparation for this I have accumulated a bag of $LEVEL (at the picotop, as usual) - but I’m looking to scale in more as $LEVEL has surprisingly held it’s own very well against the exploit + market downturn.
The Arthur Hayes effect, innit?
Individual Coins
$BLUR - I believe that someone will propose a sort of staking / fee-sharing mechanism ; and personally, I really like the product.
$RLB - this one’s for next cycle, lol. I bought another bag in the recent nuke to 2-3 cents ; but I wouldn’t advise you to do the same; The thesis for this is a long one, and one that I’m working towards dedicating an entire article on (if I find the time)
Stargate Finance - wen LayerZero token? I actually think that the team is building something incredible - with the recent release of the Goerli Testnet and sudden activity by the LayerZero team, it makes sense that one of the most hyped projects finally start delivering something
Heading Into Next Week:
I will sit on my hands and after my exams finish (when I have more time) - I’ll start looking at alt charts and accumulating coins that I like and have a bullish thesis on. Most times I don’t “trade” actually - my thesis normally play out over weeks. There are some obvious inverse trades I like to take (e.g on overextended alts); but they’re not my edge
Keep an eye on Rewkang’s posts - I think they’ve been a good signpost for what’s going on; Don’t idolize him, but it’s good to always take reference from his tweets. But I have to say - there will always be an inflection point
why do you rate this recent liquidation candle in the same sphere as 3AC and FTX fallout? i think this is a bit far-fetched