Downgrade Your Portfolio

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 all. Hope you’re all enjoying the final weeks of summer. For me, this has included locking myself inside and staring at the 1m chart on dexscreener. Another week where ETH has been a stablecoin and the real $bitcoin looks to claim another 2x in from the previous ATH.

This will be another concise rant as I have been limiting my NFT trading for the most part over this last month. Locking up liquidity in “shitcoins with pictures” has turned out to be far less favorable than locking up liquidity in shitcoins without pictures. Despite a handful projects I am slowly adding to, there are very few projects at this point that I am confident will outperform fungible tokens on a short and medium time horizon.

Despite this, NFTs actually had a decent week until yesterday when DeGods got nuked into oblivion and are still struggling to find a floor. I see on twitter some are saying they got “Azuki’d”. Nonetheless, this massive volume in DeGods certainly contributed to the first increases in week-over-week volume that we’ve seen in a month.

After DeGods downgrade (in both art and price) the floor is now sub 5 ETH and looks poised to fall lower. Azuki, DeGods, and Captainz, who were all above 10 ETH at some point this summer, are now all under the 5 ETH. Whether it’s poor leadership, lackluster announcements, or simply holder impatience, prices of these continue to grind down as holders lose faith.

On the other hand, utility-less projects with “culture” like Punks, Miladys, Remilio etc. continue to be the only projects in an uptrend over the last two months of this bear market. Sproto Gremlins even flipped Doodles, Moonbirds, and Clones.

Most of your favorite influencers have pivoted to AI at this point and people are down tremendously. This isn’t due to risk aversion though. At the same time, we have been in a bull market for altcoins since ~May (eerily similar to defi summer back in 2020). Maybe NFTs are just a late cycle phenomenon and people don’t start trading pictures until they’re filthy rich. Or maybe, most of these projects were just vaporware garbage to start and were inflated to completely unreasonable prices.

At the same time, there are still projects and creators innovating. Jack Butchers openen collab with Pudgy Penguins are having some sales in the 5 ETH+ range and getting a ton of love on the timeline.

Pudgy Penguins are one of the last projects that haven’t taken a real “nosedive” yet. Pengs have still remained one of the best performing NFT assets all summer by simply doing nothing and holding strong around that 4 ETH price range. Luca has made some bold claims about the announcements coming up as the anticipation builds. Overpass is supposed to come out sometime in early September 👀.

While I’m not going to sip on some hopium for this, I do tend to be optimistic. There’s no doubt penguins have the best “story” in web3 and if anyone is going to be the shining light when everything is going to 0 I still would bet that it’s the cute flightless birds. Conviction has surely been tested over these last few months and I am looking forward to seeing what the team comes up with.

Overall, I still believe we’ve bottomed in volume and that we’ll see a steady uptick in volume to finish off the month. This doesn’t mean prices go up, as we’ve seen capitulation to be a primary source of volume for many of these projects. With the combination of how poor the DeGods/Azuki announcements went, I think if Penguins nail their upcoming ones than this would mark a nice reversal on what’s to come. It would certainly be poetic.

Otherwise, I hope you all have a great week. Not much to cover right now so not going to sugar coat it. I’ll be back next week most likely on Wednesday and hopefully there’s something more exciting than another “blue chip” falling 50% in 48 hours. Have an amazing week everyone.

Cheers,
Wilson