Written By EC NFTea ☕
Welcome to volume 30 of the Champs Only newsletter. As always, if you are reading this, I want to congratulate you yet again on being a Champion, and a Champs Only Pass holder (or an aspiring one).
Unfortunately, I still don't have any good news yet again. One glance at Dune Analytics and we can see that OpenSea Daily volume is back to consolidating below the $10 million range. Previously, it had been hovering around the $15 million range, but now it has dropped below, which is very bearish. Unfortunately, looking at the state of the macroeconomy and the FTX saga, we can expect for there to be more volatility. From October 31st we witnessed a few days of better volume, and this is thanks to the Art Gobblers mint. However, now we’ve dipped to new lows once again and it seems that we will remain here for some time. The overall sentiment feels very dire at present.
As mentioned previously, until the macro environment looks better, we can only assume that there is more pain to come. I still believe that the catalyst for the reversal will be when the FED becomes more dovish, and interest rate hikes end. Some people have assumed that the bottom is in, and it may be, but I believe that there is potential for more downside for risk on assets due to certain factors around the globe. Inflation is still running rampant, and the FED continues to threaten with more interest rate hikes.
Once again, Google Trends proves that not much has changed in the last week. We are still moving sideways, and the general trajectory is slightly trending downwards. We are in a period of consolidation, and the overall sentiment still feels very bearish.
Dappradar OpenSea statistics also support Dune Analytic’s evidence that not much has happened in the last week. The 7 day historical activity graph shows us that users, volume and transactions are all mostly consolidating, and moving slightly downwards overall.
The Cryptocurrency Global Market Cap has shown downwards movement over the last week. Recently, we witnessed a few consecutive weeks of upwards overall trajectory, taking us above the $1 trillion range. Unfortunately, the chart shows that the total market cap has fallen below the $1 trillion range once again and it is trending downwards. For the first time since early 2021, the market cap had fallen to the $800 million range. In such uncertain times, this volatility is to be expected. It is likely that we will continue to bounce above and below the $1 trillion range for an extended period of time, until the market recovers.
Continuing with much of the same news, and correlating with the Global Market Cap, the Fear and Greed Index currently shows that we remain in a period of ‘extreme fear’, with a score of 22. This is the same as last week, as last week showed a score of 22 too. For weeks now, we have been fluctuating between fear and extreme fear. We are in the midst of a very volatile period, and I can still see things being unstable for a while.
The NFT market feels very dry at present, and it’s because ETH NFTs monthly volume on OpenSea is currently as low as June 2021, before NFTs really 'mooned', and the data shows that it’s getting worse. As you already know by now, given the state of the economies, no one cares about NFTs at present. All the available evidence, data and statistics support the statement above.
Regarding the top 10 best performing projects over the last 7 days, the performances have been good. All 10 projects are in the green, with increases in floor price. The NFT market is struggling a lot at the moment, and the FTX saga has not helped. However, over the last 7 days, these floor prices have appreciated in value.
For those of you who are into the traditional sector, overall it has been a relatively average week. Below is the 7 day performance of the S&P 500. As you can see, the majority of industries have had neutral performance, and then some are red, while others are green. For weeks now, it has been constantly red then green, before turning red again.
Market Update And Analysis
Unfortunately, once again, not much has changed on a macro level. We remain in a bearish risk-off period due to the poor macroeconomic conditions, which we have discussed in previous volumes. If you’re new here, or just need another refresher once again (sorry), here is what has been happening in the macro economy:
1) The war in Ukraine
2) Coronavirus pandemic
3) The FED being hawkish and interest rate hikes
4) Inflation at an all time high
5) Incoming global food shortages
6) Incoming recession
7) Overprinting of money
8) FTX saga (microeconomy)
In previous volumes of a few weeks/months ago, I have covered all of these factors extensively, and have discussed the effect that they are having on economies, different markets and different asset classes. Because not much has changed in the last week, I want to focus more on the micro environment and current news again.
The Micro Environment
Within this brutal bear market and macro FUD, there have been several bullish events happening on the micro scale. Many mainstream brands or Web3 organizations with large audiences have been utilizing NFTs and blockchain technology for growth and development.
These are the type of events that are eventually going to push us into mass adoption, and they are happening more and more regularly. Recently, there have been just a few, but some interesting things happening in the microenvironment. This week, for those of you who did not experience the last bull run, you may think that Web3 is always a rubbish place. I’ve conducted some research on how the market was a year ago, compared to now (November).
This Time Last Year in Web3?
This time last year in Web3, we were in a very different place. Here’s a look back on how things have changed from the last bull market to this bear market.
We’ve been weathering this bear market for so long now, it almost feels like the bull run is a myth. Many newer Web3 enthusiasts have only just discovered the degen lifestyle, and they don’t know any better than this ‘storm’ that we are enduring now. If this is you, and you really hate this place, then you’re not alone.
It may be hard to believe, but it wasn’t always this way. I can think back to a time where dopamine, euphoria and profits were abundant. Also, Discord and Twitter engagement was high, communities were flourishing and virtual friendships were being made. It almost sounds too good to be true to those who didn’t experience it, or who joined the space after late February 2022. If you don’t believe me, then you’re in the right place. Together, we will explore how good things were a year ago in Web3.
Just before we get to the good bit, let’s look at how we got here in the first place. If you’re not into economics, then you may not understand the correlation between the health of the macroeconomy, the cyclical nature of markets and the bull and bear market. In brief, the 8 points stated above are the major macroeconomic events that led us to the bear market:
Once these black swan events had triggered chaos and downwards cascaded across the markets, we began to see a downstream effect in the microenvironment. If you’re unaware of what I mean by this, then think back to the collapse of LUNA, the bankruptcy cases of Celcius and 3AC, and most recently the FTX saga. Now the doom and gloom is out of the way, let’s reminisce about the good times and compare them to the current market climate.
Crypto
Bitcoin
It couldn’t be more perfect timing to make the comparison of a year ago and now. As you can see by the chart below, BTC reached an all time high of $69,000 around 365 days ago. Since then, it’s all been downhill (literally). While there has been some overall volatility, presenting good long/short trades, the overall trajectory and sentiment has been trending downwards.
Back in June 2022, we hit a local bottom of $17,500, and many speculated that a bottom was in here. However, fast forward to the present day and the FTX catastrophe has taken us to a new local bottom of around $16,000. Is this a confirmed bottom? Unfortunately, I do not think so. We can only assume that there is more pain to come until the macro environment is looking healthier.
Ethereum
The same applies to Ethereum as Bitcoin. As you can see by the chart below, Ethereum also reached its all time high of just over $4,800 in mid November of 2021. Since then, it has followed the same path at Bitcoin, and the trajectory has trended downwards overall. There have been many trading opportunities for those more experienced traders, but for the macro-investors who succumbed to FOMO near the top, their portfolios will certainly be in a very dark shade of red. Now, Ethereum sits at $1,243, meaning that it is down by around 75% from the all time high.
NFTs
The Bored Ape Yacht Club
Unlike crypto, NFTs had not reached a peak at this time one year ago. Previously, there was a connotation which suggested that when crypto went bullish, NFTs were bearish. In November 2021, this certainly seemed to be the case. However, since then, this theory has gone out of the window as virtually everything is bearish now.
According to CoinGecko, the Bored Ape Yacht Club (BAYC) had reached a floor price of around 50 ETH in November 2021, which sounds very low for the elite collection. Later on in the year when the euphoric bullrun peaked, the BAYC reached an all time high of 180 ETH in May 2022 as shown on the chart below (Parasec). Since then, it has been a slow and continuous decline, down to its current floor price of just below 60 ETH. The good news is, if you believe in the BAYC surviving this bear market and in the longevity of the project, then this may be an amazing buy range (NFA DYOR).
CryptoPunks
Alongside the BAYC, CryptoPunks is the only project that generally represents the performance of the NFT market, similar to how BTC and ETH roughly represent the crypto market. According to NFT Floor Price, the floor price for the CryptoPunk collection was around the 80 ETH range. Unlike the BAYC, CryptoPunks did not go on a parabolic run up to the ‘moon’, but instead, performance has somewhat consolidated sideways. Now, the floor price is hovering just above the 65 ETH range as we can see by the chart below.
Other Considerations
November 2021 is a long time ago now in the NFT space. There will be many people who entered the space earlier this year (2022), and will never know what the market was like back then. Many of your favorite projects would not have even been launched yet. For example, popular ‘blue chips’ such as Azuki (December 1st 2021) and Moonbirds (April 16th 2022) did not exist a year ago.
Prior to the bear market, there were metas and narratives that dominated the space. When Azuki was launched, it was a catalyst that allowed many anime based projects to enjoy success. Then, when Invisible Friends was launched, the spotlight shifted to animated walking characters.
For the real OGs, you’ll remember that a year ago, the meta was 10,000 supply collections with 3D art animal avatars. At this time, user volume was high and scammers took advantage of the influx of newcomers. This quickly made people associate the 3D art style with rug-pulls, and people still tend to shy away from it. In the present day, given the lack of projects launching in the NFT space due to market conditions, there isn’t a clear narrative.
When Will Things Get Better?
I believe that the bottom signal and a catalyst for the reversal will be when the FED becomes more dovish, inflation is curbed and interest rate hikes end. Some people have assumed that the bottom is in, and it may be, but I believe that there is potential for more downside for risk on assets due to certain factors around the globe. Inflation is still running rampant, and the FED continues to threaten with more interest rate hikes. I speculate that we still have another capitulation before we see a true confirmed bottom. We could be here for a while, so brace yourself for ‘winter’.
This space is in-flux and forever evolving. It is still in its infancy and the market is emerging. What is true today, may not be true tomorrow. What cannot be argued is that we’re all early to one of the biggest technological advancements of this generation, and I can’t wait to see how this all unfolds. Time may be tough now, but they always haven’t been. Things will get better in time, and if you’re here now, you’re going to make it!
Crypto Feature
Written by Fckiddd
MARKET SENTIMENT 23/11
The last week has seen ETH crash to the previously mentioned levels of 1000-1100, with ETH hitting a low of $1070; the downward trend is still in effect and I expect this to continue into the early 1000’s if not mid 950’s. The latter is one of the strongest support levels for ETH, historically being the level at which we have seen large scale institutional buys approx 2 years prior around Jan 2021, and this level throughout the last 2 bear cycles has been largely respected. That being said, the following historic support level is low 700’s and while we could see a flash crash to these levels, I am quite confident that will not be the case.
On account of the current trend, I am continuing to DCA into ETH at the aforementioned levels of between 1000 and 1100, keeping aside some of the money to DCA in sub 1000 if we do test that point. I have also been keeping a close eye on all the ALT’s I have mentioned before: with the likes of MATIC, UNI, etc. sitting at extreme discounts. Something to note is the momentum and/or movement of ALTs in reference to ETH: it is common knowledge that a dump on ETH causes a significant dump on ALTs, however one thing to note is that ALTs tend to surge while ETH moves sideways. This is useful to note since this presents ample opportunities to scalp longs on ALTs, especially UNI. UNI is a token that sees a surge in volume as soon as ETH moves sideways and/or reaches historic S/R levels. This is on account of UNI being the most commonplace DEX and the DEX that brings in the most volume consistently; the same can be said for SUSHI, albeit to a lower degree of momentum.
e aftermath of the entire FTX debacle has also led to an influx in lack of trust and faith in the crypto markets, something that is pivotal as many large institutions lost millions in the wake of the crisis. Sequoia Capital alone reported a $150m loss due to the collapse, while BlackRock have yet to announce the total value of assets written off but rumors state it is somewhere in the mid $300m mark, etc. This along with the SEC, FTC and FBI looking to arraign Sam Bankman Fried will continue the negative skepticism surrounding crypto and in my opinion will continue this sell off into the end of Q4.
With all this being said, there is still some room for ETH and BTC to crash further, and is evidenced by the fact that both the coins have failed to break the downward trendline since early November, with each flash crash presenting a small bull trap to trap late longs and liquidate early shorters. This is why I have switched my current trading strategy from aggressive scalping to swing trading the dumps. While this strategy provides less trades, they are more fruitful trades as the ROI on them largely outweighs the risk- the setup’s are few and far between due to the current volatility of the market but we have been given almost 3 flash crashes since November, and each time we have created new lows. Should we fail to crack $1180 on ETH this week, we can expect to see ETH hit $1000 if not $950.
Upcoming Project Forecast (Operation Whitelist Hunter)
Project: Friendly Skull Society
Mint Date: TBA (minting soon)
Mint Price: TBA
Supply: 5,555
Bullish Points:
- “FSS is a brotherhood for ambitious individuals seeking personal excellence. They are the builders, misfits, and go-getters of tomorrow.”
- This project aims to help onboard people from Web2, to Web3. To do this, it has created a streetwear brand in collaboration with one of Iceland’s most notable up and coming designers. Additionally, it is building a website and app unlike “anything you’ve seen from an NFT project,” called the Knowledge Hub.
- The knowledge Hub is going to include alpha, courses, podcasts, events and certification programs. It aims to be a one-stop-shop for entrepreneurs and business enthusiasts.
- It has a long and extensive roadmap and vision, with true real-world value and tangible utility, unlike many other NFT collections.
- This project will be launched on the Solana network. More information can be found on its Whitepaper.
Potential Concerns:
- External market conditions.
Upcoming Project Forecast (Operation Whitelist Hunter)
Project: Magna
Mint Date: TBA
Mint Price: Free
Supply: 2,000
Bullish Points:
- This project is going to be free-to-mint, which means it’s essentially risk free for those who are able to get on the Whitelist. Additionally, this collection has a low supply, and low supply projects tend to perform better during the bear market (when volume is low).
- It is very hyped up, and it has managed to amass a solid following of more than 65k followers during the bear market. Engagement on Tweets is very strong, suggesting that many people are excited for its launch.
- The art style is anime and it is very clean. The anime art style is popular in the Asian market, and the Asian market is still performing well despite the bear market. If the demand can outweigh the supply, this project will do well.
- This project has managed to collaborate with established projects in the space, such as Earpitz NFT, KaijuKingz, YogaPetz and more.
- The Whitelist is not overallocated.
Potential Concerns:
- External market conditions.
- It could perform like Isekai Meta.
Upcoming Project Forecast (Operation Whitelist Hunter)
Project: Pollen
Mint Date: TBA
Mint Price: TBA
Supply: 5,555
Bullish Points:
- It is very early in this project's development. This means that securing a Whitelist spot should still be possible. It has amassed just over 4,000 followers, and its followers to engagement ratio is strong.
- The artwork is by Artpetio, an established animator. Some of his other work has been traded for more than 7 ETH on Superrare.
- It is an art based project. Art only projects have been performing well during the bear market. Think about Art Blocks and the other examples.
Potential Concerns:
- External market conditions.
- It is very early in the project's development. There isn’t much information available.
Applicable Strategy
As the NFT market is static, my applicable strategy remains exactly the same as in previous weeks. The majority of NFT projects are not presenting superior ROI% opportunities. Actively trading NFTs is currently a more degenerate and low capital play. Some of the strategies that I am focusing on are stacking capital, DCA-ing into BTC, keeping an eye on discounted ‘blue chip’ NFT collections and looking at other asset classes at discounted rates.
If you believe that Crypto is coming back at all, now may be a great time to start buying as we reach capitulation. If you invest in BTC now, in 2-5 years it’s going to be worth a lot more (NFA). It could easily be a 3-6x plus, especially at the time of the next BTC halving. Crypto will likely consolidate for months at lower levels before we enter the next bullish rally. Patience is key, do not overinvest when there is still so much uncertainty. Buying BTC at $18,000 vs $21,000 is a $3,000 spread. When BTC hits $200,000 or higher, that $3.000 will be insignificant. There is no need to try to time the market perfectly.
Otherwise, for the macro investors who aren’t deploying capital yet, cash remains king. Until we see inflation pivot, interest rates decrease, and a dovish stance from the FED, we have to assume that there is more pain to come. A lot of different indicators suggest that we have not yet seen a true macro bottom, regardless of the current macro conditions.
Learning this, it’s important to remember as we move closer and closer to an official recession, there are going to be some golden investment opportunities that will present themselves in the next 6-24 months. Almost every asset class that appreciates in value over time, already is and will become even more heavily discounted. This is the time to be picking up crypto, stocks, shares, gold and property (real estate) with the goal of taking profits in the next bull run, to generate astronomical returns. If we look at history, bear markets are always followed by a bull run. The most important thing is to have available liquidity, so that you’re able to capitalize on what’s to come. If you’re short at present, seeking ways to bolster your income may be a play right now.
Regarding NFTs, not much has changed ,and the market looks to be getting even worse. For this reason, I really do not have any new applicable strategies to add in the current climate. In previous volumes I have covered many ways to navigate the current market environment, so please refer back if you’re new here. Otherwise, always stay keen and keep grinding. It’ll pay off in the end!
Disclaimer
None of us at Champs Only are financial advisors and this newsletter is not financial advice. The content in this article is for educational purposes only and merely cites our personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary.