The Russo-Ukrainian war has been in the headlines over the past few weeks, an event that has sparked massive portfolio changes for TradFi investors and brought a local bottom to the cryptocurrency market. But I believe this war may soon be over.
The Fed raising rates in an environment of inflationary trends and slowing growth has the potential to lead us to some bad events later in the year. We will move from inflation to stagflation as early as the third quarter of 2022.
What does this mean for the world? -> This means a slow death, which is not good for most people who are not prepared.
If digital assets are to decouple from the TradFi market, now would be a good time.
The world is in a mess right now, plus there are not enough pensions around the world, plus stagflation, that’s the root of the catastrophe. Policymakers will need to consider how to navigate this issue. If things don’t go well, will they either: 1) let the ship sink — let’s get a deep recession — everybody’s going to be unhappy; or 2) keep printing money — give people money and make everything inflate and let People are dying slowly as their purchasing power gradually declines.
Maybe a parallel world could be Noah’s Ark? Let the current world slowly bleed to death → enter the metaverse → the virtual/metaverse economy will eventually surpass the economy of the real world.
There is a constant stream of large TradFi funds entering the crypto space that are investing in the infrastructure layer of the space, for example, Temasek (Singapore government-linked fund) invests in IMX.
More and more funds are focused on gaming and the metaverse.
Valuations in VC rounds are high, and it may be better for some funds to buy liquid tokens (those that are already listed), as some of them are close to or even below the seed valuation. As a retail investor, this is great news for me as I have the opportunity to buy solid projects on the cheap if I do my research.
Fragmented market – some coins are in a bear market while others are in a bull market, the key is to identify this and trade accordingly
A season of full-scale pullbacks – most coins rose first and then fell, and almost no coins have trended in any direction in the past few weeks
Older coins (EOS, WAVES, TRX) are making a comeback with the news, which shows how much the market is making a buzz, but the full-scale pullback season also shows how PVP the market is.
Clearly, the current market conditions are best suited for quant/oscillation traders, not trend traders. Hopefully that changes in Q2 — will share my thoughts on how to navigate this situation. But will focus on the “May” situation.
The second quarter is expected to be a better quarter, for most sectors of the cryptocurrency market, there may be risks, believe that the market has and continues to allocate funds to: 1. Games 2. Blue-chip DeFi coins
The start of BTC as collateral for TradFi could be the start of monetizing BTC into a bond-like asset, after all there are about 5T (February 2022) worth of negative yielding bonds in Europe alone. BTC’s market cap is still below $1T (March 2022).
Luna Foundation Guard (LFG) sparked the current mini-bull market and could trend in the next 2-3 months. I think the current price action (pa) is caused by people pre-operating on LFG buys.
There are also other market participants who are buying the “hardest money” in anticipation of stagflation
Interestingly, after Ray Dalio said he has some BTC in 2021, recently Bridgewaters mentioned that they will go into cryptocurrencies, as you know, they are not the only ones looking for crypto risk, believe they will also start configuring BTC.
It’s all about the merger, and while most market players are bullish on this event, I’m not sure how it’s really going to end, somehow when most people (the flock) think it’s happening, it goes to the other side.
Due to its high liquidity, ETH remains one of the avenues for institutional funds to gain exposure to cryptocurrencies. It’s a great asset to hold market beta risk in the long run, but if you want to beat the market as a retail investor, it’s probably best not to get involved with ETH.
Most ETH-related activity is likely to happen on L2 in the future.
- The latest funding round, which valued Starkware at $6 billion, was led by Sequoia, with participation from investors including Paradigm, 3AC and Alameda.
- There is a lot of developer activity on Starknet, a vibrant community, and consistent ecological updates.
- There may be strong DeFi infrastructure, MakerDAO and other blue chip DeFi will be ready to launch on Starknet.
- The game ecosystem will also be strong, with expansions under construction on Starknet, including Loot Realms. There’s also the Matchbox DAO, which aims to be the hub on Starknet for game developers, designers, and more.
- When will Airdrop (the grapevine says it’s in 2022).
- Interestingly, the NFT market on Arb is more resilient compared to all others.
- The Magic ecosystem props up the on-chain NFT market, with physical games including Seed of Life, Battlefly, and more, and I think we’ll see new money coming into the ecosystem.
- Derivative tokens like Dopex and Vesta will likely continue to maintain sticky TVL on-chain.
- Launching Opensea on Solana could kick off their NFT and gaming season
- Game: Aurory is probably the most anticipated game coming out. Star atlas is also highly anticipated, but it may take some time. One game I might be keeping a close eye on is Meeklony, which may launch TGE in Q2 2022.
- After observing the performance of the Ecosystem Coin, I decided to stick with Luna and peg UST during the safe-haven period
- The ultimate goal of UST is > USDT, and Do Kwon and the team are building a complete ecosystem to continuously increase the demand for UST.
- Game projects are coming to Terra Ecosystem
- Defi/FX hopes to help fuel UST growth, thereby fueling the burn.
- May break ATH soon and trend up
- Subnet goes live → Cheaper transactions and more scalability
- Game: Defi Kingdoms (Jewel) and Crabada (Cra) will launch their subnets soon. Although Crabada’s Swimmer network has some delays, it will be done eventually. Avax is becoming the top industry chain for game developers, and I’m very excited to follow their journey.
- DeFi: Most Defi tokens on Avax have fallen 70-85% from their all-time highs. I think this is a good place to keep an eye on these coins as Avax Summer is coming up.
- Badger DAO is a DAO that enables Bitcoin as collateral for DeFi applications.
- TLDR; it pays off your BTC
- The previous hacks on Badger have been sorted out and I believe Badger will have the potential to provide BTC holders with an important infrastructure to monetize their coins.
- Citadel is a treasury DAO that aims to be the largest BTC-owning community in the world.
- Citadel will grow to be the Bitcoin whale of the people, with the aim of supporting the creation of Bitcoin-focused products, not just DeFi, but the severely underfunded Bitcoin Core development.
- To ensure that it can generate sustainable yields on its Bitcoin positions, it will hold not only Bitcoin, but yield impacting assets across DeFi (such as Convex and BADGER).
a. Convex Finance
What the story is everyone knows, basically CVX controls the voting power of most of the CRV, FXS and other tokens they partner with. CRV wars have turned into CVX wars.
Curve v2 is coming soon – and will bring great rewards to CVX holders.
Still one of the key projects in the DeFi portfolio.
- rDPX New Token Economics
c. Frax Finance
- FPI Airdrop
As I mentioned in my Q1 outlook, Frax is likely to be the top stablecoin, FPI is the CPI for cryptocurrencies, and Sam Kazemian is an indicator of faith that gives us hope for a brighter future for the metaverse.
Probably one of the few DeFi tokens that can be kept in a wallet and the price will come back after a hold of 5 years, but it’s still hype.
- Code updates are fast
- The new xTRIBE allows users to directly stake FEI or FEI LP tokens on the Fuse lending platform. All rewards are automatically compounded.
- Possibly another DeFi coin that you can hold and bring back in ten years with a Ferrari. NFA.
e. Redacted Cartel
- Influencer for all DeFi votes.
- Behind the scenes (check their documentation)
- Possibly a way for retail investors to buy tokens as ETFs, as Redacted has a wide reach.
- I bought BTRFLY at auction and sold it for about $3,000. Going to add it back to my portfolio in the near future.
- Liquid Staking – sAVAX
- anchor target
- DeFi KingdomsPartners
- Still the AVAX native lending platform
- New token economics allow the protocol to be a launch pad as well.
- sJOE, rJOE and veJOE imply higher buying pressure when demand picks up
- The team continues to build amid the constant flow of funds out of DeFi over the past few months
- Might be a good time to revisit. At its recent lows, JOE was close to the price of a VC funding round, so there’s plenty of room for price upside as long as you trust VCs don’t just invest 2x.
- If you don’t know GMX, check out Blocmates’ complete guide to GMX.
- It’s a Perp protocol, a lot of people are using it, and it’s still a great coin whether it’s bull or bear.
Other DeFi projects on the watchlist
- Aave v3 is cross-chain, prices have risen, and may see the OG DeFi protocol make a comeback after a massive overhaul.
- A new decentralized FX protocol with a strong mature team, strong investors, solid roadmap, ve-token economics, upcoming GLP token economics, MKR vault type Product, monetizing real world assets, Fiat on/off ramps partner sequencing, the team ensures they focus on DEFI protocols for protocol profits rather than pure TVL growth.
Web3 Gaming Summer
Thoughts on Game Plates
In January 2022, I decided to switch to GameFi because I think the future of the metaverse will require some solid games that people want to spend a lot of time playing. So I decided to dive into the gaming space. I’ve written more insights about this in my twitter so you can check out more of my views.
Jason Choi mentioned that GameFi feels like DeFi in 2020, which means we are about to enter a GameFi bull market and we are still very early.
Wangarian mentioned that the next 100x potential is in GameFi, and I tend to believe him, in fact that’s what I’ve been discussing with my mates.
Game Guild Transformation
A guild recently sold all of their Pegaxy holdings, leaving scholars without jobs, and with the recent changes in Slp, guilds that only focus on scholarship models may not survive long-term.
As such, guilds need to revisit what their primary role is, and I wrote a post on 12 areas that guilds can tap into, and I believe some guilds may be heading in that direction.
I believe some guilds will turn to Game Center or Studio as their primary mode. Merit circle started with cooperating/investing in selected games, I believe GuildFi will also move to this model, I heard they are developing, there will be announcements in the future to share their plans.
Games to Watch
Gaming Ecosystem – Treasure DAO (MAGIC)
- MMORPG – Ragnarok / Treeverse / Meeklony / Ember Sword
- RPG – Encryption Strategy (RAIDER)
- FPS – AFAR / Blast Royal
BAYC’s Upcoming Metaverse Land Sale Could Spark Next Metaverse Bull Market
Currently, The Sandbox (SAND) remains the most interesting project and the most successful virtual world project leader
NFT Worlds (WRLD) is definitely a project to watch, using Minecraft design, developers can easily build virtual worlds, various NFT projects have been buying land and developing it into their own metaverse (ie Floki Verse) – there NFT Worlds seems to have a lot of potential and will be writing an in-depth look at it in the future.
As Jason Choi points out, winning metaverse underlying projects like The Sandbox will be the main winners in this space, kind of like L1’s fat protocol.
Q2 2022 Portfolio Allocation
The general idea – I think what happens in the market will naturally express itself in my portfolio allocation, so…
- What are the possible benefits of a prolonged bear market?
The bear market is unlikely to be prolonged because the people I talk to who work at TradFi instis keep telling me they are getting ready to deploy cryptocurrencies and buying power is coming soon.
The market is maturing and market participants know that BTC/ETH/Crypto is here to stay, all we may have is frequent corrections.
If a bear market does happen, I’m prepared to mostly go into stablecoins and only market trades.
- Which segments are not being discussed right now and will be more popular in the next few months/year? (This is a question I often ask myself)
Personally, I think the metaverse will be the mainstream in the next few years, but not many people talk about the metaverse. Maybe this will be a space to watch.
I do know that Facebook (Meta) supports Realy, while a separate Web 3 protocol called MONA is ignored.
- Offense or defense?
Defend and look for strong coins
- Based on the above questions, how can I better manage my risk?
Tend to be more fluid while also sticking to good R/R games.
My Portfolio (NFA)
Crypto Raiders (RAIDER)
I recently wrote about my thoughts on this game project in an article, but to make a long story short; the Raider team has a long-term view, forgoing short-term profitability for the long-term sustainability of the game.
It’s a game that even some game designers are playing
One of the most vibrant neighborhoods out there
Treasure DAO is building a decentralized Nintendo where their games can be combined with each other and items from game A can be used in game B.
There are other games I’m currently whitelisting and/or starting to buy their game NFTs, will share in the days when I get more info.
(20%) productive assets
For the reasons mentioned earlier in the article
Convex Finance ($CVX)
Accumulate more CVX at Be4 Tetra Roundtable and CitadelDao
Badger DAO (BADGER)
There is an initial position that will increase my position in the future.
(40%) Stablecoins / Mainstream coins or L1 / Coin-Perps
Due to the current market conditions, a market where funds are dispersed, I find it difficult to buy and hold, it is more of a traders market.
My strategy has shifted from holding productive assets to more trading, be it T, swing trades, basically anything that keeps my portfolio liquid but also capitalizes on market moves.
This part of the portfolio will be where I spend the most time, from stablecoins to holding Avax/Luna or trading markets
(10%) Alpha speculation
There is always this configuration for very low market cap projects that may require a holding period of more than 6 months, actually the kind of projects that are heavily held and easy to forget, and currently part of this mix is the DeFX coin I mentioned earlier .
Tokens will not be disclosed here at this time as they are small market caps and high risk.