IN THIS ISSUE
- SOL blasts to new highs tags $130 USD
- FTM announces 370m incentives program
- FTX.US acquires CFTC license
- L1’s continue breaking out across the board!
Last week we looked at the Avalanche ecosystem breakout and discussed the potential for an echo-rally on other L1 chains like ATOM, FTM & DOT. This week, while AVAX cools down, the Fantom Foundation announced a 370m FTM incentive program that caused a massive rise in the price of FTM.
The hot ball of money rolled onwards and the liquidity inflow/outflow chart on AVAX showed some evidence of recent gains being bridged back out of the ecosystem and onto FTM. There is a race now for L1’s to acquire users and developers on their platform. I’d expect to see many more of these announcements in the near future. Who’s next? It may be that they end up canceling each other out and it will come down to the user experience on each chain, but the rallies in price that we’re seeing with each new incentive program is nothing short of incredible.
When everyone is looking left, as a trader, I make an effort to look right and see if I can spot the next big opportunity before it makes headlines. Today, DOT and KSM both enjoyed strong breakouts on the daily chart. The para chain narrative is heating up and crowd loans are quickly growing in popularity after the success of the Moonriver (MOVR) crowd loan.
Here is an example of how the crowd loan works. 1 KSM in June was worth ~ $400
If you invested $100k in the Moonriver crowd loan, that would’ve purchased you 250 KSM.
250 KSM locked in MOVR crowd load would’ve purchased you 3,625 MOVR tokens.
MOVR set up their crowd loan such that 30% is unlocked on day 1 and 70% is vested over the life of the parachain lease (48 weeks) with tokens unlocked every week.
MOVR is trading at $166. Meaning you would currently be liquid with 1087.5 MOVR, now worth $176,175. You would also have 70% of your tokens still coming, as well as access to your original KSM in 48 weeks since you’ve only “loaned it”. Apparently, there are crowd loans happening every two weeks, each one causing more KSM to be locked up for 48 weeks. So, one can imagine the impact this could have on supply/demand dynamics for KSM in the coming months.
Needless to say, the above example with $MOVR demonstrates the incredible potential of the KSM crowd loan system for speculators who don’t mind locking up liquidity for almost a year. There are all kinds of risks when it comes to long-term lock-ups, since we know how fast this market can shift and it’s hard to predict exactly where price will be that far out. I think there will be a rush to fill the next few crowd loans, and that perhaps sometime later this year, the play could lose its edge.
Consider the impact that the first few crowd loans unlocking, could have on the price next year. Maybe prices are much higher then and KSM would still be worth more, or maybe the market has cooled down, and the crowd loans ahead of the one I got in, sell their tokens while I’m still locked up.
There are always risks, and other projects may not come out as hot as $MOVR did this month, but this is definitely an opportunity I’ll be exploring in greater detail in September. I think the earlier I participate in one of these, the less risky it would be, as I’d like to have as few lockups ending ahead of mine as possible. It might be a free bag by the time the 48 weeks is up, so could be that it won’t matter either way.
As a trader, I may just look to capture the price action on DOT/KSM, and avoid getting into the crowd loan lockups altogether. I’ll need to do more research first.
You can learn more about crowdloans on Kusama & Polkadot here: https://polkadot.network/participating-in-crowdloans/
The Fear & Greed index had its first taste of “Extreme Greed” since May, this week. That’s a signal to me that I need to be more selective with my entries and consider potential drawdowns more carefully. There have been long periods of Extreme Greed before, so it’s not an automatic sell everything signal, but it’s certainly something to pay attention to. Moreover, it’s not a time where I look to add big size to my long-term positions, unless it’s on a chart that is just breaking out from lows, on volume, or a vetted setup with clear invalidations.
Overall, I’m feeling a bit conflicted right now in the market. There are so many coins showing signs of big buyers stepping in and driving price up through one resistance after another. And then there is Bitcoin… Looking heavy, showing signs of reversal at weekly resistance… Part of me wants to continue buying up PCZ dips aggressively, but there’s a little voice in my head warning me to be cautious here.
Historically, September is the worst-performing month for markets (it’s not just a meme). That’s not a reason in and of itself to go risk-off, but add to that the straight shot we’ve taken from July lows with hardly any break, and the waning momentum on Bitcoin, and I have to think, that we’re headed for a correction. Not a bear market. But a shakeout, that will leave the late bulls reeling on the side of the road, and provide patient traders with an opportunity to get long from a position of strength.
I don’t know how it will play out, so I’ve taken profits on a number of coins (even some of my SBF basket names), and have moved closer to a 50:50 cash to crypto ratio for the time being.
SOL blasted through the Chaos PRZ that I’ve had on my chart from the summer consolidation but is beginning to show signs of exhaustion up here on lower timeframes. This is an area where I’d expect to see some consolidation, if not a proper pull-back into the PCZ which is now up around $80. Zooming in, there may be an opportunity to play some Fib-Pong in September on the hourly chart. One of my favorite setups.
AVAX dipped into the PCZ today and is resting on the key support/resistance area around $38. The volume on the run-up to highs was so intense, that I’d be shocked if the local highs mark the top for the year. I’m looking to add to my position below $40 but may give it some time to clean up this month.
ATOM is on the move after dipping perfectly into the PCZ, once again demonstrating how powerful this area can be on the chart during a strong bullish trend. There is a tight band of fib confluence up around $35 that should act as resistance in the coming weeks as traders look to get paid on their recent success. That of course, IF the party continues, which volume suggests, it will.
FTM also dipped into the PCZ from last week’s chart (not shown here) and exploded upwards on the news about their incentives program. I’ve redrawn the PCZ to highlight the next area where I’ll be thinking about longs. Starting at $.61, this area looks like an interesting level to try and catch the next leg up on this one.
DOT finally broke out today above the big S/R level that had been holding it down in August. I didn’t get the PCZ fill that I’d been hunting but think there is an opportunity here to hunt longs on a retest of the support around $28.
KSM looks very similar to the others. Price tagged the PCZ last week and is now blasting to new local highs. The Fib extensions don’t align quite as nicely as they do on ATOM, but both could serve as good TP levels for traders. Given the crowdloan’s that are underway right now, I’d be inclined to keep a close eye on those to get a sense of when to expect new supply in the market. It may be a good hold until those start unwinding next year.
A test of the 20-week moving average for Bitcoin would align beautifully with the Pump Chaser Zone (PCZ) around $42-43k. That’s the next area of interest for me if we lose the local lows. With ETH/BTC breaking out today, it looks like the market could be gearing up for an altseason, so we’ll need Bitcoin to move slowwwwly on it’s way down, or just carve out a range up in the mid-high 40k’s.
The $ETHBTC chart looks very strong this week after breaking out of the local consolidation it formed on the daily. The next area of interest if we break to new yearly highs would be up at the 1.618 fib extension around 0.115. A move like that would bode very well for Altcoins vs. Bitcoin.
ETH/USD broke out too of course and has arrived in the HTF short RLZ which is usually an area for me to be looking for take profits. I haven’t had much of a position in ETH through August, because I spent most the ETH I had on Parallel Alpha cards. For now, I’m interested in bullish retests for short-mid term long exposure. If ETH/BTC continues to run, new ATH’s for Ethereum could be just weeks away.
Bitcoin dominance has come into a key level down at 42.5%. Parked in the local reload zone, it’s an area where I’d expect to see the “bulls” put up a fight and potentially put a floor in. In that case, if I had Altcoin vs. Bitcoin trades on, this is a time where I would look to start paying myself, at least partially, just in case this markets the pivot. Earlier I mentioned that I’m feeling a bit conflicted right now as a trader.
The ETH/BTC breakout occurring right as BTC.D hits a potential reversal area, really paints the picture as to why I’m feeling that way. I’m not sure I have a clear edge in my analysis on these, so am moving in and out of positions partially, and avoiding making big decisions right now.
The DeFi perp also broke to new local highs today and shows promising buy volume on the chart to back it. Price is approaching the HTF short RLZ but the trend is bullish. It’s not one I’m going to fade. If Bitcoin brings the market down, I’ll have cash ready for DeFi dips. Otherwise, I’m staying long with most of what I’ve got left, and will wait for a proper reversal before I take more off the table.
Given the recent breakout on DOT and KSM, I think there is something to be said for hunting names within the DOT ecosystem. Here are the ecosystem shortlists, curated by Coingecko (now including FTM!). These make a great place to start hunting the above ecosystems now that the L1’s have really taken off.
Polkadot (DOT) – https://www.coingecko.com/en/categories/dot-ecosystem
Fantom (FTM) – https://www.coingecko.com/en/categories/fantom-ecosystem
Solana (SOL): https://www.coingecko.com/en/categories/solana-ecosystem
Avalanche (AVAX) – https://www.coingecko.com/en/categories/avalanche-ecosystem
Cosmos (ATOM) – https://www.coingecko.com/en/categories/cosmos-ecosystem
I’ll continue to keep you updated on the state of the market each week! Until next time, have a great week, and whatever you do, always play from a position of strength!
If you’d like to get The Weekly delivered straight to your email (FREE), you can sign up with the form below.
The following commentary is provided for informational purposes only and may not represent the views of Hxro Games Ltd. or its affiliates, and should not be viewed as legal, tax, investment, financial or other advice. Digital asset transactions are inherently risky, and you are fully and solely responsible for evaluating your purchasing decisions at your own risk. Past performance is not indicative of future results.
©2021 by Hxro Labs