digital slowmad

Digital Slowmad newsletter

31 March 2022

📊 Crypto portfolio update

Invested in: USDC, AVAX, JEWEL, NEAR

Net return: 593.6%

Comments: It's been a big week in the markets, with rallies in both equities and crypto.

In particular, BTC has finally broken out of its 2-month consolidation range:

This, together with the now-bullish equity market, bodes well for risk assets.

I have thus increased the allocation of crypto assets in my portfolio.

Current allocation:

The DFK component has increased significantly due to the rising price of JEWEL, which has more than doubled from the March low. Everyone is buying/hoarding JEWEL to join the Crystalvale farms.

I had not intended to participate in the Ice Gardens, but then came across information that suggested the xJEWEL-JEWEL pool would likely yield higher APRs than I was expecting.

This altered my view, so I've allocated a portion of my portfolio as a 'set and forget' bag in the Ice Gardens.

Meanwhile, I'd also been taking some short term trades on JEWEL to capitalize on its rally from $7 to $10.

Overall, I'm cautiously optimistic about the broad crypto market. There are significant headwinds to contend with (inflation, incoming recession), but it looks like the market doesn't care about these issues right now.

🏰 DeFi Kingdoms

Users (30 days): 141.9k (+13%)
Transaction volume (30 days): $681.8m (+61%)
Discord members: 91.7k (+3%)

The Crystalvale launch has re-ignited interest in DFK, as demonstrated by the jump in transaction volume and the 150% JEWEL price rally from the $4 low.

In the previous newsletter I mentioned that I hoped this expansion would at least double the market cap from $320 million to $640 million. At the time of this writing, the market cap has already exceeded $850 million.

This is obviously a great start, but a part of me wonders about the sustainability of this rally.

You see, the original reason for cross-chain expansions was to make the game accessible to people on other blockchains. The premise was that people on other blockchains don't want to bridge over to Harmony to play the game.

But with Crystalvale running on DFK Chain (and not directly on the Avalanche blockchain), this invalidates the original purpose of expanding.

Now, if the Avalanche peeps want to play DFK, they'd still have to bridge over to DFK Chain.

So here's the thing: If they wouldn't bridge to Harmony before, why would they bridge to DFK Chain now?

This is something few people seem thinking about. Everyone is so excited with the high APRs in the Ice Gardens that they can't see beyond the surface.

The other big issue is the same thing I've been harping about in prior newsletters: the core feature of the game (combat) is likely many months away from a full release.

The good news is that the devs have, implicitly at least, recognized the need to introduce some game-like aspects while we're all waiting.

So we had the Perilous Journey (which recently ended), and are now anticipating land tournaments, pet hatching, and hero duels. These events and mini-games will hopefully hold players' attention and buy the devs the time they need.

Additional thoughts

In my view, the JEWEL price crash from $22 to $4 (Jan-Feb) was, among other things, a symptom of the over-speculation on game features that "took too long" to be released.

This is not a knock on the devs' capabilities (I'm in no position to judge), but is rather the simple recognition of investor expectations that got too far ahead of reality.

This is, of course, easy to say with the benefit of hindsight. At the time we couldn't have known that a $1 billion market cap was excessive. After all, Axie Infinity hit its first major peak at $5 billion.

Now at least, we have some point of reference. If DFK attracts a flood of new Avalanche players, I wouldn't be surprised to see the market cap hit $2 billion quite easily.

The issue here, again, is sustainability. If history were to repeat, we might see another speculative bubble, followed by another big crash once the new players get over their initial excitement and then get bored from the lack of a proper combat system.

As the saying goes, however: History doesn't repeat; It rhymes.

So I don't think we'll see the same situation we saw in Jan - Feb; I believe most of us from Serendale have learned a thing or two from the -80% JEWEL crash, and are going to do things differently this time around.

JEWEL price target?

I've been asked about my JEWEL price target for the Crystalvale launch, and my reply was that having any kind of target under these circumstances is a futile effort. There's too much uncertainty for any price target to be reliable. All we can do is attempt to paint a picture with broad strokes and hope it approximates how things turn out.

With this said, here's my estimate of the JEWEL/CRYSTAL price trajectory over the coming weeks and months:

Short term: Price rallies to euphoric highs

Existing players get excited about Ice Garden APRs. New players from Avalanche get excited about DFK (just like we did in the early days of Serendale). Low supply and high demand for JEWEL/CRYSTAL increases their price.

Medium term: Price drops and hovers ~50% from ATH, then slowly slides
Player interest is somewhat maintained via contests and mini-games. Prices pull back and hold near 50% of the all-time high, then slowly slide downwards. The slide continues until the next big event occurs (another expansion, big feature releases, etc).

The only thing I can say with reasonable certainty is that prices will pull back significantly from the highs following the Crystalvale launch.

Therefore, I:

  • Want to be taking profits on the way up
  • Will not catch the top, and am ok with that

While we are all excited with the JEWEL price rally, I'd caution against excessive greed.

As most aspects of DFK are still speculative in nature, there is substantial risk of overstaying and getting caught in a bad situation. Taking profits along the way is a good way to prevent that.

Good luck, and all the best with your strategy for the Crystalvale launch.

In case you missed it, here's mine (click to view):

📝 Admin update

  • If you missed the previous newsletter, you can read it here.
  • New here? Join this newsletter for free.
  • Personal update and lessons learned (click to view):

📹 Live feed of Synapse bridge during Crystalvale launch

💬 Quote of the week

Great poker players may know the odds, but their success is reading people & mastering human behaviour, theirs + that of others. Great traders & investors do the same. Success in markets relies on your ability to master human behaviour, not rocket science.

- Steven Goldstein

Thanks for reading, and have a great weekend. 🥃


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

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