Narratives of the week : July 17

4-month range breakdown... and then pump !

Jul 17, 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

In the last edition of this newsletter (July 3), $BTC was still standing at $60k, ie range lows. What happened right after that is that $BTC finally broke down out of this range, and went as low as $53.5k in two days. Altcoins naturally followed the same path, and even if the June 18 dump marked the bottom on OTHERS/BTC (which was my assumption), we revisited these lows on July 5.

Despite bouncing back to $58k a day after, $BTC went close to revisiting its bottom too, on July 8. This all happened in the context of Germany selling their coins and getting “rid” of $3bn worth of $BTC. Actually, Germany sold most of their coins (40k BTC) from July 8 to July 13, but the price mostly dumped before that, while Germany had only sold 10k BTC. One can argue that the price would have broken down anyway, with or without Germany, because of overall positioning of market participants (ie too many longs at a price where there are not enough buyers).

Anyway, the price of $BTC ranged between $54K and $58K during a week while Germany was offloading, and ETF flows started getting consistently positive from July 5. Despite the fact that a lot of people on CT were fudding the bottom because of “4-month range breakdown meaning a trend/momentum shift just happened”, there were a lot of reasons to be bullish with the largest market FUD (Germany selling) disappearing progressively. Frontrunning the end of that selling ended up being a good move, as $BTC has been going up only since July 11.

Donald Trump shot and $BTC pump

One of the pivotal moments for $BTC price was on July 13, when Donald Trump was shot during one of his meetings. The price dipped for 15 minutes initially, as people had to realize what had just happened and if Trump was fine, and then the price rallied by +2.5% in one hour, and basically did not stop pushing higher until today. The odds of Trump being elected after this event pumped from 60% to 70% on Polymarket, and as Trump is considered as ‘pro-crypto’, this was considered a very healthy piece of news for the crypto market. On July 15, Trump also announced that his VP was going to be JD Vance, which is also seen as crypto-friendly.

Right now, $BTC stands at around $65k, and this pump seems to have surprised even the most bullish traders. This leads me to think that a lot of people are sidelined or looking to get an entry that they are not getting because the pullbacks are very shallow.

On the other hand, there are some things to worry about too : the first one being that we just pumped more than +20% on $BTC, so by definition a large part of the move up is already behind us and it would not be shocking to dump now and form a higher low. Another source of FUD to have in mind is that Genesis also seems to be selling $BTC and they are holding an amount of the same order of magnitude as Germany. And finally, the mother of all FUDs is that Mt. Gox is finally giving back $BTC to the creditors, and they have almost $10bn of BTC in their wallets. One of the transfers they did yesterday (probably to Kraken) caused the dump from $65k to $62.4k.

As for $ETH, it basically followed the exact same playbook as $ETH, and stands at $3450 after a pico bottom close to $2800. Eric Balchunas tweeted that the ETH ETF launch would probably happen on July 23rd, and surprisingly, it did not very much affect ETHBTC which is almost flat between 0.053 and 0.054.

$XRP leads and dino coins have been strong

One of the best performers over 7 days is… $XRP ! Surprisingly, it is up +60% from its bottom and +40% in a week. One of the catalysts for this move is that the SEC has scheduled a meeting with Ripple tomorrow, and it could potentially be a settlement. $XRP has not been the only “dino low beta coin” that performed well, this ‘category’ actually outperformed massively the market from July 12 to July 14, which was sort of surprising in a contexte of uptrend. $ADA, $XMR, $TRX, $BCH, $XLM, $LTC are all part of that cohort.

I am shorting almost all of them as a permanent hedge for my longs, and it’s uncomfortable when they all outperform together, but that very rarely happens on the moves up.

$MKR ‘BlackRock news’ and DeFi 1.0

One coin has been very much impacted by some recent piece of news, and that’s $MKR. The news is that BlackRock plans to apply for MakerDAO's $1B tokenized treasury plan, and it lead $MKR to pump by +10% in a few hours, and it’s now up +25% from there. This reminds me of the BlackRock RWA news back in March, which propelled $ONDO and a few other RWA tokens to do a 2-3x pump. Will $MKR become the best RWA proxy ? I am not sure about that, but I think that $MKR is an interesting token given the fact that its generating A LOT of revenue while being not so large in terms of valuations.

Another very similar coin is $AAVE, which is also a DeFi 1.0 coin with high revenue and ‘small valuation’. $AAVE has been consistently outperforming the altcoin market since early May.

Memecoins : $MOG and $POPCAT are the hottest ones

Most of the large memecoins have been slightly underperforming the market in the recent weeks, until July 13. Since that date, memecoins have collectively outperformed and are among the largest gainers. Two “smaller” memecoins really stand out and these are $MOG and $POPCAT, which are both making new ATHs.

$PONKE has also been performing very well, and is a good candidate to become the next MOG/POPCAT, which themselves could be the next PEPE/WIF.

Other smaller memecoins with great gains or charts include : $MUMU, $RETARDIO, $BILLY, $ZYN, $JOE, $SPX, $CHUD.

Capitulation and bounce

When $BTC almost kissed $53k on July 5, many altcoins underwent a severe capitulation, especially among the newest coins with “high FDV low float” characteristics. As the market pumped, these are also some of the best performers since the bottom, thanks to mean reversion. Below you will find a list with both the drawdown from top to bottom, and the price performance since the local bottom :

$TIA : -80% / +56%
$DYM : -89% / +95%
$SAGA : -88% / +86%
$ALT : -85% / +38%
$REZ : -75% / +37%
$ICP : -72% / +71%
$CORE : -81% / +66%
$MAVIA : -90% / +145%
$TNSR : -83% / +53%
$ZEUS : -88% / +81%

$WLD short squeeze

Another great example of coin with capitulation and giga bounce is $WLD. This is the lowest float coin on the market, and it went through a -86% drawdown but is now up +76% from the lows. One of the catalysts for that squeeze is that they announced yesterday that they would increase the duration of the vesting for some tokens, which implies a lower daily selling pressure. DeFiSquared wrote a detailed article on Worldcoin, I really recommend reading it :

What else happened in the altcoin market ?

$OM is one of the rare coins that has reached a new ATH recently. It is a RWA coin, and not many people talk about it, but you should definitely keep it on your watchlist.
Among new coins, $ZRO, $TAIKO and $ATH have been particularly strong. I like $ZRO as a long, and still think $ZK should follow too.
$XDEFI, a multichain wallet, has announced a rebranding, and is up +40% this week, and +80% since bottom.

Thank you for reading this article,
Cheers,
Viktor.

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