In This Issue
- I share my thoughts on the state of the market, Bancor meltdown, Solend, Celsius updates, more de-pegs & and more mess around centralized platforms.
- Sam has a report for you on how to approach NFTs in a bear market.
Premium members also get the following:
- My latest portfolio updates
- Rekt Capital has the latest technical analysis for you on the market.
- Rebecca has all of the latest news for you.
- Upcoming NFT drops
- Defi Dad has a tutorial for you on how to earn up to 28% APR in ETH with Hop on Arbitrum.
- Jesse has a ton of hot new airdrops for you.
- Hot new token sales.
- Rebecca breaks down this week’s trending coins.
- Jesse has a deep dive for you on why the ICP token is failing.
And much more!
Hello Wealth Mastery Community,
Before we get into the newsletter today, I have a bonus piece of content for you!
I know many of us are frustrated and even fearful of the current markets and probably our portfolios too. Some people might even be thinking about leaving.
But, it’s important to recognize that those who make it through this have the best opportunities ahead of them. I want to help you understand where we are in the market and what those opportunities are.
To do so, I joined the Web3 Academy Podcast to address the current state of the markets and how to survive the bear market. This podcast allowed me to share my thoughts in long-form about everything happening in the markets and where I believe it’s going.
I highly recommend you tune into this podcast as additional learning, above what is already taught here in the Wealth Mastery Investor Report.
Near the end of the episode I also share an announcement on a new feature being added to the Wealth Mastery Investor Report in the coming week 👀
You can listen or watch on: Spotify, Apple Podcasts or Youtube
What’s On My Mind by Lark
The State of the Market
The sentiment has been a real roller coaster the last week.
When Bitcoin was under 20k everyone was saying to sell now because it was on its way to zero. And sell they did, about 20 billion in losses were realized this week.
And when Bitcoin crossed back over 20k everyone was freaking out because this was their last chance to buy before it rockets to the moon.
Emotional control is hard but key in such market conditions.
The simple reality is that those who gave up and walked away during the last bear market missed out on huge gains during the last bull market.
This chart shows that Bitcoin investors realized over 7 billion in losses in just 3 days last week.
The weekly total got close to 20 billion. This is brutal, but a reality of markets. Far too many buy high and sell low.
Keep calm. Stay consistent in your investing plan. Do not blow up your account by going too hard too fast or by over using leverage.
There remain big risks while deleveraging events continue to loom.
Celsius has half a billion worth of Bitcoin with a liquidation price of $13,600, a Solana whale 160 million dollars worth of SOL at $22.3, and an ETH whale with 140 million on the line to be liquidated at $895.
There are more, but you get the idea.
Any one of these could trigger a HUGE liquidation cascade.
Can they post more collateral? Will disaster be averted? Let’s hope.
And as a reminder, macro is still a mess. Inflation raging. Real estate crashing. Equities in the gutter. Food crisis looming. USA about to enter a recession. Proceed with caution!
Be mentally and financially prepared for big relief rallies, some that could be so big they convince you the bear market is over. But until we get some solid validations we must approach such rallies with caution while the macro scene remains so uncertain.
Bancor has stopped Impermanent Loss protection temporarily as it seems that a massive player, on chain evidence points to Celsius, has been withdrawing and dumping massive amounts of BNT tokens.
At the same time some HUGE short positions were opened up on BNT to profit off of the dump.
This sucks big time.
I have used Bancor before and we have covered it many times in the newsletter, but the bear spares no one. This is contagion.
As major players start to get into trouble they, like a drowning man, take others down with them.
We know that at least some of the wallets behind the sell pressure are related to Celsius, but with so many players going under it is also possible that others, like recently imploded venture fund Three Arrows Capital could have added to the sell pressure.
Too much sell pressure from these big entities that had hundreds of millions deposited onto the protocol mean that it becomes too difficult for Bancor to cover pools using BNT in the short term.
Now to be clear, you can still withdraw from Bancor right now, BUT if you do then you will be suffering from Impermanent loss. A risk that depositors did not intend to take on.
If you delay withdrawing until they re-enable impermanent loss protection then you will still be covered.
Only question is how long that takes?
I think Bancor will lose A LOT of trust over this by basically removing their key value proposition at exactly the time when the market needs it the most.
By the way, I do realize that we provided a tutorial on how to use Bancor last week. So this is particularly frustrating for us.
We try our best to find the best and safest opportunities for you in defi, but we must always expect the unexpected, especially during a bear market.
A solana based lending platform named Solend “almost” confiscated 160 million dollars worth of Solana from a whale on their platform.
The stated reason for even proposing this insanity was to protect users because this whale would get liquidated if the price of Solana dropped to $22.3, and despite their efforts they had been unable to contact the whale.
Who the hell has 160 million on the verge of liquidation and goes on holiday without their phone?
Anyway, this would have caused an on-chain catastrophe with a liquidation of this size into thin markets.
A vote was held with one other whale basically controlling 90% of the on-chain vote. Basically, a shit show all around.
Taking control of users’ funds, even if it doesn’t end up happening is a very bad look for a “decentralized” platform.
At the time of writing the whale has made contact with Solend to work out a solution to avoid liquidation and mitigate risks, but wow, more crazy shit happening in defi.
It also brings up some interesting debates on what is best. Should the “code is law” rule and let the whale be liquidated, along with more than 100 million of small investor money? Or is it better for protocols to step in and protect smaller investors even if it means being centralized?
At this time Celsius still has a freeze on withdrawals.
The only major announcement we have had this week is that they are halting AMAs until they resolve the situation. They are also working with Citi Group on a possible restructuring, hopefully not bankruptcy planning.
We are also seeing Celsius users trying to force a Gamestop like situation whereby they are mass buying CEL tokens and trying to liquidate the big players shorting the market and betting against both Celsius and their users.
Simon Dixon a lead investor in Celsius via his Bank To The Future platform has proposed a recovery plan for Celsius, although we don’t have many details.
There have been other major plans like this implemented in crypto history with Bitfinex being the most famous after they were hacked for a HUGE sum of Bitcoin in 2016.
Everyone said Bitfinex is dead, but fast forward a few years and they remain a top exchange.
The recovery plan worked. I have no idea if Celsius will work towards such a plan, but it could be one way out of the hole.
Both MIM and USDD have suffered from depegging this week.
Some people just like pain.
For MIM, I have no idea why anyone would trust anything related to Abracadabra after it was revealed that Daniele knowingly let a serial scammer handle 800 million worth of customer funds on Wonderland.
Personally, I would never touch MIM again.
Its falling market cap, now down to 200 million from highs of 4.6 billion seems to indicate that the market agrees with me, but still, some people hold onto it. USDD is Justin Sun’s new stablecoin.
He saw UST burning to the ground and thought that it would be a good idea to release something similar on Tron.
Using USDD is gambling. A stablecoin like this might be all good during a bull market, but during bear markets, things break.
UST should have been a wake-up call for investors. Be careful, and reduce risk. The only stablecoins I could recommend using/holding would be USDC, BUSD, DAI… and USDT when you have to.
This week Babel Finance a lending platform with 2 billion in assets under management has paused withdrawals.
Voyager just got a 485 million loan from Alameda to “mitigate market conditions”. Why? Well, it was just revealed that Voyager had HUGE exposure to the Three Arrows Capital meltdown.
Blockfi just did a new funding round at a lower valuation than previous raises, they also had to cut 20% of their workforce, and have had a run of HUGE fines from the SEC.
Blockfi also just announced a further 250 million in funding from Alameda.
In theory, those are good things to shore up the platform, but also underline how much they are struggling. You don’t get those loans and do a raise at 1/3rd of your previous valuation when you are doing well.
Seriously, if you are still keeping funds in a centralized lender then ask yourself why.
If there is even a 0.1% chance that the platform you are using could pause withdrawals then is it really worth the risk?
You can leave now and come back later when the dust settles. Peace of mind is a valuable thing.
Missing out on a few months of interest to protect your assets might be the right call now.
Sure, maybe nothing happens to those platforms and everything is fine, but with so much breaking right now are you really ready to take that risk?
How to Approach NFTs in a Bear Market by Sam
It’s said that everyone’s a genius in a bull market, and nowhere has that been more apparent than with NFTs throughout much of 2021, through the start of 2022.
NFT degens were aping into anything and everything, and that approach often worked, assuming you took profits (and yes, that’s a big assumption in NFT degen-world, I know).
What now, though, as we navigate the wreckage of (another) crypto apocalypse?
Is it game over for NFTs? And if not, then how should we approach NFTs in a bear market?
Will NFTs Survive?
In a word: yes. A growing number of people are realizing that there is more to NFTs than monkey JPEGs (and anyway, there is nothing wrong with monkey JPEGs).
NFT technology is central to web3 and metaverse development, and while trends and meta will fly by, and many NFT collections will crash and burn, the tech itself is here to stay and will be used in ways we haven’t imagined yet.
Also, this crash/post-crash period, here in 2022, feels different to post-crash 2018.
Back then, it was retail that had got burned and the crypto space became quiet.
Here in 2022, it’s large, over-leveraged organizations that got rekt.
Of course, that means retail that was invested too, but it shows that the landscape is different.
Overall, the crypto environment is a lot busier now, having expanded in all directions and sucked up talent.
The scene as a whole is very unlikely to become anything like the ghost town it was in 2018/19.
And that may be especially true of NFTs, due to NFTs being the most vertical-crossing, attention-grabbing, and least outwardly finance-oriented section of crypto.
NFTs overlap with the worlds of art, design, gaming, music, fashion, sports, metaverse development and more, so if there is one space where you’ll find ongoing activity taking place, it’s here, in NFTs.
Which Existing NFT Projects are Worth Buying?
In general, famous collections are now buyable at prices low enough that they would have caused a stampede a couple of months ago, in some cases in ETH terms, but in all cases when converted into USD.
Did you ever want to own CryptoPunks, BAYC, or MoonBirds?
There are no certainties in NFTs, and no guarantees about what the market will do next, but these are the closest you’ll get to a long-term safe play, and they’re all available at a discount.
In fact, CryptoPunks have already been moving, with the floor price jumping from around 48 ETH to 68.5 ETH, which is still far from its peak (last October) of almost 125 ETH.
Switch to USD and the gulf is even larger, with a current floor of around 77K, while it hit over 450K last November.
Is it now too late to pick up a bargain?
Not if you believe these items have long-term upside and can revisit previous highs.
It should be noted, by the way, that just after the mini-run on Punks, Yuga Labs dropped an announcement that it would be working with Noah Davis, of Christie’s, to steward the CryptoPunks collection.
This elicited cries of insider trading on NFT Twitter, but it’s entirely possible that buyers were simply taking advantage of low prices or reading a pump.
Either way, even if you’re not personally planning to splash out five figures on a Punk, these sales demonstrate that there are buyers picking through the debris and sniping with conviction.
In the next NFT tier, there are projects such as Azuki, Doodles, World of Women, Cool Cats, CloneX, Muri, DeadFellaz, and Creepz, all available cheaply in USD terms.
I wouldn’t be certain that all of these will maintain their status in the long term, but it’s a reasonable bet that some of them can, and it would make sense to pick one or two that you believe in.
And if you want a part of Yuga but can’t afford the apes themselves, then prices on Otherside land are low.
It’s the projects that build through the bear who can come out on top, and Yuga Labs is very well funded and arguably the biggest name in NFTs.
Basically, they’re going to keep busy and, in Otherside, they have solid, metaverse-oriented plans.
What Should I Look For in New Projects?
A good approach now is to look for teams that have meaningful strategies, can manage their finances and are at work building.
Groups making games and metaverse experiences, or focused on utility, should be of interest, along with projects associated with established names and active investors.
In relevant recent news, Immutable announced that it was launching Immutable Ventures, a $500 million venture focused on web3 gaming and NFT projects, in association with organizations including Animoca Brands and GameStop.
Immutable is the firm responsible for Immutable X, a gaming-specialized layer-2 platform operating on top of Ethereum.
In addition to following VC money and major players, remember that the NFT world is fundamentally degen at its core, and still heavily oriented around art and design.
Look out for meme momentum, and unexpected, transient meta, but take profits quickly.
Alternatively, for a more relaxing approach, follow art communities and artists you like, and chill through the bear market by collecting 1/1 items that really appeal to you.
What will be Different Next Bull Run?
One change is that we may not be so exclusively focused on Ethereum, which has, so far, dominated the NFT space while other blockchains were playing catch-up.
Solana has established itself most firmly as an NFT alternative, but was in need of a shake-out, having become too associated with rug-pulls, and over-saturated with generic DeFi-leaning projects in which core value is sometimes difficult to discern.
Cardano was, for a large part of the NFT bull phase, way behind Ethereum in terms of platforms and tools, but by 2022 had shiny, fast marketplaces, well-made collections minting and expanding, and the actual Doggfather himself on board.
Tezos is interesting because it has carved out a niche as the artistic, leftfield NFT space, and as a result saw expansive recent growth in NFT sales volumes.
Other blockchains with NFTs include Binance Smart Chain, Polygon, Avalanche, Elrond, and Flow.
A bearish period is a good opportunity to learn your way around new NFT ecosystems.
Crypto is cheap right now, so you can load up on SOL, ADA, XTZ, or whichever others grab your attention, and see what’s on offer and how it all works.
If you’re short of time, then perhaps just pick one alternative ecosystem to get familiar with.
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.
If you really want to take advantage of fastest growing asset class EVER, I highly recommend you join us in the Premium Investor Report.
You’ll immediately get access to:
- Deep dive Altcoin report & The Trending Coin Report
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See you next time!
Lark and the Wealth Mastery Team
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.