In This Issue
- I share my thoughts on the state of the market, which coins will survive, staked Ethereum melt down, celsius melt down, NFTs keep falling & evaluating risks.
- Sam has a report for you on art NFTs & 1/1s.
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 yield safely using Bancor v3 IL-Protected LPs.
- 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 Flow.
And much more!
What’s On My Mind by Lark
The State of the Market
Crypto market chaos has happened this week as prices for key cryptocurrencies plummeted on the back of higher than expected inflation data.
In response to this the FED raised interest rates by 0.75% today, a higher than expected number.
The crypto sell off was further exacerbated by staked Ethereum no longer trading at parity to Ethereum and came to a painful crescendo when Celsius halted withdrawals.
Then it came out that a major Venture Fund Three Arrows Capital was facing massive liquidations and was likely to go under.
The markets crashed so badly yesterday that Bitcoin came within $100 of the previous all time high.
This is bad.
Bear markets are brutal, and shit starts breaking. It is not pretty or pleasant.
And while it is probably not what you want to hear right now the reality is that those who accumulate during the bear market will be the ones to become millionaires in the next bull run.
Don’t let them tell you that you just got lucky, if you survive the bear market then you will have earned your future riches.
Which Coins Will Survive?
With the bear market in full swing, it is worth asking what coins will actually survive the bear market.
The short answer is I don’t know.
The long answer is there are some factors that will help us figure out which ones have a good chance of coming out stronger than before!
This metric is very important to try and figure out, and yet very few projects will straight out tell you their cash reserves.
That being said some do, like Trader Joe which has announced they have at least enough cash to pay all developers for more than a year.
Others like Moonbeam just announced a hundred million dollar ecosystem fund, hardly broke now, are they?
But in most cases, you will need to dig for this info in Discord or Telegram.
If the teams can’t give you a halfway decent answer then it probably means they are not doing well financially.
Is there actually a business model for this coin?
How does the protocol make money to keep paying the team?
Token Sale money often runs out quicker than expected. All of those first-class tickets to conferences and huge overhead costs early on can quickly burn through the few million earned during the token sale.
So if there is no solid model for continual income then it is bad news for that protocol.
And it is not just about them, it is about you too. If this token has no reason to be owned then what do you think will happen to it during a bear market?
Coins that have solid burn models, strong in-game economies, or pay out dividends have the best chances of coming out strong on the other side.
This is a big one to pay attention to.
The unlock schedules for some coins are just starting to heat up at probably the worst possible time.
So look up the token release which will either be in the whitepaper or can be obtained by asking on their socials. If the market is about to be flooded with tokens then expect a serious price crash.
Might be a good time to buy after unlocks, but with liquidity thin in the market and everyone scared it becomes near certain that unlocks will lead to big price drops.
This is a big one for lower cap altcoins.
As the crypto market contracts, we can see liquidity for these coins dry up to almost nothing. That means you can’t sell your coins.
Look at the volume trends on coins,
Is there a real community?
When they post on Twitter does anyone care or engage? Is there a Telegram group, and if so what are people saying, and is anyone even in there?
Are there still admins in the groups and are they active or have they been absent?
Tech and Github Commits
This is a bit of a trickier one for the average investor. But most projects will have a GitHub that you can track.
The main point here is are you seeing new commits come through? Is someone actually doing something? I.E. Maintaining the code, writing new code, and building new stuff. As an example here is Aave’s Github, you can see regular updates.
Bull Market Performance
Look there are some coins that go absolutely slaughtered in the bull market. Why would we possibly assume that these coins will do any better in a brutal bear market?
We are well into the bear market now, and it may last a lot longer.
If things are looking bad now for a coin, chances are they will only get worse as the financial pressure, social pressure, boredom, and general despair of the bear market increases.
If you are buying altcoins now or in the near future then think about some of the above factors, and remember there is no rush.
Bear markets can last longer than you expect. Chances are you will have plenty of time to get those coins you like on the cheap.
Remember too that even if a coin looks awesome and ticks all the boxes it can still fail terribly. So don’t put all of your eggs in one altcoin basket.
Founders will abandon projects, tech updates will stop coming, and liquidity will dry up, in short not all coins are going to survive the bear market.
Staked Ethereum Melt Down
This week the talk of the town has been Lido’s Staked Ethereum which is no longer trading at parity with Ethereum. The discount has ranged between 3 and 5% for a few weeks now.
To be clear this is not a pegged asset, and the secondary market can price it how it wants, and stETH is backed one for one by Ethereum which is locked until Ethereum 2.0 starts unlocking stakes in 6 to 12 months.
So then why is this worrying the market?
Well, quite simply there are many major firms that have been leveraging staked Ethereum to earn yield, but the ability to redeem that stETH for an equal amount of ETH is now becoming a real problem.
Curve Finance, the main liquidity pool for stETH is now critically imbalanced.
Major players like Alameda have made major sales of stETH, selling 50,000 stETH last week, and Three Arrows Capital sold 56,000 stETH.
There has also been a lot of concern around Celsius this week which is sitting on 410,000 stETH.
With so much fear in the markets and liquidity being so thin, it was feared that a bank run could happen on Celsius, which it would appear is exactly what happened as Celsius halted withdrawals.
The final point to make here, holding stETH is fine assuming you are in no rush for liquidity, but being in a leveraged position or keeping your coins with someone who may be leveraging stETH is risky at this time.
To be clear, this is NOTHING like the UST collapse, but there could be an imbalance in the price of stETH to ETH for a while until all of this settles down.
I am holding around 25% of my Ethereum in stETH.
I would personally consider moving more ETH into stETH if I see a big imbalance in the price.
Celsius Melt Down
Well, it finally happened, one of the biggest crypto lenders has halted withdrawals, transfers, and swaps.
This is a shock move that has rocked the crypto space and inevitably left many investors in a state of panic over the fate of their funds.
While Celsius has not been very transparent about why they have stopped services except for saying that it was because of “extreme market conditions”, the fears now are that Celsius is insolvent.
But what exactly does that mean?
Well, there are likely two options here.
The first is that Celsius’s balance sheet is insolvent, that is to say, that Celsius does not have the funds needed to pay back investors. Their balance sheet does not match the obligations.
Celsius has lost a lot of money in some high-profile hacks like losing 70 million worth of Ethereum in the Stakehound hack, 50 million in the Badger Dao hack, and of course their huge over-exposure to staked Ethereum.
This option is the worst since it would mean that regular investors who trusted their money with Celsius are going to lose out big time.
The second option and the one which I am hoping for is that this is a cash flow issue.
In this scenario basically, it was a liquidity issue.
Celsius has the money, but they just don’t have it right now. They simply need to clear out their debts and negotiate with partners to get things flowing again.
Let’s hope that this is what the problem is.
Since they halted withdrawals things have gone from bad to worse.
Celsius is managing a position on Maker Dao worth half a billion in Bitcoin that would face liquidation if the price were to drop to 14k.
They have enlisted legal partners for a possible restructuring, I wonder if this means a bankruptcy?
They are also not letting people pay back loans on their platform facing liquidations unless they send more money in.
I am deeply sorry for any of you who are caught up in this mess.
I should have done more to express my fears around Celsius.
NFTs Keep Falling
Key NFT collections are still bleeding out.
NFTs like much of the rest of the crypto market are getting smashed. They have been falling for weeks.
The last NFT pump was around the time of the Bored Ape Yacht Club land sale. After that, it has been down only for NFTs with a few exceptions like Goblin Town which had a quick big pump.
It could be a while before we see a new pump season for NFTs.
These exist on one of the most speculative ends of the market.
That being said, the bear market may give some good deals to pick up hot collections at a good discount.
After the downfall of Celsius, it is definitely time to consider holding onto those private keys.
As I mentioned a couple of weeks ago, the bear market is starting to break things.
Any leveraged positions in platforms like Aave of Maker Dao are at risk if we get a liquidation cascade.
Centralized lenders obviously are having liquidity issues, and while I have not heard any rumors about other centralized lenders, ask yourself if the risk is worth the small reward right now?
You can always come back later.
The peace of mind from holding your own keys is priceless.
NFT FAQ Report
We published an incredible resource on NFTs, answering many of the most commonly asked questions.
Check it out HERE.
Art NFTs & 1/1s by Sam
Bear market vibes are all around, and whichever way you look at it, prices are down heavily: for many NFT collections themselves, and for the crypto they’re priced in, whether that’s ETH, SOL, ADA, or something else.
However, that’s not a reason to panic, as when it comes down to it, some sell-offs are more brutal than others but overall, nothing happening now is entirely unexpected.
All markets operate in cycles, and crypto is following an established pattern that includes regular crashes.
So, patience is key. Let the market wash away the junk, and in the meantime, be ready to pick up decent tokens at a discount.
If you’re holding NFTs long-term with no need to cash out soon, it’s probably best to think in ETH terms on the expectation that ETH will go up again during the next bull phase, although that said, even in dollar terms there are some collections that–taking into account their airdrops–have been holding up this year, including Doodles, Mutant Ape Yacht Club, and CloneX, with Proof Collective the most profitable by a wide margin.
Another thing to be aware of is that volumes are low and NFTs are infamously illiquid, so at the moment it’s much more difficult to flip quickly. It’s currently perhaps better to be buying NFTs with a low time preference in mind.
Having said that, due to the price of ETH itself dropping, the trading data (focusing on OpenSea) looks worse in dollar terms than it does if you look at the number of trades being made.
The latter metric has dropped, but only to around where it was last December.
Art NFTs and 1/1s
With all the financial turbulence and negative sentiment in the air, now might be a good time to explore the more artistic side of NFTs.
Overhyped PFP drops are exciting and can be profitably volatile, but collections running into the thousands will be more difficult to sell out at the moment.
When it comes to 1/1s and smaller sized art collections, though, nothing much has changed as artists continue to go about their work, and there will always be interest from collectors.
The Tezos blockchain has a thriving NFT community and is becoming well known as a network towards which artists gravitate.
Looking at 30 day sales volumes across blockchains, Tezos is up by 49%, while Ethereum volume has dropped by 78%.
While Objkt and Teia are the major Tezos marketplaces to keep an eye on, Versum is an alternative platform with a heavily art-focused approach, and for some great resources, artist and coder NFTBiker has created a suite of Tezos NFT tools.
Solana and Cardano
And on Cardano, there is Artano, a community-curated art NFT marketplace.
Pixel Blossom was created by and features Daniel Taylor, who illustrated Omnimorphs, this project has brought together twelve well known crypto artists in one place, and utilizes a gradual, pixel-by-pixel reveal process.
You can pick up Pixel Blossom NFTs on secondary, but the project is also a useful introduction to the artists themselves, all of whom are great starting points from which to explore the world of NFT art.
Art Blocks and Pace Verso
For background, Pace Gallery is a bricks-and-mortar contemporary art gallery with nine locations in major cities around the world.
The partnership between Pace and Art Blocks will release new work from a variety of artists, which will feature in exhibitions around the world.
The first collaborative launch is scheduled to take place on June 21st, and is called Petro National.
It’s the work of tech-savvy artist John Gerrard, and is going to consist of 196 unique NFTs, which will be up for sale in a descending auction.
Although photography can be found across the major NFT marketplaces, such as in the OpenSea photography section and on Foundation (do a photography search), there are also a few more closely photography-specialized marketplaces and communities.
Most people associate artistic NFTs with the visual arts, but that isn’t the only use case, and there are communities growing that use NFTs as a medium for written work, particularly poetry.
TheVERSEverse is a poetry NFT gallery that is onboarding writers to web3, and exploring how tech and storytelling link up.
Async Art is an NFT platform for the creation, collection and trading of art, music, and some poetry, taking a multimedia approach.
And to further explore the crossover between NFTs, poetry and other kinds of writing, a good point to navigate from is Crypto Poetry, which is a hub for writers who utilize blockchain technology.
As is the case with most corners of the NFT world, Twitter is the primary place where news circulates and connections are made.
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.
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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.