Newsletter 220805 – Bear rally sentiment

Digital Slowmad newsletter

5 August 2022

Crypto portfolio update

Exposure: 38.0%

Net return: 572.9%

Comments: The general consensus right now is that the ongoing crypto rally won't last, and that we'll see new lows before long.

While I understand the reasoning behind this view, I don't necessarily agree with it; I think there's a growing case to be made that the bottom of the bear market might already be in.

There's no guarantee of course, and nobody knows for sure... but I do think people are overestimating the chance of a deeper bear market.

To be clear, I'm not saying that a bull market has begun... I'm only expressing that I'm less bearish than most crypto influencers are. My stance is more neutral than anything else.

As such, I've started dipping my toes into the market, and have broadcasted my moves in the private group:

Posted 26 July. Both BTC & ETH orders were triggered

I don't dismiss the possibility of new market lows, but if that happens I don't think it'll stay at those levels for long and would probably be buying heavily into it.

For now, I'm happy with a minority exposure in non-stablecoins:

Allocation details available in the private group

🐻 Bear market narratives

The leading crypto narratives today are centered around:

The Ethereum merge
Ethereum L2's (Polygon, Optimism, Metis)
"Safe" yields (Curve's tricrypto, GLP, etc)
NFT innovation (sudoAMM)

Notably, the narratives around the other L1 blockchains (Solana, Avalanche, etc) have fallen by the wayside. Unless new and compelling narratives pop up for these L1's, I'd expect Ethereum to dominate the spotlight and draw the majority of capital and attention.

This does not bode well for the majority of L1's, especially those that that saw explosive growth last year. If you're holding the native token of these L1's hoping for a dramatic reversal, the odds are against you.

The crypto market is heavily driven by narratives, and right now they're focused on the Ethereum ecosystem. I'd suggest allocating one's capital accordingly (NFA, DYOR and all that).

Admin