Crypto portfolio update

Exposure: 2.2%

Net return: 608.7%

Comments: BTC has gone nowhere the past 12 weeks and the crypto market is in a lull period with low price volatility and low trading volumes.

Right now there are no new exciting narratives to look forward to... and the SEC is suing two of the largest CEXs in the industry: Binance and Coinbase.

And with most altcoins now bleeding across the board (not to mention the numerous scams),  the anti-crypto sentiment is as prevalent as its ever been.

On the fundamental/macroeconomic front, things are also not looking good as Europe has entered a recession and the US is likely not too far behind.

But with the US debt ceiling now suspended until Jan 2025 the Fed will have fewer concerns in continuing to hike interest rates in their fight against inflation.

What all of this means is that conditions are not conducive for higher crypto prices.

And if I had to guess, I'd say we are likely near the top of the 2023 echo bubble. The risk-reward of continuing to buy/hold crypto has diminished considerably, in my opinion.

I have thus liquidated the majority of my holdings and would prefer to wait for better (lower) prices before accumulating again.

Current allocation:

 DeFi Kingdoms

DFK has redone its hero designs and animations, and I must say... it looks great.

Unfortunately, this is not enough to get me interested in buying into the project again.

Consider the main investible assets:

Heroes
Supply has been increasing non-stop since the Gen0 launch in Oct '21, and the ecosystem is facing dwindling player numbers and no major supply sinks (impact of dark summoning isn't too meaningful). And with plummeting values of quest items rewards, there isn't much incentive to hold heroes.

Gen0s
With falling hero prices, the ROI of Gen0s (in USD terms) have naturally fallen as well. Additionally, the devs/community are now considering to increase the summoning cooldown period which would further lower the ROI.

Jewel
The SEC is now looking to classify the major GameFi tokens (AXS, MANA, SAND) as securities, and Jewel is most certainty in the same category. Almost every Jewel hodler is underwater right now and many of them are likely to dump in any kind of rally. A CEX listing is not coming any time soon, and by then Jewel could fall to $0.10 or lower.

Crystal/Jade
Price has been falling relentlessly due to weak demand/utility and supply inflation. If I'm not even buying Jewel, I'm definitely not buying these power tokens.

Over the past few months I've been waiting to buy back into the DFK ecosystem... but have struggled to find good reasons to.

Think about it.

New GameFi participants can choose many other projects without the baggage of everything that happened with/to DFK last year (that still clouds over the ecosystem today). To be blunt, if I were a new user I'd rather buy into projects with a clean slate and fresh hype.

Putting everything together, the only way I see DFK recovering is if - and I've said this for many months now - the PvP gameplay turns out to be highly engaging and addictive.

More likely though, I think the weight of the legacy baggage + harshness of the current bear market will be too heavy to overcome.

At the start of this year I thought DFK could turn a corner within 12 months (I was admittedly rooting for it)... but given how things are playing out, I'm forced to admit that the forecast is likely to be inaccurate.

So I hate to say it... but as far as I can tell, I don't think DFK will pull through this bear market in any meaningful way.

Admin update

• If you missed the previous newsletter, you can read it here.
• New here? Join this newsletter for free.
• Join my private alpha group here.

 Cobie's wisdom

In times like these, I'm reminded of the advice Cobie dropped in his now-defunct podcast:

 Quote of the week

I have never encountered a winner that held hate towards something.

- Conor McGregor

Thanks for reading, and have a great weekend.

Cheers,
Slowmad

P.S. If you have any questions or feedback, let me know at: chris[at]digitalslowmad[dot]com

Get future newsletter issues in your inbox: