🧘♂️Build an Emergency Fund. Today. #108
Market Meditations | March 1, 2021
Exchange Tokens, Cardano, Bitcoin, Emergency Funds and More
A beautiful crypto market to wake up to today ? Now that the bears are asleep again, let’s consider other profitable opportunities on the road ahead.
Today, we explore: exchange tokens, cardano, bitcoin, emergency funds and more ?
As part of the Market Meditations community, you will be prepared for whatever the markets throw your way. Learning to also dance in the rain ☔️
Read, enjoy and share with your network. Let’s all build wealth together.
Crypto. Moses parted the red sea and today, bulls parted the red markets. Price appreciation vs. 24 hours across all fronts. With Bitcoin taking the lead and other coins following suit. A sigh of relief is heard across the crypto market community.
Legacy. Equity markets resume risk on. With traders and investors shrugging off concern about the consequences of higher inflation (as depicted through 10 Year Treasury sell-offs).
Delighted to say this article is brought to you by FTX ?
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Narrative Investing and Exchange Tokens
Whether you’re a trader on the one minute chart or an investor buried under mountains of reports and on-chain data, you’re asking yourself the same question: what should I buy to make me money? ?
Answering this question is difficult because the crypto market is filled with hundreds of coins. It’s likely as the industry booms, we’ll be inundated with even more information than we can handle. Our responsibility as consistently profitable traders is to make sure we know what coins to buy and what coins to stay away from. We can miss out on a lot of profit — or worse, lose tons of money — if we don’t answer this question properly ⚠️
One of the easiest ways to answer this question is with a concept called narrative investing. Narrative investing is the idea that coins with fresh, exciting news and fundamentals are more likely to move than ones that do not have this catalyst. Check out my YouTube ? video ? where I discuss narrative investing in more detail. Let’s take an example.
If you’re frustrated with Ethereum’s gas fees, wouldn’t the narrative of “an ultra-fast, censorship resistance blockchain” that is cheaper to use than Ethereum appeal to you? Well that’s what the Solana project ($SOL) led by Alameda Research and FTX is. This narrative led to a 1000%+ price increase in two months for $SOL ? The narrative became so sticky that people began to call $FTT $SOL and $SRM (all tokens associated with FTX), “Sam’s coins.” Each of the tokens saw rapid price increases due to their association.
One of the biggest narratives of 2021 is that of the exchange token. Exchange tokens are tokens issued by exchanges that provide various benefits like discounts on fees and dividend payments. This is important for traders and investors because when investors who believe in the product and team buy a token, this increases the token’s volume and momentum. Coins with volume and momentum are more likely to increase in price than those without, which makes your job as a trader that much easier. FTX’s native token $FTT, for example, increased 580% in a little over a month. ?
We’ve seen that the exchange token narrative in crypto has led to massive gains. That being said, responsible traders are always on the lookout for new narratives they can take advantage of. Recently crypto exchange Coinbase filed paperwork to go public ? It is logical that Coinbase may decide to launch its own exchange token. Alternatively, the public offering itself catalyses an entirely new narrative in legacy markets around “crypto going mainstream,” which will offer opportunities to make money for traders and investors.
Either way, we recommend you keep a close eye on the impact of Coinbase’s public offering. Restrain yourself, however, from rushing into any position. As the narrative develops, create a plan ? in line with your risk tolerance and time horizon and act accordingly.
? If you’re serious about trading and investing, consider joining our community and gaining access to the full range of insights and analysis ?
CRYPTO NEWS & ANALYSIS
Shark Tank’s Kevin O’Leary: “Crypto is Here to Stay”
Shark Tank’s Kevin O’Leary, who previously called the cryptocurrency space “a giant nothing burger” ? has decided to invest 3% of his portfolio in Bitcoin and Ethereum. In an interview with CNBC, Kevin O’Leary stated, “digital currencies are here to stay.” His newfound confidence comes from that fact that “most people that are willing to hold them, including institutions over the last 90 days, are willing to deal with the volatility.” ?
When big money enters Bitcoin and Ethereum it gives confidence to other market participants ✅ This confidence over time can translate into higher prices, which is helpful if you’re a HODL’er. If you prefer to capitalise on smaller, more aggressive price movements from altcoins, we know that the money flow in crypto is from the large caps to small caps ? This means that if more money enters Bitcoin and Ethereum it may catalyse one of the biggest alt seasons the space has ever seen. Make sure to create your trading plan ahead of time so you’re not scrambling last minute.
TWEET OF THE DAY
ALTCOIN NEWS & ANALYSIS
Cardano’s ADA Token Tripled In February
A recent Coindesk article pays tribute to Cardano’s ADA. A smart-contract blockchain aiming to rival market leader Ethereum.
Cardano’s bullish price action has caught many traders and investors’ eyes ? Whilst Ethereum posted a substantial 7.4% return on the month, Cardano’s ADA token boasted an impressive 274% gain. These gains were enough to earn Cardano a market capitalisation of $40 billion, making it the third most valuable digital asset ?
From a fundamental viewpoint, there has been an influx of news recently that retail and institutional investors are bullish ADA. We recently tweeted one such headline through our Twitter:
These technical developments combined with the strong fundamental story might lead just traders and investors into thinking that Cardano is a guaranteed success. ? However, there are no free lunches and there is always risk where there is reward.
Whilst ADA’s future is certainly promising, it is worth remembering Cardano doesn’t yet have any smart-contract functionality. We must also acknowledge that Cardano is currently benefiting from unit bias: when investors buy a cheaper alternative asset given its lower price against more established ones. And so, whilst there is cause to be optimistic, there is also cause to be cautiously optimistic.
Why You Need to Build an Emergency Fund. Today.
Everyone faces unexpected circumstances in life. Our only certainty is uncertainty. What is critical, is not that we eliminate uncertainty (for it is inevitable) but rather that we ensure we are prepared for what comes our way. Both welcome and unwelcome.
Uncertainty is particularly prominent when it comes to high risk assets like crypto. There is no shortage of stories when it comes to liquidations. Liquidation and losses can cause substantial financial strain. At the very least, you ought to have enough set aside to cover emergencies through an Emergency Fund.
An emergency constitutes anything that affects your basic ability to live or work. A vacation to Miami does not impact your ability to live. Fixing the car you need to travel into work every day however does. But how much do you need and how do you get started❓
An emergency fund should cover 3-6 months of living expenses. To begin:
Calculate how much money you spend on basic necessities such as rent, food and transportation.
Consider your spending habits and calculate how much you are able to save on a monthly basis.
Finally, start putting this money aside each month until your target is reached. ?
With these tips, you too can be prepared for the unexpected. For more personal finance tips, check out our break down of ? 8 Millionaire Characteristics
SCAN THE WEEK
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 1st March
Biden Passes $1.9 Trillion Stimulus Package ?
We start the week with prospects of even more monetary stimulus. Biden’s bill passed the House of Representatives on Saturday and is now headed to the Senate.
Tuesday, 2nd March
VR Startup Hackathon ?
During this Virtual Reality VR startup program, you will learn and navigate through tools, software, hardware, platforms, resources, projects, processes, methods and strategies to create your own Virtual Reality VR Tech Startup Business for different markets and industries. For more information or to register, visit the Eventbrite ? here.
MM Podcast Release #50: Investing Strategies from a $200m Crypto Fund with Jason Choi ?
Jason Choi is General Partner at The Spartan Group, a $200m crypto asset management and advisory firm. He is also the founder and host of The Blockcrunch Podcast.
Wednesday, 3rd March
“DEFiiCON” Conference ?
DEFiiCON is a series of back-to-back education lectures from the very people changing the DeFi space, including confirmed appearances from AAVE, Balancer, Compound, Chainlink, Gnosis, Alpha Homora, Fantom and more. Register ? here
Thursday, 4th March
MM Podcast Release #51: 8 Tips To Achieve Financial Freedom ?
In this episode, we are going to examine 8 key points that can help you achieve financial freedom. Wealth is not a result of luck, but of applying consistent habits that we will break down for you.
Decision On Oil ?
With oil prices surging (monthly gain of +18% in February), OPEC members will meet on Thursday to decide whether to boost supply accordingly. According to supply/demand and economic theory, an increase in supply helps control prices.
Friday, 5th March
U.S. Employment Data ??
The first Friday of each month is ‘US Nonfarm Payrolls’ day, commonly referred to as NFP. The data presents the number of new jobs created in the previous month. A useful indicator of economic growth, or lack of.
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Disclaimer: 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.