🧘♂️ALERT: New Profit Strategy
Market Meditations | February 22, 2022
More bearish market conditions are an opportune time for learning and preparation. That’s why today’s newsletter focuses on powerful tools to level up your crypto journey to financial freedom.
- LunarCrush for Sentiment Analysis
- Our new profit strategy!
- Surprising New NFTs
- Interesting Cardano Developments
⏰ Top Headlines
- Luna Foundation Guard raises $1 billion to form bitcoin reserve for UST stablecoin
- Tourism in El Salvador up 30% since Bitcoin adoption, minister says
- NFT marketplace OpenSea hit with $1 million Bored Ape lawsuit
- Brazilian Crypto Exchange Foxbit Raises $21M in Series A Funding
? Bull and Bear Emojis?
Sentiment analysis allows us to understand investors and traders’ thoughts, feelings and emotions towards an asset. Being able to effectively analyze the emotions of other traders and investors may give you an edge in the market. It can help you to find profitable opportunities before the masses. Here are some examples:
- If we see that market sentiment for a particular asset is increasing but the price has not yet moved, we may have found an opportunity to get in early before a pump!
- If sentiment is increasing but the price of the asset is decreasing, the smart money has likely exited. It might be a good time to reduce your risk in that asset.
- If the market is moving sideways but sentiment continues to fall, this may suggest a reversal is near.
There are many widely used platforms available to analyze market sentiment such as The Crypto Fear & Greed Index or The Bull & Bear Index. Today we will explore a more in-depth way, using social media metrics to understand the market sentiment on LunarCrush.
Step 1: Customize Your Dashboard
- LunarCrush allows you to customize your dashboard to include your own holdings, a watchlist, alerts and more.
- As well as price movements, you can set alerts on movements in social media engagement.
Step 2: Select the ‘Markets’ Tab
- The markets tab provides key metrics on 3,560 different cryptocurrencies.
- Key global metrics such as social volume, social engagement, shared links and more are shown at the top of the screen.
- This provides a birds-eye look at the market’s sentiment on a given day.
Step 3: Click ‘AltRank’ to List Coins in Order
- AltRank is made up using Market Volume Rank, Percentage Change vs BTC Rank and Social Score Rank.
- A rank of 1 means the project has the best AltRank in the last 24 hours.
- If a coin is consistently in the top 25, you could be paying close attention.
Step 4: Select a Coin of Interest
- What is of interest to you will depend on your trading style and current strategy.
Step 5: Get Deep Into the Social Metrics to Find Alpha
Decentraland (MANA) 2nd in AltRank as of 14:42 21/02/22
- You can filter via key proprietary metrics, social metrics or trading metrics.
- In this example, we will look at social volume which at the time was at +150.6%.
- The dark blue line graph shows social volume whilst the light blue shows price.
- We can see that social volume had a huge spike before price adjusted.
- Purchasing at the peak of social volume would have resulted in a 31.81% increase in the price of $MANA.
Step 6: Identify Trends and Backtest
- When using any sort of data you must perform some type of backtesting to confirm your thesis is correct and not just a one-off.
LunarCrush is a robust platform with many features. We recommend that you use the platform and read their documentation to get the most out of it. Sentiment analysis should be used as additional confluence and it provides the best results when combined with strong technical analysis, fundamental analysis and risk management.
?️ An Expensive Point to Prove
Crypto Twitter artist @SHL0MS has made a name for themselves by destroying physical objects and turning the process into NFTs. A pretty expensive one at that, as they decided on exploding a $250,000 Lamborghini Huracan. The total cost of the project reached $1,000,000 after other costs had been factored in.
- The Lamborghini was destroyed on February 2nd 2022 with parts of the debris being shot by a video and turned into an NFT.
- An auction for the $CAR collection goes live on February 25th. It is made up of 999 NFTs, with 888 up for auction and the remaining 111 being distributed to the team.
- This collection will make up LambDAO which Sh0lms claims will not have financial goals but will be more ethically minded.
Despite the project having good intentions, the creator wanted to make it clear in a tweet that they “hate lambos and that is why I want to destroy one”.
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? Pump Up the Volume
Price doesn’t always serve as an indication of network use. Scrutinizing transaction volume can often be a good indication of the health of a project, but it isn’t perfect. Cardano’s daily transaction volume has experienced a surge, but prices remain lackluster.
- On-chain activity for the Cardano blockchain saw a swift and significant rise, surpassing LTC and ETH, coming to rest only behind Bitcoin in 24-hour transaction volume.
- A large part of the reason behind the spike in use is the launch of SundaeSwap, a scalable decentralized exchange and automated liquidity provision protocol on the Cardano network.
- Even with positive on-chain metrics, ADA’s price continued to fall, retreating below $.83 before rebounding slightly earlier today.
Everyone loves experimenting with projects and tokens when the ecosystem is enjoying a bullish climate, but those with valid use cases will retain users even when bearish sentiment prevails.
Feel like getting to know your ice cream? Check out SundaeSwap’s FAQ here.
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BTC’s hash rate took a big hit after China implemented its ban on crypto mining last year. Fast forward 1 year and we’ve seen new all time highs.
In Thursday’s newsletter, we will deepdive into BTC hash rates and how they can be used as a powerful tool for crypto investors.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.