Dead Cat Bounce?

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.

Gm everyone. I hope you’re doing lovely on this fine morning and afternoon. I have been doing my best to enjoy the lovely weather and enjoy summer but at the same time it really feels like any minute away from my phone/computer means I’m missing something. Whether this is the final stages of the “echo bubble”, beginning of the bull market, or the great bull trap (capo was right?) it’s just too -EV to not be staring at a screen all day. This is clearly very good for my mental health! While the shitcoin meta has surely died down with jeets in full control, we still have multiple versions of Bitcoin2.0 going to various million dollar market caps, Pepe2.0 going to a whopping 80m market cap (naturally I sold after a 2x at 6m so I am seething), and calls for DMT to be the next Axie Infinity. Clearly signs of a very healthy market with absolutely no froth… Anyways, I’m here to write about NFTs so will do my best to stick to that 🫡.

NFTs the last couple of weeks haven’t been as fun, but there are signs of life.
While I didn’t move too many jpegs around this week, things have recovered nicely compared to the bloodbath the other week. Azuki went back over 7 ETH with Apes floating back around their 33-35 ETH zone. Frankly, this is much better than I expected, and may be due to simply the fact that a lot of people were over-leveraged and got wiped out. Naturally, things will bounce.

The primary question floating around NFT twitter is if the market is in “dead cat bounce” mode or if that was the “bottom”. It’s split pretty much 50/50 and you should be happy to hear that I think the market is in “dead cat bounce” mode (so you can counter trade me). Blur farmers are BTFO, there’s no new participants, and low risk more liquid shitcoins are a better meta at the moment. If ETH sends above 2,000 then I think we’re going much lower.

That being said, NFTs did show a sign of life in Fatzuki this week.

A few things to note here and why it’s important. We haven’t had a paid degen mint in months now. Honestly, probably since like March/April. The market has been itching for something fun and Fatzuki was the perfect project to take this over. Topping the volume charts and doing a bit more than a 10x from mint, we saw a sign of life from the degenerate blockchain-picture traders hopping in for some fun. Was this an absolute home-run? No. Did some people make decent gains? Yes. Do I think it’s dead now? Yes. New mints (Degen or not) consistently selling out and holding top volume for more than 24 hours is what will bring the market back. While there may not be a full fledged bull market anytime soon, stuff like this is important to look out for to gauge broader risk tolerance.

Another thing to note that continues to cement NFTs as “legit” is that the high--end market hasn’t been as impacted. While this hoodie punk would certainly have gone for a lot more in the bull market, 218 ETH for $400,000 for a digital image is still a lot of money. High conviction collectors/traders are still here and they’re still placing their bets accordingly. We actually saw a decent amount of high end sales this week, and grails continuing to go for Xs above floor [bullish]. All of the collections below still feel “alive” and that their best days have not come yet. Interestingly enough we haven’t seen many grail BAYC or MAYC sales recently. Obviously, a large reason for this is due to price and illiquidity, but I’d expect more people doubling down on Yuga. Something to look out for as we tend to always move on to the new shiny object.

So where does this all leave us? What am I doing in this market? Not that you should do or care about this, but you have read this far after all. I’ve been patient for the most part. My Penguin bags are packed and I’m waiting for any upcoming catalyst to determine what to do next. It’s been a while since they’ve been in the spotlight (toy drop was almost 2 months ago) and I think (hope) there’s a solid chance they’re the talk of the space in August. I had my fun with Fatzuki, although certainly overtraded which turned this into a very small win. And then I’m looking for new gems, such as Dokyo.

I’ve also been getting more involved with Creepz/Overlord and slowly packing my bags there. With rumors of Portal Coin which I discussed last week and now a full on partnership with immutable, I think Q4/Q1 will bring this project back into the spotlight. Still, I understand how tough it is to be patient and the timelines here been stretched. That being said, having almost 300 people show up to a holder discord call on a random Thursday afternoon in this market isn’t something I would ignore. Cult followings are bullish.

Anyways, that’s all for this week folks! Thanks for your patience as I haven’t been the most consistent with writing this summer. We’ll get back in our groove and start going much more long-form after the summer. Speaking of, next week we’ll have a guest post from our good (and very smart) friend Cali, discussing leverage, blur, and expressing a more “tradfi” take on internet pictures. Chuck should be good to drop another banger tomorrow as well.

Stay safe out there and enjoy peak summer time!

Cheers,
W