Cryptic ball: to believe there is an order to our days.
Some people choose to see the ugliness in this crypto market, the disarray. We choose to see the beauty. Or at least the memes! We haven't talked much about dogecoin here, having introduced everyone's favourite project only this Wednesday to explain how the DOGEBTC pair has typically signalled alt season cycles. Well, today that meme has reached an entire new level, as you can see below and likely in all news outlets and crypto group chats.
What does it mean? Well, the alt season we've been talking about is reaching extraordinary exuberance levels. Doge is up 50x since the beginning of the year and it looks like it could be on its way to achieve the proverbial $1 mark. Note that there will be strong resistance on that level! After all, right now its market cap is at the same level of Vodafone or Ferrari! But those are real companies, you know? Should we get worried with the irrationality of the bulls?
Yes, we should. Even if this memetic coin has always trumped all odds exactly because it represents the beauty in this world, one must be aware of the limitations of a meme. One the one hand, let's not underestimate doge and its army of fellow Shibas - as some traders sadly went bust after trying to go short today. But, on the other, let's also understand crypto cycles and how leverage is fuelling this boom. After all, leveraged doge traders have suffered $750 million in liquidations over the past 24 hours - meaning this pump is being fuelled by futures markets, not by organic spot pressure. Trends are great until they no longer work!
Chart art: this alt season broke all records.
Market musings: to believe there is a purpose.
Despite the above warning regarding the current hype surrounding some alts, note the following. It is only after everyone and their friends hear that this magic internet bean, jokingly shilled by Elon Musk some months ago, has returned 50x in 2021 and roughly 130x over the past twelve months, that the true craze will be felt. Still, check today's Visual Block to see how a greed and fear ratio, measured here by the amount of open interest (leveraged trading positions), has historically been a good proxy for tops and bottoms in this beastly rollercoaster.
Additionally, we must repeat that, as things are getting wilder by the day, it's time for you to spend your weekend thinking about your trading and investment plans. You could also define levels at which you'll take profits, in case your favourite token, or even the bitcoin benchmark, falls to. For example, look out if BTC finds support around $57k. If it doesn't, then a test of $50k is warranted, and the rest of the market can follow it down. Zooming out, note our view is that this is just a temporary pause, while funding rates reset before the next leg continues. Will that be the final one? Only time will tell. Keep doing your own research and have fun!
Visual block: buy when there's doge on the streets.
NFT naan: this is the new world.
This was not the best week for NFTs. As an asset class, Kraken Intelligence reported average gains of 2% over the past seven days, compared with 20% to 30% average returns for DeFi, exchange, and privacy coins sectors. Still, the hype continues and established artists keep trying to share they were early in the non-fungible game. Paris Hilton apparently met Vitalik Buterin, Ethereum's co-founder, in 2016, invested in ETH and BTC back then, and in this good interview claims "NFTs have literally taken over her entire mind and soul"!
On another note, the author of Dilbert, the excellent comic strip about the business world, has minted an aptly-themed NFT. Click on the image to bid for it!
Three things: an odd friend once told me something.
- Arthur Hayes is back with a great comparison between traditional, centralised finance (CeFi) and decentralised finance (DeFi).
- Multicoin Capital, a popular crypto fund, tends to shill their projects by sharing their investment theses. Check their latest one here, it's about NFTs.
- Ethereum's layer 2 scaling solutions are all the hype. Learn more about what you can do with them with this great post.