The Daily Alpha 5/13- Happy weekend everybody! Took a breather last night to recharge and spent a good portion of today writing. Wanted to share with you a Daily Alpha as well as an article I just published on enduring this bear market:
This Bear Market Is Ending Anytime Soon. Here’s What You Need To Do Immediately – NFT GOD. — nftgod.gives This NFT bear market is going to continue for a long time. Here's what you can do to be prepared and when you should jump back in...
Azuki Bounces Back
After a wildly tumultuous couple days for Azuki, cratering from 30 eth down to 7 eth, floor prices have shockingly recovered back to as high as 17 eth. As everyone is surely aware, project founder Zagabond was ousted as a serial rug puller with many questionable behaviors in his past. To follow that up, he had an even more questionable sit down interview after the controversy broke. Many famous long term holders openly dumped and fudded the project on Twitter. Apparently none of that matters as over the course of the last 24 hours Azuki has been by far one of the best NFT trades ever. Being able to make tens of thousands of dollars in under 24 hours is a difficult feat to achieve even in a raging bull market.
I personally have gone on record as saying I’m not touching this project, even when it was at 7 ETH. Clearly my thesis hasn’t been accurate up to this point. Having a base of strong holders who are emotionally attached to their PFP was enough to keep a strong floor on this project, and allow it to rubber band back up. I’m still not a buyer despite being 50% below all time highs. I can see this dipping again to the 10 eth range, I can’t see this ripping back to 30 (at least in the short term). At times like this where you see people making life changing money on a project you have to fight all bodily urges to FOMO into this project. If you were super bearish yesterday a 24 hour pump logically speaking shouldn’t be enough to change your mind. Remove emotions and determine if your investment thesis remains the same.
Also one really interesting takeaway for me here: no project has ever endured the amount of FUD Azuki has endured the last few days. Ever. Yet their floor price is still incredibly high. What does this tell me? Sell shaming and censorship of critical feedback for projects is a major red flag. If your project can’t endure free speech then the brand probably isn’t strong enough. I can’t tell you how much I’ve seen messages deleted in Discord then explained as “making complaints public will only hurt the project”. If I see this I’m running far away. No project has endured more public complaining than Azuki has and the strength of their brand totally withstood all of it.
After a few days of nauseating price action all financial markets took a breather today, with crypto and NFT’s pumping upwards. Markets don’t move in straight lines, so we were due for some upwards action. The question becomes does this continue upwards or was this a dead cat bounce? To me this doesn’t feel like the right time to get back in with size. None of the macroeconomic factors in this market have changed the last couple days. Inflation is still high, rates are still hiking, and the war in Europe is still going on. I’m sitting tight here and if I feel the urge to make a high conviction move, I’m waiting for another dump. You can never lose money on the sidelines.
What I’m Targeting: NFT’s whose value comes from their brand.
While I am not looking to make any purchases right now, if a super dump happens I’m looking at NFT’s who get their value PURELY from their brand. I’m not talking NFT’s who get their value from air drops, I’m talking NFT’s who have been holding their value because of their name. For me, this includes Nike x RTFKT, Adidas, Gucci 10KTF, and CryptoPunks. If none of these airdropped free NFT’s over the next year, I believe they’d still be at the same value they are now (or close to it). I don’t include Bored Ape in this category. While I do believe they are a blue chip, I also believe a lot of their value comes from the constant high value air drops they get. And now that they are developing a game, I think a lot of their value is now attached to news of that game. The brands I listed before could have 0 pieces of news for months and I don’t believe they would tank. I’m targeting more Nike shoes here and if I had the budget CryptoPunks.