In This Issue

• For this weeks portfolio tip, I’ll be talking about self custody.
• Sam has a report for you on whether or not Azuki NFTs are a good buy.
• David shows us how to short sell on Bybit
• Rebecca has this week’s top trending coins.

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Lark’s Portfolio Tips

Self Custody 

We all know the importance of self-custody, and yet so many people got caught with their pants down this year when FTX collapsed.

The simple truth is that crypto is not like stocks. With stocks, your investments are supposed to stay on your brokerage account. This is the norm. But in crypto, the exact opposite is true.

Leaving your funds on a crypto exchange opens you up to a wide range of risks:

• The exchange can be hacked.
• The exchange, like FTX, can commit massive fraud.
• Exchange APIs can be hacked liquidating your positions.
• Withdrawals can be halted without warning.

Exchanges are marketplaces, plain and simple. They are not banks.

The one exception I made to this rule was crypto lenders like Blockfi and Celsius. My reasoning was that, yes, it is custodial, but at least I earn money on it.

Obviously in hindsight that was a terrible decision as these companies have almost all collapsed as their lies and fraud became apparent. So that leaves no real excuse for keeping money on exchanges except that you might not know how to withdraw your coins or you may not feel safe doing so.

How to is easy, just click withdraw and send it to your deposit address on your Ledger wallet (or similar). And the not feeling safe argument has gone out the window. The risk is just as high if not higher on a centralized exchange.

Yes, exchanges like Binance, Bybit, and Phemex are all releasing merkle proofs of reserves which is great. But, again, they are marketplaces, not banks. Even Kraken CEO Jesse Powell says he does not want users to leave their coins on his exchange and to treat it like a bank! If you are still storing your crypto on an exchange then it is time to really think about getting it off of there.

• Step 1: Buy a hardware wallet. My go-to is a Ledger, but there are many great brands. 
• Step 2: Get your coins moved to your wallet. 
• Step 3: Take care of your wallet.
  • Write your passphrase down twice, offline, using pen and paper. Laminate it and store it somewhere safe. Store the second one somewhere else safe like at your mom’s house. Go big time and get a metal key store plate that can survive just about anything. 
  • Never give your passphrase online for any reason. Never store it online. 
  • Make sure your pin is hard to guess. 

Self-custody is easy. It just takes some common sense approaches to safety, and in the end, is actually much safer than keeping your coins on an exchange. 

Unstoppable Domains Cyber Monday Sale

Unstoppable Domains, the creators of the wildly popular NFT based domain service, is running a very limited time Cyber Monday offer. Buy one NFT domain and get a second of equal or lesser value FOR FREE! You can grab hot domains like .crypto, .nft, and .bitcoin, and yes premium domains are included in this sale. 

Please note this sale will run from November 28th 9am EST for 24 hours ONLY! 

Ustoppable Domains Sale HERE.

Are Azuki NFTs a Good Buy by Sam

While JPEG flippers are understandably cautious at the moment, if you were looking to pick up some top-tier NFTs, now might be a good time to go bargain hunting.

One collection with a strong presence is Azuki, and in an arena where attention is everything, it’s maintaining interest–even during tough times–through ongoing expansion and new tech.

To figure out whether or not Azuki is a good buy, let’s look at how it started, how it’s performed, including some bumps in the road, and what it has planned for the future.

Image credits: Chiru Labs

Azuki’s origins

Launched in January 2022 by a pseudonymous founder called Zagabond, through his Chiru Labs platform, Azuki was massively hyped and sold out a public sale of 8,700 NFTs in three minutes, with the rest of the collection snapped up in a subsequent private sale.

NFTs were still on a high at that time, and the collection is a product of the bullish mania that exploded in 2021, although Azuki came after CryptoPunks and Bored Ape Yacht Club had risen to dominance.

Image credits: Chiru Labs

The collection consists of 10,000 PFPs, each depicting a side-facing manga-style character, and the whole project has a Japanese anime theme. The artwork was created by Steamboy (real name Arnold Tsang), who was previously an art director on the Activision Blizzard game Overwatch.

Anime NFT meta became a major theme throughout 2022, and Azuki can be considered the top collection in this category, kickstarting the trend. It placed strong emphasis on creating its own world, brand, and–core to everything web3–asset-holding community.

Image credits: Chiru Labs

In March, a 20,000 NFT companion collection was added, called Beanz. Beanz NFTs were airdropped to Azuki holders (two Beanz for every one Azuki), although they initially displayed a crate (and were called Something Official), which then updated to a broken crate with soil spilling out, which later became a bean pod, and finally a cute, bean-style character.

Founder controversies

Back in May, Zagabond, the founder of Azuki, revealed that he had also been the creator of three previous NFT projects: CryptoPhunks, Tendies, and CryptoZunks.

CryptoPhunks (yes, they’re CryptoPunks but reversed)

He wrote in detail about the concepts and limitations of each, and of how they had been learning experiences leading up to the creation of Azuki.

The problem with this was that his former projects had all been created under different pseudonyms, and Zagabond had walked away from each one, taking with him a total of over 1,000 ETH in profits, and all over the space of just two months.

These revelations caused an immediate crash in the Azuki price (from a 23 ETH floor to below an 8 ETH floor), and Zagabond ended up apologizing for his actions. At the time, the fallout was damaging, but the more time that goes by, the less it appears to have had a long-term impact (don’t forget that prices have been dropping anyway across NFT collections).

Innovation and Brand Expansion

Physical Backed Tokens

Last month, Azuki launched a new, open-source standard called the Physical Backed Token (PBT), and introduced the scan-to-own concept.

Image credits: Chiru Labs

The idea is that physical objects are fitted with a chip (called a BEAN Chip), and when scanned, an Ethereum-based PBT is minted and kept in the owner’s wallet. It can then be transferred to a new owner’s wallet if the physical item changes hands, creating a trustless, on-chain record of authenticity.

Image credits: Chiru Labs

Azuki drew attention to this innovation with what became a $2.5 million auction of nine Golden Skateboard NFTs, each of which is redeemable for a physical gold-plated skateboard fitted with PBT technology.

After the skateboards there has also been a collaboration with Japanese streetwear brand Ambush to produce high quality hoodies and pendants that incorporate BEAN chips and PBT creation.

Oracle Red Bull F1 Sponsorship

This month, Azuki became a sponsor of the Oracle Red Bull F1 team in the Abu Dhabi Grand Prix, with Azuki #8494–a character called Lei the Lightning Azuki–adorning the team cars.

Image credits: Chiru Labs

To commemorate the occasion, a free-to-claim NFT featuring the same character as appeared on the cars was minted on the Tezos blockchain through the ByBit NFT marketplace (ByBit is also an Oracle Red Bull sponsor).

Price performance

Azuki floor price from Coin Gecko

With demand sky-high, and the January NFT market still bullish, Azuki minted out easily at 1 ETH. The floor price just kept going up from there, hitting a high over 30 ETH in April.

There have also been some huge sales of rare items, with Azuki #9605 going for an incredible 420.7 ETH in March.

There was then a big drop in May, to below 8 ETH, when controversy around the founder first hit, an immediate recovery to 15 ETH, and then a bear market decline to as low as 5.9 ETH in August.

By September, prices were back above 10 ETH, and have stayed between 9 and 12 ETH since then, with the floor now sitting at around 10.3 ETH.

In October, even as the bear market deepened, Azuki’s Golden Skateboard NFTs sold at auction from 200 to 309 ETH, although these NFTs have special value because they’re redeemable for real gold-plated skateboards.

There have been some big trades this month in the original collection too, though, with eye-catching sales of rare NFTs at 150 ETH, 120 ETH, 109 ETH plus five floor Azukis, and 98 ETH plus two floor Azukis.

Competitors

Azuki is top dog when it comes to anime-inspired collections, but there are a plenty of other projects competing in the same category.

Image credits: JUUNI

JUUNI is an upcoming project with good potential, while DigiDaigaku is the creation of proven game designer and investor Gabriel Leydon, who is working on a new approach to gaming called free-to-own.

In terms of artistic depth and uniqueness, the Renga collection is hard to beat, although as a project it has periods of inactivity and there is uncertainty about where it’s heading.

Image credits: Capsule House

Capsule House is extremely stylish, featuring art and design from creators Seerlight and Kaejunni, who both also produce much sought-after 1/1s.

As for Azuki, while many projects make grand promises about the future, this project is now making inroads into blockchain-connected phygital development. The original collection has shaken off controversy along the way, and while the bear market has wiped out all-time-highs, prices consistently find their way back to double digits.

We are still early in the NFT experiment, but Azuki is among the few projects that can plausibly establish a lasting brand.

Image credits: Chiru Labs

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How to Short Sell on Bybit by David

Bear markets suck. 

During times of extended falling prices, many traders feel their only option is to sit on the sidelines until markets finally hit bottom. But it doesn’t have to be this way. Short selling is a trading method to profit when prices are falling. In current times, this can be an important tool to utilize. 

Today’s article explores the world of short selling on Bybit. With over 10 million users and some of the most diverse trading instruments and optionalities in the industry, Bybit is one of the best exchanges to execute crypto short sells. Specifically, we will discuss: 

• What is Short Selling and Why Do It
• What are the Risks
• How to Short on Bybit in Eight Easy Steps
• Available Short Sell Instruments on Bybit

There’s plenty to discuss. Let’s roll. 

<h3 id="what-is-short-selling-and-why-do-it“>What is Short Selling and Why Do It

Short selling is a trading strategy that allows a trader to profit when an asset’s price is falling in value. Specifically, a trader performs a profitable short sell by selling a borrowed asset at a higher price, and then repurchasing it at a later time for a lower price. 

Short selling gets its name because the trader never owns the asset that they initially sell. The trader is “short” the asset because they borrow it via a loan from a lender. A successful short sell means the trader is able to pay the lender back with the asset that was originally loaned out, because it was repurchased at a lower price. The short seller’s profit is the price difference between the original sales price and the repurchase price. 

Let’s look at an example: 

• Bitcoin is trading at $20,000. Alice believes that bitcoin will likely fall in price over the next few days. 
• Alice borrows 1 bitcoin from a lender, and immediately sells it on the open market for $20,000. 
• Over the next few days, bitcoin’s price falls to $15,000. Alice repurchases 1 bitcoin for that price. 
• She returns the 1 bitcoin to the lender, and pockets $5,000 as her profit (minus lender interest payments and trading fees). 

Short selling provides an avenue for traders to make money in a falling market. So long as a trader can correctly predict the direction of a market, they can make money regardless if prices are going up (longing) or down (shorting). 

<h3 id="what-are-the-risks“>What are the Risks

Shorting is risky because the trader is taking out a loan which must be paid back. Thus, if the asset goes up in price (“goes the wrong way”), and the short sell is closed, the price difference between the original sales price and the higher repurchase price would be the amount lost on the trade. And because any asset theoretically has no price ceiling, short sellers can lose all their posted collateral via liquidation.  

Liquidation occurs when the collateral can no longer cover any further price increases. When trades are going the wrong way, many traders will add additional collateral to cover their positions in an attempt to avoid liquidation. The hope is that the price will eventually fall and the trade will eventually become profitable. But remember, because this is a loan, the lender is charging interest, which continues to accumulate so long as the trade is open. 

Stop loss limits help traders minimize their risk. With a stop loss, traders lock in acceptable risk and avoid losses beyond what they are willing to tolerate. At the end of the day, remember that short selling is not for beginners. And leverage is only for advanced, experienced traders. 

<h3 id="how-to-short-on-bybit-in-eight-easy-steps“>How to Short on Bybit in Eight Easy Steps

The following is a concise step by step instruction for how to execute a derivative short sell on Bybit. A glossary of terms is provided in the following section in case any of the terms are unfamiliar. 

1. Fund your derivatives account. You’ll likely want to fund with either USDT or USDC.

2. Select your preferred derivatives contract. For this example, we will be using the BTC-USDT perpetual contract. 

3. Here’s the trading desk. The far right section is the order interface. 

4. First, choose either cross or isolated margin. Set the amount of short leverage you want, if any. 

<h2 id="”>

5. You are “opening” a short sell, so you are using the open tab. Select if you want a limit, market, or conditional order. Specify how much of the asset you want to short. 

6. In order to minimize risk, you’ll want to select Sell Short with TP/SL. Set your take profit and stop loss limits. Then select Open Short. Congratulations, you’ve now successfully opened a short sell order!

<h2 id="”>

7. Once opened, the order will appear under the active tab at the bottom of your trading desk. You can edit your take profit or stop loss limits when the order is open, and you can post additional collateral if necessary. 

8. If you’re using TP/SL, you don’t have to monitor your trade. However, if you need to close your position early, select the Close tab, specify how much of the asset you want to repurchase, and then select Close Short.

That’s it! You’ve now executed a derivatives short sell on Bybit in eight steps. 

Glossary of Terms

• Margin:  This means collateral. Because short selling requires taking out a loan, a short seller must post collateral in order to protect the lender, in the event that the trade goes the wrong way.
• Cross Margin:  The entire available balance under the trader’s margin account will be used to meet margin requirements. Thus, a trader’s entire margin account can be exposed to liquidation. 
• Isolated Margin:  Only the amount of margin allocated for the specific trade is used to meet margin requirements. Only this allocated margin is at risk of liquidation. 
• Leverage:  Financial tool allowing traders to increase their market exposure beyond their initial investment. For example, 10X leverage means a trader can enter a position for $10,000 worth of BTC with only $1,000 of collateral. Bybit offers up to 100X leverage. The odds of gains, losses, and liquidation exponentially increase as leverage increases. 
• Limit Order:  In terms of a short sell, this is an order to sell an asset at a specific price. The asset will not be sold until it is triggered by that price. 
• Market Order:  An order to sell an asset at the current market price. 
• Conditional Order:  Either a limit or market order to sell an asset that only takes effect once a certain condition has been met. Bybit allows traders to set up conditions based on Mark Price, Last Traded Price, or Index Price. 
• Take Profit:  A profit exit strategy which ensures that the short sell is automatically closed once the asset falls to a certain price. The take profit price will always be lower than the price that the asset was initially sold for. 
• Stop Loss:  A risk management tool that automatically protects the trader in case the trade goes the wrong way. For a short sell, the stop loss price will always be higher than the price that the asset was initially sold for. 

<h3 id="available-short-sell-instruments-on-bybit “>Available Short Sell Instruments on Bybit 

Bybit offers multiple short sell instruments. The following is a list of available instruments and a short description. 

• Spot Short Selling:  This is the most simple and direct method for performing a short sell. Borrow crypto at a specific price, sell it, attempt to repurchase it at a lower price, pay back the lender, and take profits. Easy peasy. Bybit’s spot short sell order menu has less optionalities than the other instruments discussed below. 

<h2 id="”>

• Derivatives Short Selling:  The step by step guide above is an example of this. Derivatives are contracts whose value is dependent on the price of the represented asset. The bulk of Bybit’s derivative short sell options take the form of perpetual futures contracts — meaning, there is no expiration date. Short sell trades can stay open for as long as the trader desires. There are lots of customization options (margin types, leverage, etc.) when creating derivative short sells on Bybit. 

• Crypto Put Options:  Put Options provide an additional way for traders to profit when asset prices are falling. Put Options give the purchaser the right, but not the obligation, to sell a crypto at a predefined price at a predetermined date. If Bitcoin is trading at $20,000, but Alice believes it will be trading at $15,000 one month from now, she can buy a Put Option which gives her the right to sell Bitcoin at $20,000 one month from now. In order to do this, she must pay a premium to the Put Option seller. If bitcoin’s price falls, her profit is the price difference between the lower price and $20,000. If bitcoin’s price is above $20,000, Alice would take the option to not sell the bitcoin, and her loss would be the amount she paid in premiums. 

<h3 id="conclusion“>Conclusion

Bear markets do not have to mean a waiting game with zero profits. Short selling says otherwise! Bybit offers a diverse menu of short sell instruments, contracts, and customization options to satisfy even the most sophisticated traders.

Remember that short selling and leverage are not for beginners. If you are new to short selling, start with very small positions, use stop losses, and don’t use leverage. Educate yourself and give yourself time to hone your skills. If you approach short selling with patience and rationality, and don’t treat it like a casino, you will have a way to make money when markets are falling. This is a big deal!

Trending Coins This Week by Rebecca

Here are my key takeaways from the trends this week, and it’s a mix of partnerships from the outside looking in, but chaos on the inside.

1 – SONM is a decentralized fog computing platform that saw its SNM token pump and dump within 48 hours, exploding up over 4,000% and then crashing right back down. 

2 – Chiliz is an ERC-20 token that powers the sports fan token platform, Socios. Chiliz has surged 11% in 24 hours as the 2022 World Cup kicks off, with sports fans turning to tokens on the Socios app.

3 – Solana is an L1 blockchain that’s seen co-founder, Anatoly Yakovenko, urge validators to update to the latest version of the node, to fix the network outage problems. Elsewhere, the FTX collapse has led to a 70% decline in Solana’s DeFi total value locked (TVL).

4 – GMX is a DeFi perpetual exchange on Avalanche that’s seen a boost in volume after the FTX collapse. GMX has been integrated into the insurance platform, Tidel Finance.

5 – Aptos is a newly launched Layer-1 blockchain created by ex-Meta employees that’s announced a partnership with Google Cloud to support Web3 projects.

6 – Media Network is a content delivery network on Solana that’s been recognized by Binance’s Research team, despite the effect the FTX collapse has had on the Solana ecosystem. Integration with BNB Chain is being teased on social media.

7 – Bitcoin is being bought up daily by El Salvador, according to President Nayib Bukele, who announced they will buy one BTC per day. 220K bitcoins have been removed from crypto exchanges since the FTX collapse, as investors move their coins to self-custody.

8 – Polygon is an Ethereum sidechain that’s announced yet another brand partnership, this time it’s with Nike. Nike has launched the beta version of its Web3 platform called Swoosh and will feature Polygon-based NFTs in 2023.

9 – Ethereum has been under selling pressure as the FTX hacker has started selling millions in ETH for the Alameda-linked Ren Bitcoin (renBTC). Starknet has deployed its new token, STRK, on the Ethereum mainnet but the tokens are not yet for sale.

10 – Evmos is an EVM on the Cosmos network that’s hosted the final workshop of its “One Million Wallets” hackathon.

11 – NEAR Protocol is an L1 network that’s seen more than 2M NFTs minted on the blockchain. NEAR Protocol will be appearing at Art Basel in Miami in December.

12 – Cronos (CRO) is the native coin for the CryptoCom exchange that’s seen its CRO token surge over 20% as an official sponsor of the 2022 World Cup in Qatar. Despite the pump, investors are still wary given concerns over the state of CryptoCom’s reserves.

13 – Algorand is a self-proclaimed “green” L1 blockchain that’s also associated with the 2022 FIFA World Cup. Back in May this year, Algorand was announced as the official blockchain partner of FIFA. ALGO is up over 10% in the week leading up to the World Cup.

14 – Gains Network is a decentralized trading platform on Polygon that’s seen a jump in users since the FTX collapse, as investors move out of centralized exchanges. 

15 – Uniswap is an Ethereum DEX that’s overtaken Coinbase to become the second-largest exchange trading ETH since the FTX blow-up. On 14 November, Uniswap processed $1.1B worth of ETH trades in a 24-hour period.

Follow Rebecca on Twitter and Instagram.

Final Notes

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.

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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.

You can find a full disclosure of all my crypto & venture investments here.