A Case Study In Narrative Trading |
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| Even in a bear market, there is always a fresh narrative to make money within crypto.
Thatâs because crypto is still an inefficient and small market. Coins, unlike stocks, donât require billions and trillions of buy pressure to rocket up. In an inefficient market, âfundamentalsâ are not super important short-term. What is really important is the narratives and what will get people rushing to buy a coin. Luckily, there are always new narratives forming, even during a bear market.
This past week was the perfect example, as LDO, FET, and BONK all had massive run-ups.
Below we will examine each one, but first, itâs worth mentioning that we arenât going to go too deep into the details regarding what each of these assets do. As we mentioned above, this is narrative trading⊠not investing.
Still, there is a lesson to be had.
Lido (LDO)
Lido is the dominant liquid staking derivative (LSD). This means that Lido makes staked ETH liquid and tradeable by giving users the liquid asset stETH in return for staking their ETH in Lido. Weâve previously discussed liquid staking and Coinbaseâs version of it here if you want to catch up.
Itâs a great value prop, resulting in Lido holding $6.51 billion in user assets â the most of any DeFi protocol.
But this isnât anything new. So why did LDO and the LSD narrative take off this week?
A couple reasons: - Widespread bullishness over Ethereumâs March Shanghai upgrade, which will enable people to un-stake their ETH
- A tweet from popular Crypto Twitter influencer Degen Spartan
This resulted in a gain of 51.4% in just one week. In a bear market. |
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| Not bad.
Fetch.ai (FET)
AI is all the rage these days. Youâre talking about it. Your mom is talking about it. Your dog is talking about it. ChatGPT is talking about it. And now, crypto is talking about it.
Everybody is itching to get ahead of the inevitable AI and crypto crossover, and this week, the winning coin was Fetch.aiâs FET.
Fetch.ai is âcreating AI platforms and services that let anyone build and deploy AI services at scale, anytime and anywhereâ, while the FET token is the currency of the Fetch.ai network.
Itâs a cool project with perhaps some real-world use cases, but letâs be honest, that doesnât really matter. The degens were sold at âAIâ.
And those that got in early enough made a nice 77.2% gain. |
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Bonk (BONK)
The big winner last week was Solanaâs newest meme coin, $BONK, which flew up 331% before returning to Earth, as meme coins always do.
There really isnât a whole lot to say about $BONK. Itâs a dog coin on Solana. Apparently, people are still into dog coins. In a bear market. In 2023.
You canât make this stuff up. |
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| Gotta love crypto.
Hunt The Narrative
In the traditional markets, there is a saying that we are sure you have heard before: Buy the rumor, sell the news.
The concept here is that rumors, stories, and narratives can drive up asset prices regardless of their underlying, quantitative value. And nowhere better can this be seen than in the crypto markets.
Simply put, there is always money out there for the taking in crypto. The market is still inefficient, and coins can go up tremendously at the drop of a dime.
Find a narrative early, invest with conviction, and get out at the top.
Is this a strategy we suggest? Not necessarily. But understanding how narratives can interplay with fundamental value can make you a better trader.
Or, you could just hodl ETH and BTC. Either option is cool.
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Power Company CEO Fesses Up... Boston is Screwed |
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| On October 27, the CEO of New Englandâs largest energy company sent a desperate letter to the White House.Â
"This represents a serious public health and safety threat," Eversource CEO Joe Nolan wrote in a letter to President Joe Biden. He then begged Joe Biden to use the federal government's emergency powers to make sure natural gas will be available in New England this winter.
Thereâs only one problem.Â
Thereâs nothing Biden or anyone can do at this point. All available natural gas is on its way to Europe. When large parts of New England go dark and freeze this winter, a lot of people will call it a shocking natural disaster. Or theyâll say it was because Russia invaded Ukraine.
But cities donât go dark and freeze in the wealthiest country in the world by accident.
The sometimes controversial, and always thought-provoking and entertaining, Porter Stansberry spent the past two years researching this story. And what he's uncovered will astound you.
So do yourself a favor. Before itâs taken offline (which could happen at any time), check out this shocking video.
A major energy crisis could spread from Europe to New England this winter. It could wreak even more havoc on the economy and markets and create a once-in-a-generation opportunity for energy investors.
Click here to watch now >> |
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Huobi Hit With Insolvency Rumors |
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| His Excellency Justin Sun isnât doing too hot.
Thatâs because Huobi, Sunâs crypto exchange and the 16th largest exchange in the world by trading volume, might be in trouble.
Fear, Unrest, and Doubt
The problems at Huobi began like most problems in crypto have recently: with the collapse of FTX.
The demise of SBFâs monster resulted in many people losing confidence in centralized exchanges, especially unregulated ones such as Huobi.
People are on edge right now and any rumor of trouble will send them heading for the exit.
The rumor for Huobi came on January 4th, as it was reported that Huobiâs internal communication channels were shut down, year-end bonuses were canceled, massive layoffs were on the way, and all salary payments would now be in stablecoins.
That FUD was enough to send people scrambling to get out, and get out they did, with $60 million leaving the exchange on January 6th.
What Now?
Justin Sun and Houbi are both saying that everything is all good. But itâs a bit difficult to believe that after all that went down in 2022. SBF, Alex Machinsky (Celsius), and Do Kwon (Terra) all said the same things before their empires dissolved.
News that Huobi Korea is planning to split from Huobi and change its name, tied with the fact that Sunâs USDD stablecoin still hasnât regained its peg, doesnât make us feel any better about the situation either.
At the end of the day, Huobi is an unregulated centralized exchange. And 2022 taught us a whole lot about the dangers of trusting exchanges, especially unregulated ones.
If you have money in Huobi, play it safe and withdraw to a more secure exchange, or, even better, a cold wallet.
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Crypto Bank Silvergate In Trouble |
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| What seemed to be one of cryptoâs greatest success stories is now in dire straits.
Silvergate (SI), the bank that embraced crypto and, as a result, grew from a small regional bank into a public behemoth, is now down badly following the collapse of FTX.
Layoffs and Asset Sales
The loss in consumer confidence following the FTX collapse has hit centralized entities the hardest, and Silvergate is no exception.
It was just two quarters ago that Silvergate customer deposits were at $12 billion. They now stand at $3.8 billion. To cover the $8 billion in withdrawals, Silvergate had to sell assets at a $718 million loss.
Not what you want to see from a bank.
But it gets worse. - Silvergate is writing off its $200 million investment in Diem. So long, Silvergate stablecoin
- 40% of the staff is getting laid off
- The company is getting sued as part of a class action lawsuit over its dealings with FTX
- Silvergate stock (SI) is down 44% in the last month
It all adds up to an ugly picture for the bank.
Looking Ahead
At this point, it looks like Silvergate is closer to the grave than the promised land. The stablecoin is dead, they are barely scraping together the money to facilitate withdrawals, and almost half the company has been laid off.
They canât take many more hits if they wish to survive the rest of the bear market.
If Silvergate does croak, it would be another huge blow to cryptoâs already battered reputation. Sure, the other crypto-focused banks, Provident Bank and Signature Bank, seem to be doing somewhat alright right now, but: - Crypto failures always get more publicity than crypto successes
- And who really knows if they are actually ok at this point?
Should Silvergate, a regulated and public company, fail, it will be that much harder to attract institutional money.
Silvergateâs survived bear markets in the past. Letâs hope they can do it again.
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Where Gold is REALLY Going Next |
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| If you own gold, digital gold, or gold stocks, read this warning immediately.
The man who predicted the 2022 crash â a day before it began â predicts an event in 2023 could have a massive impact on gold.
"Prepare for a historic move," he says.
The last time he called for a move like this, you could have quadrupled your money in 16 days on a play he recommended on Vectors Gold Miners (GDX).
Today, he's posting a new recommendation, free of charge.
Click here for the full details.
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