Market Meditations | April 16, 2021
Twitter timeline is full of hype and FUD.
Here’s everything you need to know about crypto today.
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Crypto. Main themes of the day appear to be FUD surrounding the Bitcoin sell-off and excitement on the $DOGE rally (more on this later).
Legacy. U.S. stocks extended all-time highs as record growth figures from China added fuel to bets on the global economic recovery.
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Dogecoin: Meme Or Valuable?
Whatever you think about a coin, be it $DOGE or $XRP, it can be difficult to ignore a hot rally. So, what is driving the $DOGE rally? Is Dogecoin just a ‘memecoin’ or is it actually valuable and worth including in your crypto portfolio?
DOGE / USD
With no historic data fibonacci levels are one of our favourite tools.
$0.367 presents a key structural level right now confluent with the 0.382 fibonacci level, if this holds we can expect continuation to the upside.
Our invalidation is at 0.31.
Once again, Elon Musk tweeted about $DOGE: “Doge Barking at the Moon” with a meme that hints at higher DOGE prices. Less liquid altcoins are subject to skyrocketing when a public figure or well-recognised influencer tweets about them. Let alone when it’s one of the richest people in the world. The tweet has likely attracted retail buyers and momentum algorithms. Remember that big money prefers major cryptos like $BTC and $ETH.
VALUE DRIVER: So $DOGE is soaring and now we know why. Still, is it actually valuable?
FOR: Some people deem a coin to be valuable if it has use cases. $DOGE does actually have some use cases. For instance, it can be used to purchase merchandise on Mark Cuban’s Dallas Mav Shop. Another argument would be that something is valuable if it is perceived to be such. Certainly there is a big community (on Twitter, Reddit, etc.) supporting $DOGE and this can be interpreted as perceived value. The GameStop saga acted as an affirmation of the power of these communities.
AGAINST: If we were to consider use cases on a wider spectrum, compared to other coins such as $FTT, $SOL and ethereum competitors, the use case for $DOGE is much smaller. Further, it could be argued that whilst interesting as a high risk: high reward play using just a small portion of your capital, $DOGE lacks the fundamentals to warrant it a place in your top picks.
BITCOIN / DOLLAR
$61,155 – Potential Support / Resistance Flip
$57,750 – Key Structural Level
A potential textbook play here if we get a daily close above $61,155.
Even without that our bullish structure remains intact about
$57,750. Such dips are health and certainly not a cause for concern till they affect the market structure.
TWEET OF THE DAY
BINANCE NEWS AND ANALYSIS
Feel the Burn
Today, Crypto exchange Binance announced that it has burned over 1 million BNB tokens (worth about $595 million).
FACT CHECK: “burning” refers to the process of permanently removing a crypto token from circulation. When Binance launched BNB in 2017, it committed to burning a total of 100 million BNB, which is half of its supply.
Reduced supply of a token tends to increase its price and benefits its owners. In this case, Binance and BNB holders.
This 15th quarterly BNB burn is the highest one ever carried out by the exchange in dollar terms. This is because the price of BNB jumped more than 16 times during the quarter, from about $35 to around $600.
To Cooperate or To Compete
In business and in life, it can be difficult to understand when to compete with those around you and when to cooperate. However, whether you do this will be a key factor in your success.
Consider the Prisoner’s Dilemma. Two suspects have been apprehended for a bank robbery and are now being questioned in a police station with no ability to communicate with each other. They face a choice, do they cooperate with their fellow bank robber or do they confess?
If they cooperate both prisoners will go to prison for 1 year. If one confesses but the other stays silent, one will go free whilst the other goes to prison for 3 years. If they both confess they both go to jail for 2 years. Clearly the optimal solution is for them to cooperate, they both serve a minimal amount of time in jail and will build a solid relationship of trust.
However this only works if both parties cooperate. From a purely individual point of view, the optimal solution is to confess, hope the other remains silent and then walk free. However doing so risks that (1) you spend longer in jail (2) you make an enemy of your fellow bank robber.
The Prisoner’s Dilemma shows us that pursuing the best strategy for you as an individual can often lead to a worse outcome. Do not just consider your own actions, but the actions of those around you. If you believe that others will cooperate, cooperate. Find out their goals and add value by helping them achieve them.
We are often asked the best way to excel in the crypto community and as shown by The Prisoner’s Dilemma cooperation is key. Engage with the community by diving into telegram or discord groups, set up a twitter account and find ways to add value to those around you.
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