Zhu and Kyle, Run It Back Round 2

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 my lords. We are back this Tuesday morning and NGL, I feel pretty good. Maybe this is a sign that it’s all over, or maybe there is a brighter horizon ahead of us. While normie markets (aka the S&P 500) have been on a ripper, crypto majors have been boring for the last 4-5 months. We experienced a bit of volatility yesterday but ETH is holding strong above 1,800 for now. This doesn’t matter that much, but the lack of volume in majors is what has driven everyone on-chain to memes and shitcoins. While the shitcoin casino has somewhat slowed down in the past week, it’s definitely still alive and well. While you can’t snipe new launches as much for a 20x, there’s a ton of opps to 2-10x easily on shitters in the 2-5m market cap range. It’s still quite fun.

Live picture of Chuck above.

“But Wilson, this is a newsletter about jpegs.” That is correct! Eventually, the hot ball of money is going to have to roll somewhere else. By no means do I think NFTs catch a super bid anytime soon, but when a ton of people get rich in one area of crypto, we usually see them roll profits into another. We saw this with the Milady and Remillio pump this week, both up roughly 30% in what has otherwise been another deep red week.

Overall, it isn’t surprising that after the lowest volume week for NFTs in over a year, that one collection/narrative is going to catch a bid. And that’s exactly what we’re seeing. Would highly reccommend following StarryNightDAO.

For those that don’t know, Zhu and Kyle from 3AC are back and ready to run it hot again. I actually was surprised I didn’t see this art blocks mint in almost any discord I was in. In typical fashion, I stared at the mint screen which was going slow, went to the bathroom, came back, and boom minted out. The .05 mint is now at a .4 ETH floor in under 24 hours. Not going to post the OpenSea link but the collection is Bright by Heeey. Think about this for a second. 3AC pumping an unknown art blocks collection and doing an 8x at what was the bottom of all volume last week…. seems like a bright spot doesn’t it?

I still think BAYC is going sub 20 E and Azuki never hits 10 E again. New mints are the most important indicator for new money flowing in, retail or not. The last NFT bull market started with Art Blocks and Top Shot, and if we see new Art Blocks mints start doing multiples again, that’s a good sign. Oh, and what’s that, another hyped new mint coming as well?

So, why am I still bearish on many existing projects then? One, the old thing is never hot. Many old PFPs don’t have clout to them anymore, but instead are looked at as a past sign of excess and greed in our industry. Something new will come to take it’s place. Also, there’s too many bagholders.

Some thoughts on bagholders – the chart below is really great and one of the most important ones I’ve seen.

When I chat with folks in discord I talk about bagholders a lot. Obviously, we see many members of CT call each other coping and seething bagholders, which may or may not be true at times. What certainly is true, is that there are a ton of bag holders in NFTs. I think this is a huge issue when it comes to recovery. There’s 2 aspects to consider here. The first is that some people who are down 90%, will sell into any pump. This isn’t rocket science and is simply psychology. The other aspect revolves around how rich the holders are. The biggest bull catalyst for Apes was that Yuga “made all their holders rich”. Many BAYC holders were not rich before they bought the 1E Monkey. Unfortunately, it doesn't seem like the team has that power anymore. This goes for Doodles, Moonbirds, Cool Cats, etc, they all got rich (and then poor) from their PFPs by being early. Essentially, nobody is left to buy the bags of bag holders, that is why they are called a bag holder (😂). It’s another reason I’m bullish on projects like Penguins and Miladys. Their holders are clearly wealthy enough to buy $8-10,000 jpegs. With this type of risk, chances are these holders are not willing to sell for a measly 2x, and don’t have much pressure to cut their losses on the way up.

If we add to this, we can see simply how down bad everyone is. After somebody sells their PFP for a 90% loss, which in cases can be upwards of a 50E loss, they are not rejoining that collection ever. I don’t think they leave the space either, I think the majority gamble to make it all back. There’s only a few options left in NFTs for them to capitulate into at this point.

Think the next 2 weeks we get some decent volume. DeGods have their big announcement tomorrow, $MEME should drop any day now, and Penguins have overpass releasing at the end of the month. It will probably be good for the space if 2 out of 3 of these projects don’t disappoint, which has been the trend for the last 8 months. Projects ripping on an announcement, and continuing to not die a day later is something we have not seen in quite a while. Keep an eye out.

I’ll touch more on this next week probably but I think we’re all waiting for Blur season 2 to end. It’s gotten exhausting and I don’t think we can have a meaningful upward swing in NFT prices until this is over. Don’t feel like elaborating now though, so tune in next week.

That’s all. Hope you’re enjoying the end of summer. Have another great week everyone.

Cheers,

Wilson