You Have An Edge

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 kings. I trust you’re all having a good week thus far. I knew Cali would prove to be a hard act to follow and he certainly delivered in Tuesday’s write-up opining on the stagnation of the NFT business model. For those who have primarily played in the NFT sandbox, it’s worth mulling over whether NFTs represent the best +EV plays as they continue to trend downwards and no end in sight remains for Blur farmooooors continuing the cycle of farming bids and dumping for points.

I’ve had a couple of discussions over the last week about how I think NFTs will perform over the next 12 months. For many reasons, a lot of which Cali succinctly highlighted in Tuesday’s newsletter, I have pretty high conviction around NFTs proving to be one of the worst-performing asset classes in crypto as we turn the page on 2023 and move into 2024.

As we know, the name of the game is rotating liquidity. With new narratives cropping up within the shitcoin sandbox such as blood sports and animal racing, it’s becoming evident that there are simply not enough market participants to pay attention to all of these different narratives.

BDB is pretty spot on here. If you’re still under the impression that your bags and their purported state-of-the-art technology is going to be the next 100x, I am sad to inform you that you will find yourself sorely mistaken.

It’s become more and more clear to me that this market is entirely narrative-driven. 99% of speculators are not taking the time to read new protocol white papers. If you are in the 1%, I truly believe you are wasting your time digging so deep.

Che made a video a while back, explaining why Dogecoin outperformed basically all other assets in the last bull run.

Sharing this perspective was really eye-opening for me. When the floodgates open and the normies rush back to Coinbase and Robinhood, try to remember who these people really are. Reflect on your first time opening a CEX and parsing through the hundreds of coins to buy.

Long story short - it is impossible for the average consumer to differentiate between the hundreds of coins available for purchase. In their mind, they are entirely commoditized (i.e., the same) outside of name and price.

So - how does Doge fit into that equation?

The goofy Shiba that is proudly displayed on Dogecoin is a ubiquitous meme. Everyone is familiar with it. Meme power to this degree is virtually unfadeable because for the same consumers I mentioned, Dogecoin stood out as uniquely differentiated solely because of how well-known it is. Underpinning all of this is how Dogecoin proudly advertises that there is no underlying technology. No genius or Mensa IQ tokenomics. Just Doge.

If you’re reading this, you’re likely to be one of the few market participants left. You and me - we have a real edge by virtue of keeping our ears to the ground and understanding the narratives that are bubbling up across Twitter. Pepe was an excellent example of this idea playing out.

Then there was Turbo. Then HPSonicObamaInu10. Along with a myriad of others, the latest being Hamsters as of yesterday.

You probably paper handed almost all of these at some point. That’s totally fine - I did too. I think the key takeaway to balancing the difference between being early and being TOO early lies in the below tweet.

If you see a meme that has taken Twitter by storm and there’s an associated shitcoin along with it, I would hold on tight and not check for a couple of days. In spite of Cobie, cat and Hsaka all tweeting about hamster racing, I chose to sell my Hamster far, far too early and did not reap the benefits I could have even though I knew it had all the makings of a good meme. The opposite of my Pepe playbook that delivered in spades.

With all of this going on, I find it extremely difficult for NFTs to find their footing in the near to medium-term. To me, their ability to moon and capture the attention of those active in crypto can only happen AFTER everyone has made their money on the coins themselves. It marked the end of the last bull market, and I think it will do so again for the next one.

Keep a sharp eye out for new narratives, avoid honeypots, and continue grinding. Your efforts will pay off.

Cheers,

Chuck