Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive

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In This Issue

  • I share my thoughts on the state of the market, market paranoia, FTX buys Voyager, Robinhood teams up with Polygon, Ooki not okay, Next in trouble & the only way to make money now.
  • Sam has a report for you on why CryptoPunks are so expensive.

Crypto Alpha Report

It’s the end of the month and the Crypto Alpha Report is getting closer and closer. 

My team and I scour the market for countless hours and we put all of our findings from the previous month into one report. That is:

  • 📉 An overlook of the crypto markets
  • 🎈 The top Airdrops of the month
  • 👀 The Top Altcoins to watch
  • 🧑‍🌾 The best DeFi Farms
  • 🙊 The most exciting NFT mints

Everything packed in a single report, being released in a few days exclusively for the Premium Subscribers of the Wealth Mastery Newsletter! 

Unlock the Crypto Alpha Report right now with a 7-day free trial! 🚀

Alpha Report

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 17.4% APY with ATOM liquid staking.
  • 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 Biconomy.

And much more!

Unlock 7-Day FREE Trial

What’s On My Mind by Lark

The State of the Market 

Well… I wish I had another tune to play, but it is another bad week in markets. Surprise! 

Bitcoin has been range bound for the last 10 days. This kind of boring, largely directionless price action is so typical of bear markets. Back in 2018/19 for example we had months of sideways actions. The worry for investors now is that this is the calm before the storm and that prices could still drop further due to macro craziness! 

Ethereum is ranging between $1,280 and $1,400. Break down from this range and $1,000 can come real quick. But, an October rally could see us coming back to challenge key areas of resistance. 

S&P 500 just bounced off of key support. Curious to see if that starts to develop towards our October rally around these mid-terms. 

Bank of England starts buying UK bonds again. This is a move that will likely make inflation last longer, but when the Pound cratered this week the BOE had little choice but to intervene to try and shore up markets.

This move could signal a change in policy of central banks as the crisis continues to get out of hand. If the ECB and FED follow suit… it could be the signal we are looking for to call a bottom. But until the FED joins the party, it is too early to celebrate since the USD is the wrecking ball and the fed is driving the machine. 

General Paranoia About Markets Now

Bonds Breaking, the bond markets have had a crazy volatile week and year. 12 trillion has been erased from the bond market. The bond market is widely seen as being in a state of chaos right now. This is bad for markets. 

Housing Falling, US housing markets are expected to cool by up to 20% in key cities. Overseas markets like here in New Zealand or over in Australia are also facing huge slumps. This lowers home owner equity and diminishes the wealth effect. 

Stocks Getting Crushed, at the time of writing the S&P 500 is hanging in the balance. If it falls any further then we lose support and all hell could break loose. Remember people like Ray Dalio are still calling for another 20% down from here. 

Rate Hikes are the fuel to the fire of markets now. All of the above is because of the FED’s rate hikes. And we have more hikes to come which will put even more pressure on the markets. A hard landing, AKA pain, is what the FED has created for markets. 

Inflation, while inflation is trending down in the USA… for now, the EU and UK are getting rekt hard by inflation as Europe faces a very hard situation with energy prices. While we may still be far form peak inflation in Europe, we could be heading in the right direction in the USA. But, the trick now for the US is to actually get inflation down. The fear is that even if it keeps falling that it will stay stubbornly high for a long time. 

FTX Buys Voyager… Maybe Celsius… 

FTX has finalized a bid to buy bankrupt crypto lender Voyager. The deal will see FTX get all of the crypto and all of the customers. The part that remains very unclear at this stage is what happens next for depositors. Will they get crypto back? Will they get cash? When and how much will they get?

Also, as soon as this happened rumors started flying that FTX may also buy up Celsius… or at least what is left of Celsius! At the same time it was announced that Mashinsky, the CEO of Celsius resigned. 

Robinhood Teams Up With Polygon! 

Big news for Polygon this week as it seems that Robinhood’s 22 million customers will be getting access to crypto via the Polygon Network in a collab to launch a crypto wallet! Which could be great long term news for the Matic token. An initial testing phase with 10,000 users will hopefully grow into something much bigger. 

Ooki Not Okay

In yet another shit show BS announcement from US regulators it now seems that CFTC is coming after decentralized organizations. In particular they said that the Ooki DAO (formerly BZX) had failed to comply with the banking secrecy act, failed to properly register, and has been offering illegal digital asset trading!

The crazy part about this is that they are charging DAO participants with these crimes. So any token holder that has participated in platform governance is now being sought as a criminal.  This has far reaching and dangerous implications for on chain governance. It also really underscores how little regulators know about the industry. Anyway, the key takeaway here is sadly, never participate in governance… but let’s keep it real, most of us weren’t anyway! 

Nexo In Trouble 

For those of you who still have your crypto on centralized lenders, be aware that NEXO has just been hit with enforcement actions by 8 US states. Particularly it is being argued that NEXO is offering unregistered securities to clients and are not providing adequate risk disclosures.

At this time, it only affects US users who have been unable to use the Platform since February unless you were already a customer. To be clear, no one is saying that NEXO is insolvent, or any such thing as has happened to Celsius, but that it is coming under increasing regulatory crackdown. While NEXO has been one of the few crypto lenders to survive, the bear market has proven the folly of trusting these institutions. 

The Only Ways To Make Money Now? 

This bear market sucks, newsflash! The easy money times are so much more fun and profitable. But, there are ways to make money even in these markets. But, you need to adjust to the bear market mind set. Bull markets are “easy” because you can just buy random coins and then sell them later for profit… usually. But, right now making money in crypto has gone into hard mode. There are no easy lunches at this time. But there is still money to be made. 

Trading… This may be the only way to consistently make money in crypto right now. Longing rallies and then shorting them when they fizzle out can indeed make gains for traders. BUT, you need to know what you are doing. You need to have a strategy. The reason most traders fail is that they have no idea what they are doing. Good news though is that there is always time to learn, and why not now during a bear market when things are quiet. 

Airdrops and Testnets, Jesse covers the latest opportunities for you every week in the our Premium investor report. And few of these are make money now opportunities, but they are ways to get free coins and maybe make a lot of money later on! A testnet worth taking a look at is SafeStake

Defi, you know, I am impressed with just how well defi has survived this bear market. Yes, some stuff has broken, but then it did in the bull market too. But, overall the opportunity to make money in defi has remained strong. There are lots of ways to put your assets like Ethereum, AVAX, or stablecoins to use right now to make money. Risks persist, but the thing you must decide is if those risks are worth it for you or not.

One further note here as well, while “blue chip” defi protocols still offer nice yields, there could be bigger gains elsewhere. A potential idea for farmers would be to ape into bear market launched protocols that never had a bull market and farm throughout the bear and sell when the bull comes back. The risk here is the protocol just fades away and potential gains with it. 

Three ideas

  1. Pancake Swaps new stablecoin farms, currently yielding around 10% apy
  2. Convex Finance is offering 6.5% on staked Ethereum pools. 
  3. Trader Joe’s AVAX/sAVAX pool is paying 8.5%.

NFTs, while they may not be everyone’s cup of tea, the fact is that NFTs still make money. Albeit less than before. But, flipping opportunities still exist. Free mints still happen. And hot mints with high ROIs still happen. Even with the shit market conditions. 

The bear market will not last forever. But it will last for a while. So think about how you can use this time to make money in the market. 

How to Earn Up to 9.74% Effective APY Liquid Staking ETH Tokens by DeFi Dad (Premium Article)

The most popular liquid staking solutions such as Lido and Rocketpool provide a simple and secure way to earn interest on ETH by allowing individuals to stake ETH with value that’s still liquid and can be used across a range of DeFi applications, such as lending, overcollateralized borrowing, and liquidity provisions. 

Today, I will show how I might choose to market-buy a discounted ETH liquid staking token, with plans to hold it for at least 6-12 months until staking withdrawals unlock, and I can retrieve 1 ETH along with whatever staking rewards I’ve accrued, netting me the Effective…. (Unlock the whole article below 👇🤑).

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Why CryptoPunks are so Expensive by Sam

Looking at the NFT space today, you’ll notice there are certain templates and features that are widespread among collections, and if you’re wondering where these features come from, there’s a reasonable chance that the answer is CryptoPunks.

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: Larva Labs

The CryptoPunks collection minted 10,000 tokens, which set 10,000 as the standard supply for other creators to adopt, although there is more variation between new projects now.

Then there’s the PFP (profile picture) standard format: a set of characters all facing in the same direction, algorithmically assembled, based on an identical underlying form, but with varying overlaid traits, some of which are rarer than others… yep, that all comes from CryptoPunks.

The collection also makes use of a pixelated, retro design style, and that too has become commonplace in NFTs.

In other words, CryptoPunks are iconic and influential, but what also stands out is that they are very expensive. Looking at the assets themselves, the artwork is simple and repetitive, so what exactly is it that makes CryptoPunks valuable, and what is their backstory?

NFTs Before CryptoPunks

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: Kevin McCoy

CryptoPunks were minted in 2017, but they were far from the first ever NFTs. For that accolade, you’d have to go back to 2014, when artist Kevin McCoy minted a work called Quantum on the Namecoin blockchain, and established a platform called Monegraph, meaning monetized graphics.

That same year also saw the launch of Counterparty, a platform built on Bitcoin which allowed for the creation and trade of unique crypto tokens (or in other words, NFTs), including early collections Spells of Genesis and Rare Pepes, which were recently rediscovered by new NFT collectors.

Predating both Counterparty and Quantum, there were Colored Coins on the Bitcoin network, but these can be thought of as proto-NFTs, setting a basis for further experimentation.

CryptoPunks Change the Format

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: Larva Labs

Paying homage to punks, cyberpunks and cypherpunks, CryptoPunks were launched by John Watkinson and Matt Hall’s Larva Labs in June 2017, on Ethereum. It was the first ever PFP-style collection, in the sense that it created the concept of a PFP collection.

A remarkable aspect of the story, especially when wondering about the price tag, is that they were originally distributed for free. In those early days, anyone with an Ethereum wallet could claim a CryptoPunk, and they were rapidly snapped up after a Mashable article brought them to wider attention.

It’s fascinating to read the article now, as it presents the case for NFTs long before most people had heard of the concept, and talks about a zombie punk (now one of the most sought after traits) being traded for $1.

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

A prescient extract from the 2017 Mashable article

From there, punks were exchanged around the compact community of Ethereum users that existed at the time, and a marketplace was established. They immediately gained a little in value, but were still far removed from mainstream awareness.

Influence and Copycats

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: ThreadPunks

It’s riding high on the frothy, WAGMI, NFT delirium of 2021 that CryptoPunks soar in value and start to garner attention from outside the crypto space. The collection is covered not only in crypto and tech media, but in art world channels too, and CryptoPunks items go on sale at auction houses Christie’s and Sotheby’s.

As this happens, they exert tremendous influence in the NFT space, with CryptoPunks-style traits becoming commonplace, and innumerable copycats, such as SolPunks on Solana, and the now defunct ThreadPunks on Cardano.

The NFT collection which currently has the highest market cap, Bored Ape Yacht Club, draws on the CryptoPunks ape trait, but the story comes full circle in 2022 when Yuga Labs (the creators of BAYC) acquire the IP rights to CryptoPunks.

Price History

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Chart from Dune Analytics

CryptoPunks were free to claim in June 2017, and throughout the rest of that year–when crypto experienced a euphoric bull market surge–traded at an average price of between 0.15 and 0.62 ETH (taking average prices to a high of around $150).

Then, throughout the prolonged crypto winter of 2018 into 2019, prices dipped back down in both ETH and dollar terms, as crypto ground out the bear market lows.

Through 2020, prices prepared for take off, and by the end of the year, CryptoPunks were trading at an average price of 8 or 9 ETH, which had become equivalent to around $5,000.

After that, the really attention grabbing sales started happening during the crypto and NFT bull run of 2021, with the average sales price hitting a peak of 131 ETH in October, which at that time–while crypto was at a cyclical high–was equivalent to almost half a million dollars.

Keep in mind also that rare pieces sell for for much higher amounts, with the top three CryptoPunks sales coming in at $23.58 million, $10.35 million, and $7.82 million, and a lot consisting of nine CryptoPunks selling for just under $17 million at Christie’s in May 2021.

The current situation is that last month, 85 CryptoPunks changed hands at an average cost of 75 ETH, or about $115,000, and the floor price on punks right now is 63.95 ETH, up from a dip to 43 ETH at the end of May.

What makes CryptoPunks so Valuable?

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: Sotheby’s

A huge factor is CryptoPunks’ unique historical importance as both tech artifacts and works of art. When it comes to tech, they are part of the crypto space, meaning an area that is expanding, finance-related and known for intense speculative gains, and at the same time, the art world that CryptoPunks have joined sometimes places immense value on prestigious items.

CryptoPunks are a scarce asset, with perfect, blockchain-locked provenance. They have permanently influenced the entire NFT space, forever, and what’s more, they operate as digital Veblen goods, allowing owners to flex wealth and–some holders might argue–tech sophistication.

As for claims that CryptoPunks lack artistry or creative merit, well, besides being subjective and overly dismissive of generative art, that’s hardly a new line of criticism in the modern art world. Tell it to the ghosts of Marcel Duchamp, Jackson Pollock and Andy Warhol, and let me know if it gets you a discount at Sotheby’s.

Should I Buy a CryptoPunk?

Market Paranoia, Making Money in the Bear Market & Why CryptoPunks are so Expensive - - 2022

Image credits: Larva Labs

The collection’s floor price remains below all-time highs as the bear market persists, but the steepest mid-2022 dip was eaten up with conviction when the floor recovered sharply across two days in June.

If you have a low time preference and a pile of ETH, then yes, buy one. Even if NFTs disappeared forever (which they won’t), CryptoPunks would be the remains left over, of value to both art collectors and tech nerds alike.

They have been enormously disruptive, confidently low-key, and are detached from preoccupations with utility and brand-building. Why are CryptoPunks so expensive? Because they are a landmark in the histories of both art and tech, and each unique item represents part of a wider story.

👉 GO PREMIUM TO SEE THIS WEEK’S TOP 3 NFT MINTS 👈

Final Notes

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.

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See you next time!

Lark and the Wealth Mastery Team

Legal Disclaimer

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.

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Join the Wealth Mastery Investor Report

By Lark Davis

Combining cutting edge insider insights and done-for-you market analysis to deliver crypto investors the best opportunities to grow their wealth, stay ahead of the curve, and avoid costly mistakes! We cover DeFi, NFTs, Altcoins, Technical Analysis and more! 

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