The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs

the team from elrond

In This Issue

  • I share my thoughts on the state of the market, Bitcoin fear and greed, UST breaks, dollar cost averaging and PolkaDot cross chain messaging
  • Sam has a report for you on borrowing against NFTs

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What’s On My Mind by Lark

The State of the Market

Bad. Really bad. Ouch.

Everything is down big time.

UST crashed. Luna crashed. Altcoins down another 50%. Bitcoin is down to a new yearly low, in fact the lowest price since January 2021.

BUT we did get a buy signal for Bitcoin.

The daily RSI is showing an oversold reading, which is very rare. It maybe happens once a year.

Historically this has been a good time to buy.

To be clear, the RSI can become more oversold.

Prices can go lower.

The RSI can remain oversold for days to weeks.

But this time period represents a good time to stack based on the charts. 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

THAT BEING SAID, there is zero need to rush things.

There has been an extreme amount of trauma and damage done to the markets this week, and it is still unraveling.

The knock on effects of the implosion of the UST stablecoin will have broad reaching effects that may not become immediately apparent.

I did deploy some capital today to buy Bitcoin, but not a huge amount.

I am also largely holding off on any altcoin purchases for the moment.

Sure there are some great “bargains” right now, but the risk remains high until the market stabilizes.

I can happily enter an altcoin position when it is at -85% from ATH when the market starts showing strength versus -90% when the market looks weak.

Bear markets are games of survival. Don’t blow your capital too soon.

Ensure you have enough runway to make it through the hard times without cannibalizing your portfolio.

Pretty soon you will be able to say you survived the bear market of 2022.

Look, we all knew that the crypto market is volatile.

And today, it is really showing us that. Having rode these waves before, I can say that yes, it will get better.

But that doesn’t mean that it is not a brutal process. 

Bitcoin Fear and Greed 

The emotional ballet of the markets continues.

Fear is the new normal. The sentiment is bad and it keeps getting worse.

I am reminded of the ghosts of 2018. Bear markets are no fun.

Most people turn super negative, quit, sell for a huge loss and walk away until the next all time highs.

I understand this may seem like a tempting thing, but the reality is that those who can grind through the bear market will be the best positioned for the next bull run.

Which will come, they always do.

The only question is when. 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

UST Breaks

The UST stablecoin, the beating heart of the Terra Ecosystem got absolutely smashed this week.

Earlier this week the peg started to slip a little bit which caused a bit of panic and then the next day it completely tanked going as low as 22 cents to the dollar.

The LUNA asset has been smashed.

The Luna Foundation has sold some of their Bitcoin, and put some into market making.

This has rocked the entire crypto space for a few reasons.

One is that UST is one of the biggest stablecoins.

Two is that UST is a major player across many chains and in many defi applications.

Three is that the Terra Foundation has had to sell some of their Bitcoin into a weak market, crashing prices further.

UST is a mess. And I am over exposed to it, lol. 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

The situation has even caught the attention of Secretary of Treasury Janet Yellen… or was she involved?

She has afterall been very anti crypto, and the Treasury Department has been anti stablecoin.

Wouldn’t be a big stretch of the imagination would it?

That or the design of Luna / UST was just unsustainable during these bearish market conditions. 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

One thing is for sure, I don’t see how anyone can trust their money in UST or LUNA ever again.

I certainly won’t.

There are stories floating around Twitter of people who have lost everything on UST.

Even talk of suicides. It is one of those days, but I do need to say it. No matter how bad it gets. This is just money.

You can always make more money.

If you are hurting then please, do not suffer alone. Reach out to friends and family. Call a hotline.

I know it all seems dark right now, but it is often darkest before the dawn.

This too shall pass. 

Dollar Cost Average 

What if after all of this pain and bleeding in the market you were only down 6%?

Well, that is what has happened to those dollar cost averaging into Bitcoin. 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

Simply buying Bitcoin once a week rain or shine has long term proven to be one of the strongest strategies for investors.

These numbers get even crazier if we zoom out, because the above graph is only based on investing $100 a week for the last 52 weeks.

What if we assumed you had been buying $100 of Bitcoin weekly for the last two years? 

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

You would currently be 78% in profit.

Crazy right???

Consistent investing and long term perspective has proven to be a winning strategy. 

Polka Dot Cross Chain Messaging 

Looking beyond price and the general drama of the market right now there is some great news for Polka Dot.

Cross Chain messaging has gone live!

This means that a new era of Polka Dot is beginning.

You see up until not there wasn’t a great deal you could do with you DOT aside from staking it and putting it into parachain loans.

But the cross chain messaging changes all of that!

DOT can now be used as a collateral asset inside of defi applications on popular network like Parallel Finance, Astar, Acala, and Moonbeam.

This may not be the most exciting news to hear while the markets are getting smashed like this, but I wanted to remind you that the fundamentals of crypto just keep getting better. 

🔥 IN CASE YOU MISSED IT 🔥Check out this awesome video I made on ways to make money even in the current market  👉 CLICK HERE

Borrowing Against NFTs by Sam

One issue with NFTs is the opportunity cost of holding them, and it would be useful to be able to borrow against them and unlock their value.

If NFTs continue to grow and be further adopted, this capability will become more sought after.

Some NFTs might be usable as stores of value, while others will provide utility.

Particularly in the latter case, holders won’t want to sell their asset, losing the benefits or utility that it provides, and so in-demand mechanisms that provide loans against NFT collateral can create a meeting point between NFTs and DeFi.

One way to achieve this kind of lending is through a peer-to-peer design, meaning the platform is acting as a secure means, and an escrow service, by which lenders and borrowers can connect.

The alternative is through an automated protocol, meaning that the platform pools liquidity to be lent out, rather than connecting individual borrowers and lenders.

This is more similar to an AMM (automated market maker) style decentralized exchange.

JPEG’d

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

From a user point-of-view, JPEG’d has developed a very simple system.

You deposit your NFT, and it then acts as collateral, allowing you to take out a loan for a portion of its value.

As in the DeFi world, you don’t need permission or a review process, as the whole system operates through smart contracts.

When an NFT is deposited in the JPEG’d vault, credit is paid out in the native PUSd dollar-pegged stablecoin, creating what’s called an NFDP (non-fungible debt position).

Currently, JPEG’d only allows CryptoPunks to be utilized, but has stated that BAYC, EtherRocks, CloneX, and Doodles are on the way.

If the platform takes off, then it’s reasonable to expect that further collections will be added.

NFTfi

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

Pre-dating JPEG’d, there is NFTfi.

With so little competition at the intersection between NFTs and DeFi, both platforms could still grow, but NFTfi adopts a different approach.

In this case, it’s peer-to-peer, so once you’ve connected up your wallet, you can explore the options as both a borrower and a lender.

If you put up an NFT as collateral, it will be placed in a loan marketplace, and you’ll receive offers from lenders, detailing terms.

Accept an offer, and the transaction will be locked into a smart contract.

Take on the opposite role, and you can offer loans against NFTs in the loan marketplace.

In this case, you set terms and then profit from the interest you’ll make, or in the case of a default, receive the NFT that was used as collateral.

On NFTfi, all transactions are conducted in wETH or DAI.

There are over 150 NFT collections listed, with more being added regularly.

Honey Finance

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

Over on Solana, you can find the Honey Finance NFT lending and DeFi platform.

Honey will soon no longer be Solana only, and has shown off a demo of their Ethereum dapp, so it looks like they’ll be covering both chains.

Honey is not a peer-to-peer protocol, instead creating liquidity pools from which lending will be provided, and the platform also incorporates NFT staking and token farming. Its lending function is not operating yet, so this is one to keep an eye on as it develops.

Solvent Protocol

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

Also on Solana, there is Solvent Protocol, which is a little different from the other platforms listed here.

Solvent has created a system in which you can deposit NFTs from particular collections into what are called buckets, creating pools that it compares to index funds.

If your NFT is in a bucket, you earn tokens specific to that collection, that can be traded for USDC, or used to buy NFTs from the buckets (you can also put NFTs you placed in a bucket up for sale).

Solvent is now in collaboration with Honey Finance, as part of the latter’s Honey Ecosystem Partners system.

Lending Pond

The Crashing Market, Bitcoin Fear & Greed, UST Breaks & Borrowing Against NFTs - - 2022

If you want to borrow against Cardano NFTs, or earn interest on lending out some ADA, then there’s Lending Pond, on Cardano, which acts as a peer-to-peer platform.

If you’re a borrower, then you set the terms you want and list your deal, and if you’re a lender, then you can browse the deals on offer.

Lending Pond is more basic than NFTfi, but operates in a similar way.

Kraken NFT Marketplace

With Coinbase having already entered the NFT space, Kraken is now planning to launch its own NFT marketplace.

The waitlist is open, and Kraken has announced several planned features.

One standout aspect that distinguishes it from OpenSea, is that after users have custodied an NFT with Kraken, there won’t be any gas fees charged on further trading activity.

Purchases will be payable in cash or crypto, and there are plans to incorporate multiple blockchains, starting with Ethereum and Solana.

A launch date has not yet been announced, but it will be interesting to see whether it puts pressure on OpenSea–which recently added Solana NFTs–to make changes or add new features.

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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.

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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! 

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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