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November 5, 2021
A Volatility Squeeze Is Imminent
Another day of boring action of BTC and ETH lies behind us but signs are mounting that it’s time to pay attention. All major price moves – in either direction – have happened after a prolonged time of consolidation as we have seen in the last three weeks.
Is it time to go to the moon and kick off the parabolic end-of-year rally? Or will the doubters be right and get another leverage shakeout followed by more corrective action? Well, let’s look at what indications we have.
Looking at the charts, we can see that Bitcoin has quietly retested support in the last days and weeks, giving altcoins some room to run in the meanwhile. It’s likely that this quiet time is ending soon though, with a major resolution to either direction insight.
Meanwhile, BTC and ETH supply on exchanges is dwindling, certainly promising for the mid-term outlook. Short-term price action, however, is to a large extent determined by factors like sentiment and leverage (especially the latter being of slight but not huge concern right now).
NVT, an important on-chain metric, is also painting a positive picture for Bitcoin from a macro view.
Some Tips to Up Your Crypto Game
Here is some great advice on how to crush it in crypto – besides being a “bull market genius” like everyone right now:
Politicans Getting Paid in Bitcoin – a New Hot Trend
While BTC’s price hasn’t been very exciting lately, there are still reasons to pay attention to what is going on in Bitcoin land. With Bitcoin still being the largest cryptocurrency out there and mostly leading the markets, it’s in every crypto holder’s interest that BTC is doing well.
On that note, we have seen some very positive developments when it comes to Bitcoin’s public perception and its role as a primary asset in this digital age. Holding Bitcoin is becoming more and more mainstream, and politicians, companies and celebrities endorsing Bitcoin (and/or crypto) is only accelerating this trend.
Meanwhile, we get one story after the other illustrating that today’s financial system is far from in a healthy state…
Polkadot Crowdloans Have Kicked off – Should You Participate?
Today a major milestone on Polkadot’s roadmap has been reached: the opening of the crowdloans for the first-ever parachain auctions. Right now, Acala seems to be firmly in front of Moonbeam, likely securing the first parachain slot!
While this is an exciting moment for every Polkadot fan, we have to ask ourselves: Should we jump into these first crowdloan opportunities that have opened up today? While it’s up to everyone to make his or her own decision, here are a few facts that you should consider before deploying all of your DOT right away:
Another 200k in 5 mins (200K $DOT = 1 MM USD). At this rate, it will reach 10 MM $DOT or 500 MM for 17% of $ACA which means Acala will have FDV of 3 Billion at launch🤯
With everyone rushing into these highly anticipated (and marketed) Polkadot crowdloans, the chance of getting a “fair share” of tokens is declining. In contrast to participating in one of the first Kusama crowdloans like Moonriver, you are certainly not “early” when participating in one of the first “hot” Polkadot crowdloans.
DOT is locked for the full duration of the parachain's first slot on Polkadot, 2 years. The DOT will be automatically returned after the 2 years. When the team wins and launches their network, they will distribute their network tokens to you in a certain ratio to the # of DOT.
Also, be aware that by participating in a crowdloan, you lock in your DOT tokens for almost two years.
lcDOT enables Acala Crowdloan participants to receive a liquid lcDOT token 1:1 for all DOT locked in the crowdloan. This way, contributors stay fully liquid over the 2 year period, and can earn yield in a variety of ways if they choose.
While you get your DOT back after approximately two years, you still have to consider how much you want to bet on Polkadot being a dominant blockchain in two years. While the chances for that are high, there are scenarios where either a bear market or other L1s’ success spoil the party…
You can also participate through a “liquid” crowdloan mechanism, where you don’t have to wait two years to make use of your DOT, but there are risks involved with that: Firstly, you have to trust the project that issues these liquid DOT tokens (+ their smart contracts), and secondly, these representative tokens could trade at a significant discount to the DOT price if enough people start selling (as we have seen with a couple of “liquid staked ETH” tokens).
In addition, it’s also important to have an eye on the tokenomics of the projects you want to invest in. There is for example a significant difference between Moonriver’s crowdloan on Kusama (where the majority of tokens got distributed to the community) and many of the Polkadot crowdloans (which have larger private sale and team allocations). On the flip side, Polkadot projects might attract much more capital and reach higher market caps than Kusama projects in the end… Definitely do some research before jumping in!
To summarize: Should you participate in either the Acala or Moonbeam crowdloan? If your goal is to make a quick flip or buy an early Polkadot “gem”, the answer is clearly no. If you want to make a long-term bet on some of the most exciting new crypto projects and are aware of the conditions, then go ahead!
Immutable X Is Gaining Steam
After Immutable had been building quietly for months and years, the adoption of its gaming- and NFT-focused layer 2 network Immutable X is accelerating. Keep your eyes wide open for anything happening in the Immutable X ecosystem in the coming weeks and months, as there are exciting things on the horizon!
Should you buy IMX right now after its listing? With a fully diluted market cap of over $11 billion and private sale unlocks ahead, maybe it’s better to wait for better entries or look at other opportunities in the Immutable X ecosystem for now.
Don’t Overlook the Solana Gaming Ecosystem
Besides Polygon, Immutable X, and BSC, Solana has probably the fastest growing gaming ecosystem in crypto right now. Star Atlas and Aurory are just two prominent examples. With millions of dollars and thousands of developers flowing into the Solana ecosystem on a weekly basis, it’s likely that gaming projects on Solana will continue to attract a lot of attention in the future.