Q1 2022 Plays
This is our year. WAGMI
Holy shit, what a start to the new year. Frontier’s Ubisoft partnership just got made official, $MAGIC hit $3 after hovering <$1 for the longest time, and $JEWEL is absolutely killing it with its run to $20.
On top of that, NFT bull szn (may) be back. This time, we’re seeing trends of an efficient market - products that have been building are slowly getting recognised. NFTWorlds is one of them - I still remember seeing them at 0.1 floor and fading them. They’re now worth 4Eth, and their token is worth ~$0.30.
Overall, it’s been a great start to the new year. I’ve been planning out my investment thesis for this quarter, but I’m no Ansem. I’ve only been in this space for 4 months, and so my exposure to certain sectors of Web3 may not be as strong as some of my readers. Hell, I didn’t understand his section about infrastructure, and I never heard of some of the coins he shilled either.
But that’s ok. As crypto grows, I don’t think it’s necessary to know “everything”. After all, being a specialist is always better than a generalist. I don’t go out of my way to catch Ws in every sector - instead, I stay in my lane and try to be the best in the sectors that I’m familiar with.
Anyways, let’s stop dillydallying and get straight to business.
#1: P2E Narrative
If you read my previous article, you know that I’m hella bullish on Blockchain Games.
I won’t go out of my way to repeat what has already been said; I think this narrative will guide most of 2022, if not all of it. And I’ll be on the lookout for games that fit my thesis as mentioned in the article.
Currently, the games I’m invested in are:
Defi-Kingdoms, Treasure, and Frontier. Which I have dubbed as JFM (Jewel, Frontier, Magic). But there are many more games that I’m looking forward to seeing what they build. These aren’t short term plays, mind you. These are things that I’m fine with holding for extended periods of time (think 6 months).
Northern Guilds - Pixie Interactive. A game that focuses on the “fun-first” aspect that I so love talking about. They’re focused on building, and I look forward to seeing what they deliver. The team is great, and they seem to have some sort of “unique advantage” - I’ve talked to the CEO about launching on different networks, and he assured me that they’re working on an “engine” that would put all the worries to rest. Bullish.
Humans of the Metaverse - Another one of those “land”/ metaverse plays that we so often see nowadays. At <0.1 Eth, I think it’s worth a punt. It has pretty decent traction with the existing players, and their economic model is nothing short of interesting. I look forward to see what they do.
Critterz - I look forward to seeing how this develops. With the recent run of NFTWorlds, it seems like a no-brainer move to buy any “Minecraft-esque” game because people will FOMO into it. I bought critterz just yesterday at 0.7, and sold it for a neat 2x. I’ll be looking for lower entries into it, because I do think that this whole “minecraft” game idea is genius; instead of building your own game, leverage on an existing game and get people to earn while playing.
I’m especially bullish on the idea that we can make money from already existing games by creating a token that tracks your play time (like what Critterz is doing). Not only will this save teams so much money and time from creating a game, but it also saves so much on “mindshare” - i.e you don’t have to grow your player base from zero, you can tap on the already existing huge playerbase.
I’m not sure if this can only be made to be done for Minecraft, but if you could do it for League of Legends, CS:GO, etc. I think that’ll be huge. But I may be putting the cart before the horse here; Critterz may go to dust when all is said and done. But you can be sure that I’ll be keeping a close eye on it.
But in general, in Q1 2022 I’ll be looking at more and more games, sizing them up and placing my bets on them. I do believe that we’ll see a huge boom in this sector in the upcoming months.
I know, I know. NFTs as a “Q1 2022” play sounds “duh”. But I’d be lying if I didn’t include it as one of my “plays” because, well, it is. My portfolio allocation is around
80-20, where 80% of my portfolio is in coins, and I use 20% of what I have to flip and earn money on NFTs.
But in the last few days, OS volume has been up immensely. Like, way higher than what we saw in Oct-Dec. I do believe that we’re seeing the signs of a second bullrun, and you can be damn sure that I’ll be riding the wave.
Now, I like to split the NFTs I buy into two parts:
The mint & flip
The buy on secondary and hold
If I mint something, I make sure to always cover the cost basis. It’s a strategy well known in this space; you mint 10 of something, you sell 5 to cover the initial costs and let the 5 run to Valhalla.
Buying on secondary is a bit more complicated. For buying on secondary after a hyped mint, you’re betting that the price will go higher than it’s current levels. But 90% of the time, the reason you’re buying is that “it’s going up” and you want to “catch the train before it leaves”.
Now THAT, my friend, is a great way to get rekt. I know because I’ve done it so many times. I see this project going up, and I fade it. Then I see it going up even further, and I’m like “ok well this is going up even MORE”, and buy into it. And before you know it, prices have dropped 20% and I’m just cursing myself.
But now, I’ve established a sort of “framework” that I apply when buying on secondary. It works for me, and hopefully it works for you. The questions I ask are:
If this goes to 0, am I comfortable holding this for the long term?
This helps you on an emotional level. It also helps you to establish some things - if the price does drop, will there be some sort of catalyst that will help it increase in the long run? (E.g NFTWorlds dropped to 0.1, but they constantly built their product in the background and are now worth 4 Eth). It helps to ensure that the project has some sort of product built around it; that it’s not just a JPEG.
This advice is applicable to PFPs as well - you just have to frame it differently. You’ll have to think - is the project doing anything to build hype and FOMO around it? Are there big names backing it?
Is there some sort of bullish catalyst that can make it go up further?
This is the question you should ask yourself after #1. As I said above, it helps you establish the foundations of the project - whether it’s sustainable in the long run, or just a cash grab.
Holders - Will they dump?
The community of the project is important in the sense that you want the community to have diamondhands. Take the recent Phantabears mint for example. It was shilled by Jay Chou (a very famous Chinese Singer), and minted out. Knowing this, I minted and flipped it. I knew that the holders weren’t people with long time conviction on the project - most of them were instead more like myself, looking to make a quick buck. It went to 0.5 and now it’s sitting at levels around mint.
Does it fit the NFT meta?
The NFT meta changes pretty fast. Back in August, we had Loot szn (white text on black backgrounds). Then, we had pixel art (Kongz, Kaijus, Mice). Then, we had Apes (and this still exists right now), Wolf Game derivatives, and now we have the “Minecraft” meta. It’s extremely important to identify the subtle meta-game in the NFT world.
Does it have some sort of Influencer / Hype?
The NFT market is a market built on hype. You CANNOT underestimate it’s power. Hype is what drives demand, and hence prices. Lately, another meta-game we’ve had is that projects that were backed by celebrities saw huge pumps; For example, inBetweeners was shilled by Justin Bieber, and now is sitting at around 1E from highs of 2E. Then we have the Adidas mint, CloneX, and many more that I can’t really remember.
These are just SOME of the factors I look at. And even within these, some take a greater weightage than others. A project could look like absolutely shit, but if I think that the hype it carries is clouding the market’s participants, I’ll look for a quick entry and exit.
All in all, there’s really tons of other factors that I look at. Obviously, I’ve done this for quite a while so it comes naturally to me. Don’t worry if you can’t get it straight away - it takes time and practice. In the meantime, you can take a look at the full framework below, and maybe adopt some of these questions to ask yourself the next time you make a buy.
#3: Value Accrual Tokens
#1 & #2 are where most of my money is going to be at. I believe that those have the highest upside in this current meta-game.
But when all is said and done, I’ll be looking to rotate into my comfy homes: OHM. Now, I know that some people look at $OHM’s chart and think it’s gonna crash. Well, I can’t say that I disagree. The performance of OHM has been wildly disappointing, with a drop from $1000 at it’s peak to around current levels of $300.
While I did not expect this, I also am not fazed much by it. Because fundamentally, OHM was never one of those coins with a 10x upside. Maybe if you got in at $3, sure. But at the levels I got in at ($700), it’s not a coin that can go up anymore. If it does, then sure I’ll be happy. But I didn’t get into it expecting the 2x; I got into it because of the yields and the foundation of the project.
I’m not going to pretend that I know how to explain OHM, so instead I’ll direct you to the someone that can:
Again, I would like to re-iterate: OHM isn’t one of those coins you expect a 10x on. It’s literally a bank for me. But I think it deserves a spot on this list because, well, it will be a “play” that I’ll be constantly accumulating over time. Because in the long term, I believe in the fundamentals of the project.
The fact that we’ve seen 10000 ohm forks over the past few months also further cements my conviction - this is something that WORKS. And I know, that in a longer time-frame (2-3 years), people will flock to these safe havens for support. Because OHM, unlike other tokens, has a “backing” i.e a risk-free value. This is why they’re called “value-accrual tokens” - they actually have some sort of monetary value backing each OHM.
I’ll also be looking out for TEMPLE - another contender to OHM with a slightly different mechanic. But overall, these 2 coins are what I’ll be rotating my profits into, but I don’t think it’s something someone with a smaller bag should look to buy.
#4 “Everything Else”
I know that Ansem’s newsletter had way more “plays than this”; but again, I would like to say that I neither have the time nor money to spread myself too thin. As someone with a small bag, I’m looking for concentrated plays that can boost my networth; 10x of $100 is $1000, but 2x of ten $10, is just $200. Simple mathematics.
So I’ll be focusing on basically points #1 & #2. As Cobie said, “Trade the metagame”. Last year, the meta-game was “L1 networks” - and while I believe that they’re here to stay, I wouldn’t want to place my bets on SoLunAvax, coins that have already pumped 10-100x of their initial values.
As for the ZK-Narrative / Infrastructure and DAO Tooling narrative, they’re just things that I will keep in mind as time passes. But I believe that the P2E narrative just has the highest upside right now.
This “ability to focus” is, I would say, a core principle that new traders have to learn as well. At the end of this, you might say “man this substack is so simple”. And what’s wrong with that? Simplicity is key. You could have gone all-in on Bored Apes last year and do NOTHING else, and you would probably have outdone any SoLunAvax trader. Why do you feel the need to focus on 10 different coins and sectors at once? I believe that my style of trading perfectly balances enjoyment and monetary gains. I don’t stretch myself thin by trying to keep up with 10 different sectors, but I’m still making some dough. And that’s enough to make me happy.
Meh, that’s about it from me today. I would like to go into further detail about what I believe to be “Core Principles In Trading”, but that is a topic for another day. In the meantime, here’s my "coin framework” that I use when buying any coins. It’s not that different from the one I use to analyse NFTs, but I weigh certain indicators differently, e.g “Team” is more important in a coin that’s building a product on top of it, than for say a PFP project.