November 12, 2021
The Level-Headed Will Win
Today’s mild continuation of the dip has spread quite some nervousness across Crypto Twitter. That shouldn’t be the case if you a) took enough profits during the last weeks’ run-up and b) haven’t extended yourself by “FOMO-buying” in the last few days.
If you’re playing this stage of the cycle right and have started laddering out of your positions, you should be able to look at this (normal) volatility without anxiety. Up, down, or sideways – if you’re holding reasonable amounts in high conviction plays, this short-term volatility shouldn’t phase you…
Just remember: The risk vs. reward ratio is nowhere near as favorable right now as it was just a few months ago in June and July – or of course in 2020 and earlier. Does this mean that these increased risk levels should scare you out of the crypto market entirely? Absolutely not, because the odds for a continuation of this bull market are still in our favor. But you also should be smart enough to not throw all of your capital into every dip going forward – because you never know if or when the music stops.
We haven’t had a nice correction in the markets since… [checks chart] …September. Of course, many new market participants haven’t even had a taste of a nice crypto dip just yet. And as soon as the majority of investors get complacent, the risk of a “nuke” rises.
It didn’t help that the Ethereum Foundation caused a little FUD by selling some ETH (which they have done before).
If you look at Ethereum’s hourly chart, does that look bearish to you? For now, we haven’t even broken the impressive uptrend line which started at the end of September. Are we testing support and shaking out some weak hands? Yes. Is this the end of the bull market? For that to be the case, we would need to see a LOT more downside (and bearish on-chain signals)…
One sector seems to be doing quite well today despite the scared sentiment: Metaverse and gaming projects.
Whenever Bitcoin and Ethereum are in price discovery mode, “top callers” appear on Crypto Twitter after every dip in the market. Let’s try to ignore them and focus on the data instead…
If you need a reminder: On-chain still looks healthily in “mid bull market mode” as of now.
glassnode @glassnode#Bitcoin hovers just below ATH, as investor sentiment onchain remains extremely strong Long-Term Holders take modest profits, onchain activity suggests an early stage bull market in play, and hashrate recovers by 95% Read our analysis in The Week Onchain https://t.co/unaRv516PS
Weighing pure crypto indicators such as on-chain metrics against macro forces (aka, potential crash scenarios) will be one of the most important but challenging tasks going forward!
Bitcoin Overtaking Gold Soon?
While there is still a ways to go for Bitcoin (at $1.2 billion market cap) or crypto as a whole (at $3 trillion) to flip gold (at $12 trillion), the trend is definitely going in the right direction. Especially now that GBTC has more capital under management than the world’s largest gold fund!
Polkadot Parachain Auctions Are Heating Up
After crowdloans for the first round of Polkadot parachain auctions opened up a few days ago, it is now time to watch the showdown and see who is going to win the first slow! It’s also the time to decide if and how you want to contribute.
Here are some important stats that can help you make a more informed decision:
Given the fact that the parachain auctions will last for several weeks and every week only one winner gets chosen, you don’t need to hurry if you don’t want to participate in the “most crowded” crowdloans (which are clearly Moonbeam and Acala).
You can see that the implied FDVs (Fully Diluted Valuations) differ wildly between the projects and it’s apparent that everyone wants a piece of Moonbeam and Acala!
You have to decide for yourself if you want to bet on Moonbeam and Acala becoming the expected massive powerhouses on Polkadot with multibillion valuations and/or spread your bets across high-quality projects with smaller valuations that potential have more growth potential…
With the markets being somewhat boring, now is the time to study some of the parachain contenders more deeply and decide whether you want to back them. If you want to read more about the crowdloan process, here is a great resource.