🐻 Most of us are familiar with bull and bear markets. A bull market is a market that is on the rise and where the economy is sound; While a bear market exists in an economy that is receding, where most assets are declining in value.
🦀 Less familiar is a crab market. We are used to binary market conditions: up or down. The crab, however, moves sideways with no strong bias or conviction. Adding numbers, we’ve seen BTC range-bound between $30k and $40k. Albeit more towards the lower end of that range recently...
So, how do we navigate a crab market? Or, how do we survive and thrive in a crab market? Today, we share the Market Meditations view.
🔥 As usual, we also share the hottest crypto market news and analysis!
Read, enjoy and share with your network. Let’s all build wealth together.
⏰ In A Rush?
Here’s 5 things you need to know about the crypto markets today:
🪙 SEC Chair Hints Some Stablecoins Are Securities
Securities and Exchange Commission (SEC) Chair Gary Gensler said cryptocurrencies whose prices depend on more traditional securities might fall under securities laws.
🍈 BNY Mellon joins State Street to service new crypto exchange
Traditional financial institutions such as State Street and BNY Mellon continue to get involved in the fast-evolving cryptocurrency space.
🐴 A startup that lets you race NFT horses has raised $20 million from a16z, TCG
A startup using non-fungible tokens to represent digital racing horses has raised a $20 million Series A round.
🇺🇸 Bank of America Is Clearing Crypto ETPs for Hedge Funds in Europe
Bank of America’s prime brokerage unit has started the clearing and settlement of cryptocurrency exchange-traded products (ETPs) for hedge funds in Europe, according to three sources with knowledge of the matter.
🇰🇪 Etherisc onboards 17K Kenyan farmers covered by blockchain-based crop insurance
An insurance collaboration between decentralized protocol Etherisc and microinsurance issuer ACRE Africa has allowed thousands of farmers in Kenya to receive coverage for weather-related risks.
🦀 Navigating Crab Markets
1️⃣ Not All Projects Will Pump
During the bull market, it seemed that all crypto projects were pumping. A simple invest, buy and hold strategy seemed to yield fortunes! Projects were appreciating in price more due to bullish market sentiment than on the basis of their real or ‘intrinsic’ value. Investors ought to recognise that during a crab market, not all projects will pump.
Some projects will be destined for greatness but the majority will go to zero.
This is not unnatural of an industry; in most industries we see fierce competition that leads to the rise of extremely successful projects!
All this means is that investors will need to be more thorough in their analysis. Investigating new projects on the merits of their: whitepaper, team, tokenomics and more. For more on this, check out our 📬 Project Metrics Guide.
It’s also important to note that this cycle is different in nature to previous ones:
Previously, the correlation between BTC and the rest of the market was much higher.
In other words, if BTC wasn’t pumping, no other projects within the crypto universe pumped. We saw money flow from BTC into other assets or projects.
We now see more of a dissymmetry, whereby new ideas and projects are able to gain traction on their own merits.
From exchanges to NFTs, blockchain gaming and DeFi projects there is no shortage of opportunity. If you are willing to put the time and effort into searching for them. Some examples: crypto exchange FTX has just received a $18 billion valuation, NFT platform OpenSea has raised $100 million and metaverse Axie Infinity is thriving! For more on Axie Infinity, check out our podcast with Bryce (@brycent_). Bryce is a streamer of the popular NFT game, Axie Infinity and runs social gaming community Loot Squad.
2️⃣ Manage Your Emotions
We’re a long way off BTC All Time Highs (ATHs) and from losses to liquidations, many people have been impacted. Much as we try to manage our emotions, it can be tempting to engage in revenge trading. Revenge trading is when you try to force a trade in order to recover from a previous loss. And it is a sure way to lose any capital you have remaining.
During a crab market, mastery of emotions becomes imperative:
📉 You still want to limit your downside. Proper risk management should not be compromised! Set appropriate stop losses and adhere to them. If you need to, you can always revisit our Risk Management Guide.
✅ Continue to look for high probability plays. If you follow our TA, you will know we have suggested that opening a position in BTC or ETH is extremely risky and aggressive at the moment. If something doesn’t look like a high probability play, exercise patience and wait for a better opportunity. For more on how profitable patience can be, check out our video: I Will Buy Bitcoin Again When This Happens.
🔮 Have a reality check. Perhaps you will realise that some of your bull market profits are attributable to luck rather than being a genius. This is a great time for reflection. Identify areas of weakness in your investing and trading and educate yourself. Our Market Meditations Guide is a good place to start.
Stay focused, stay disciplined and prepare yourself for the next big opportunity.
💰 FTX Valued at $18 billion
It was announced yesterday that the crypto exchange FTX had finished a 900 million dollar funding round, which now values FTX at 18 billion dollars! This is one of the biggest fundraisers for any crypto company, but let’s take a look at why they decided to raise funds. According to founder and CEO of FTX, Sam Bankman-Fried, there were two main goals with this funding round.
Forming partnerships with people who are excited about and can help grow FTX and additionally being able to make connections on behalf of FTX.
More capital for M&A (Mergers and Acquisitions).
Although they are not looking to go public in the present, this funding would allow them to go public relatively quickly.
What does this funding mean for FTX? FTX is a leading innovator in the crypto space. This funding will continue to help their effort in raising awareness within sports and could lead to more acquisition and more exposure to FTX and crypto as a whole. This funding can lead to cultivating more popular projects such as:
Renaming the Miami Heat Arena → FTX arena.
Partnering with major sports leagues such as Major League Baseball.
Partnering with popular figures such as Tom Brady and Gisele Bündchen
The BTC market continues to dip and yet crypto companies continue to thrive. Perhaps these corporations show less short termism and impatience compared to retail investors. They believe in the long term vision and use cases of cryptocurrencies. FTX continues to make positive steps to position themselves within the larger crypto picture for years to come.
🎧 Using Data to Increase Profits with Alex Svanevik
Alex is founder and CEO of blockchain analytics platform, Nansen.ai.
You make your own luck. Whilst timing plays an important role in success, constantly building and positioning yourself allows you to be ready when the right opportunity arises.
Many organisations fail because they do not tap into innovation. If looking to invest, find companies that are constantly adapting and looking for ways to improve.
Despite common perception, many large businesses do not run efficiently. As an entrepreneur, spotting these inefficiencies is key to being profitable.
Talent is a scarce resource in crypto. As such there are plenty of opportunities for crypto enthusiasts currently working in traditional industries.
If building in crypto, a large element of growth will be cyclical. As such you have to take a long term approach. To prepare yourself for the inevitable downturns, look to diversify your revenue sources.
Nansen is different from other analytics platforms due to their wallet label coverage and the ability to dive into micro analytics rather than only macro metrics. As an example, instead of simply looking at net inflows into an asset you can see exactly who is buying the token (whether that be a fund or whale) and what else that wallet has invested in.
Crypto is hugely inefficient and therefore it is more than possible to beat the market. The key is to find ways of identifying these opportunities before everyone else.
Do not be dismissive of the NFT market. Whilst they have made major headlines both within the crypto community and the mainstream, many do not realise that some participants have no interest in the rest of crypto.
During more difficult market conditions it can be difficult to find early stage opportunities. The key is to find a unique edge that allows you to offer value to projects that you wish to get involved with.
Your on-chain data can help prove your credentials in crypto. From being involved in early stage governance of successful protocols to being a power user, this data is likely to be used more as crypto develops.
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Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.