Narratives of the week : January 20

PvP market, Pudgy Penguins, Solana memecoins and new coin launches

Jan 20, 2024

Welcome to this weekly recap, I am Viktor and you can find me here on Twitter and here on Telegram. Enjoy your reading !

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$BTC and the market overall

This week has been mostly red for the market, with $BTC and $ETH slightly down, and altcoins suffering more. Both $BTC and $ETH are close to the bottom of their range : But $BTC is in the range that started in December ($41k-$44k), while $ETH is in a new post-ETF range ($2450-$2600). ETHBTC is almost flat around 0.06.

My feeling is that we are going to keep chopping for a while but that the market is quite weak. So I also think that we are likely to break down of the current range, and the logical next zone of support would be the $35k-$38k November range. In the same time, it would seem “too simple” if we simply dump to this range, chop there for a bit, and then come back up again. So a contrarian view to that would be that we either go lower ($32k?) or we don’t get as low of a drawdown and only dip to something like $39k-$40k.

My goal is to buy more each time we go lower, with the goal of being overall max 1.25x leveraged on my whole portfolio. I think $ETH will continue to outperform $BTC.

We are in a PvP market :

Almost no single major coin did perform well this week. We are very much in the ETF hangover phase, where not much is going on. This is a tweet I posted yesterday and that summarizes the current state of the market :

What I mean by this is that most of the coins of the list are “shitty coins” that usually don’t get a lot of attention. The market is healthier when a few of the usual suspects (ie the strong coins of the past 3 months) are in the best-performer list.

Remember a few months back when nothing was happening on the market, the only coins that were getting attention were cartel coins. This is more or less the same situation, and it implies a very PvP market.

Another sign that the market is PvP is that news candles get retraced very quickly, as you can see in the tweet above.

A PvP market means harder conditions, it is less easy to extract profit than in a PvE environment : the 2023 last quarter ETF-driven pump was a PvE environment, for example. In the current conditions, I recommend you to take less trades, size smaller, and basically spend less time staring at charts. We might be chopping for a bit, and you don’t need to overtrade, you can just stand still until the market is trending again.

ETH beta coins disappointment :

The most disappointing category this week has been ETH beta coins. They have been very strong right before and after the ETF approval, as the market was rotating from $BTC into $ETH, but the post-ETF dump has been so strong that the whole altcoin market has been going down, and all the narratives evaporated. In that case, the recent best-performing trend tends to mean revert, and so it becomes the worst-performing category for some time.

For example, here is the 1-week performance of some ETH-related coins :

$ENS : -19%
$OP : -19%
$ARB : -17%
$LDO : -15%

Only 2 ETH beta coins have been holding well this week, and they are smaller market caps : $PENDLE is up +17% and $MAV is up +7%. Pendle Finance is a protocol that enables the tokenization of future yield, and has become a de facto major LSTfi and even restaking protocol. It can be seen as a way to get exposure to the restaking/Eigenlayer narrative. Combine that with the fact that $PENDLE has been one of the strongest coins during the whole year, and you get a best-performer even in a red week. Maverick Protocol ($MAV) is a new type of DEX launched in 2023 on both Ethereum and zkSync. I like its chart very much, it is a new coin, the market cap is still very small, and it can be seen as exposure to zkSync.

Blur, NFTs and Pudgy Penguins :

The other “ETH beta coin” that has been strong (+3%) this week is $BLUR. There are two fundamental catalysts for Blur. The first one is Blast, which is the L2 built by the Blur team, and that is supposed to launch in February : $1.3bn of TVL is currently locked on Blast and will be released in February too.

The second catalyst for Blur is that $BLUR might be the easiest liquid exposure to the ETH NFT market, and this market is still way down from its ATH but showing signs of life again. Instead of catching the best NFT collection, one could simply buy $BLUR and chill, at least that is the thesis.

Most of the NFT collections have seen their floor price go up this week, but the best-performer by far has been Pudgy Penguins. And the pump happened very quickly. Here is a tweet I wrote on January 14 :

And here is what I posted 4 days later :

Pudgy Penguins is primed for flipping BAYC (Bored Apes Yacht Club) in my opinion, but now the difference between their floor price is very small, so I don’t think the r/r is as good anymore.

The floor price of Azuki is up +15% too, and it is the highest volume collection traded, so despite their Elementals launch failure, they might be a good bet again. Here are the performances for the other collections :

BAYC : +6%
MAYC : +14%
DeGods : +12%
Milady : +14%
MoonBirds : +7%
CloneX : +10%
Sappy Seals : +100%
Doodles : +29%
Kanpai Pandas : +65%

Solana memecoins :

Despite its almost 2x bounce right after its January 8 bottom, $BONK is among the worst-performers this week. In my opinion, it could range during some time between 0.00001 and 0.000015.

But what is surprising is that the two other main dog coins on Solana have been performing well : +68% for $WIF, and +51% for $MYRO. And they both have been listed on Bybit perp this week, and $WIF has been listed on Binance futures too. I don’t really think that the short-term top is in for them, but let’s see.

If you want to do shitcoining, Solana is probably the best place to be, instead of Ethereum. You won’t have to pay gas fees, and according to DexScreener, most of the shitcoin volume is now on Solana.

New coin launches : $MANTA, $ONDO, $SAVM

A few coin launches happened this week : $MANTA, $ONDO, $SAVM.

$MANTA is the token of the Manta Network L2 on Ethereum. Manta more or less copied the Blast playbook, by pushing people into locking ETH for a future airdrop. The airdrop has been mostly disappointing, from what I read on Twitter. I opened a long with an average entry around $2.16. The thesis is that it is a new coin, and a L2, it catches a lot of attention from the market, $2 means “only” $2bn FDV, and we see that a support has been forming around $2.05, with higher lows on low timeframes. I will probably cut if we get under $2.05, or if we chop for too long.
$ONDO also launched on Bybit spot market. It is the governance token of the Ondo Finance protocol, which provides access to short-term T-bills on-chain. It is the first and main pure RWA player, if we exclude $MKR. $ONDO completely dumped in the first minutes of trading, but then quickly 2x’ed, and stabilized around $0.2. This price corresponds to a $2bn FDV, which is the FDV of $MKR, but $MKR is almost fully diluted, whereas $ONDO MC is officially $300M, and I read some tweet about the circulating float being even smaller. As RWA has been a very hot narrative without much tokens to invest in, I think that $ONDO could push way higher, so I also bought a bag of $ONDO. The target price is between $0.3 and $0.5, and I think the downside is quite small, since the price has been so stable.
The last launch of the week has been $SAVM, the token of the Satoshi VM, which is a Bitcoin ZK-rollup L2. The launch has been a huge success price-wise because even if we exclude the initial 10x that snipers could get, because it 4x’ed after that. But zachxbt posted a tweet showing that a lot of $SAVM shillers were influencers that had bags of $SAVM and that were dumping, so this created a FUD that damaged the reputation of the project. I did not but $SAVM, I don’t have a good feeling about it.

Last week I mentioned $XAI which is a new Arbitrum gaming L3 that recently launched. I traded it this week, but I am out of the trade. I entered close to the breakout because the chart looked great, there was a lot of volume on the coin, a clear $1 target, and it was a new coin with a lot of attention. It worked well, and I exited in profit around $1. I tried to play the second breakout at $1.15 but it failed, and I closed this trade in loss.

What else happened in the altcoin market ?

I mentioned that almost no major coin performed well this week, and that the attention of the market was on PvPing cartel scam pumps. The list of these coins is : $UMA, $API3, $RLC, $NMR, $BAND, $RAD. I recommend you to stay away from them because you will probably be better off that way. I took a small long on $UMA around $3.5 because the funding rate was at -2% and yet the price was very stable, so it was likely that we were going to push higher at least one more time, and this is what happened.
I wrote last week that $JTO was reversing its downtrend, and $PYTH was following, well, this week, $PYTH has been leading : it is up +27% this week, and is one of the best-performers in the top 200.
$SUI seems to have found its local top after its one-week pump, it is down -25% from its highs.
Conflux ($CFX) announced this week that they were going to launch an EVM-compatible Bitcoin Layer 2. This caused a +20% pump in 30 minutes, and a sudden renewed interest around the “China narrative” (Chinese new year is on February 10, by the way). But as I mentioned earlier, the news got faded and the green candle has been completely retraced too.
Another news that got retraced came from Klaytn ($KLAYTN) : they are proposing a merger between Klaytn blockchain (South Korea project) and Finschia (Japan project), to form Asia’s largest web3 ecosystem. Read more here.