🧘♂️ALERT: Something Seriously Special
1 Tool. To unlock Millions of crypto opportunities.
As part of our mission and services to our readers, we aim to share comprehensive reviews of some of our favourite tools. And so, we dedicate today’s newsletter to something very special: How we use Nansen On-Chain Analytics to Assess the NFT Markets.
🎆 Nansen NFT Tutorial
🪐 Aave’s Latest Proposal
⚛️ Intro to Cosmos: Atomic Stablecoin + Smart Contracts
Why navigate the crypto markets alone when you can get free resources and analysis sent straight to your mailbox? Make sure you’re on our free email list where we are helping over 35,000 people build life changing wealth👇
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
🤝 Nansen NFT Tutorial
When it comes to technical analysis, our approach is to use TradingView to generate macro and micro insights. We gauge the big picture, then we deep dive. Profiting from NFTs can be difficult in the absence of such data, however with Nansen, we can recreate the macro-micro approach for the NFT market.
Step 1️⃣: Asses the Macro Picture
There are two key tools to carry out this macro analysis, both found in the NFT Paradise Dashboard; Market Cap and Volume.
We can use this data to establish market leaders and if we click on the top 5 projects, price and volume trends. In this instance:
Price data indicates that after a drop for the largest NFT projects, price has now started to stabilise. To showcase this trend, consider the price data for Bored Ape Yacht Club, the 4th Largest Project.
Price and Volume: BoredApeYachtClub: Nansen.ai
Axie Infinity has 1.9 million active wallets, completely eclipsing the next highest number of wallets, CryptoKitties with 108,000 - highlight the strength of Axie and the play to earn narrative.
Other elements of this data that can help us generate insights include change in position, number of transactions and further price data, all of which can be found on Nansen.
Hottest NFT Projects (Top 5 by Transaction Volume): Nansen.ai
Volume can be used to establish what narratives and projects are currently trending:
Whilst the top 3 are established, well known projects, the top 4-10 are all new (released within the last month). This indicates that participants are happy to speculate on new projects, another sign that the NFT market is stabilising.
Artblocks have traded $40m of NFTs in the last 24 hours. As we noted last week, generative art (where all the NFT data is stored on-chain) is a strong narrative and continues to show strength.
3 of the top 5 projects are related to NFT gaming and the metaverse, including 2 new projects. This highlights another strong macro narrative that you can take advantage of.
Market cap and volume allow you to understand the macro environment of the NFT space helping you ascertain whether there are any strong narratives and whether the wider NFT space matches your risk appetite. If you can identify these narratives and it does match your risk appetite, we can move onto step 2.
Step 2️⃣: Asses the Micro picture
Now we have a framework from which to operate, we are able to dive deeper into individual trends and projects. We like to start by finding new projects that have been outperforming the market. Using the same market cap and volume data as shown above we scan the column for contract date (found in the full data in Nansen), picking up on anything created in the last 7 days. This highlights an interesting project, Galactic Apes - the hottest project created in the last week.
We can then dive even deeper. Using Nansen and by simply googling the project to find its social media channels we can ascertain:
Release occurred 3 days ago however the project already has a market cap of 12,866 eth ($37m+) and a 24 hour trading volume of 817 eth ($2m).
It has taken advantage of the popular ape narrative, created by Bored Ape Yacht Club (the 4th largest project).
It is aiming to launch its own universe where you can run missions and interact with your apes in the metaverse, taking advantage of the play to earn narrative we have already established.
It has 100 notable owners (those in the top 0.1% of ERC-721 token transactions or smart money).
We can even see the kind of prices these notable buyers are paying and dive into the portfolios of individual buyers to ascertain whether they are successful NFT traders using the below graph (each dot represents a transaction and can be clicked on for more info).
Individual Transactions: Galactic Apes: Nansen.ai
Step 3️⃣: The Overall Picture
We have now produced a top down analysis of the NFT market, establishing market leaders, trending narratives and detailed actionable insights into individual projects. What next?
The key here is to remember that Nansen is a tool that should compliment your overall portfolio system. Just as with trading any asset, other factors will heavily influence your profitability.
Risk Management: NFTs can be a highly volatile, illiquid asset class which means you may not be able to recoup any of your initial investment. Ensure you allocate an appropriate % of your portfolio to NFTs and do not only invest in new, speculative NFTs that you may never be able to re-sell.
Psychology: A poor mental approach may completely destroy any potential for profitability. Having a predetermined plan for any NFT investment will help and for tips to stick to your plan, check your our Masterclass on Improving Trading Psychology 🎧
By using Nansen to dissect the NFT market - you will be able to regularly generate alpha that allows you to outperform other NFT traders. Using this process we have shown that metaverse friendly projects are currently trending and generated insights into the hot project, Galactic Apes, that you can use to inform your strategy. Remember to use this as a tool to compliment your wider investing framework, and you can become a profitable NFT trader.
With Nansen’s On-Chain data, you can secure an edge in the crypto and NFT markets:
🤲 Exciting New Opportunities. See where funds are moving their money.
💥 Perform Due Diligence. Get more information on projects or tokens.
🌀 Defend Your Positions. Create smart alerts to track over 100 million ETH wallets.
🔥 Track The Biggest NFT Traders. See what the most profitable NFT wallets are investing in
To grow your crypto portfolio today check out the Nansen website. Currently, they are running a 7 day trial for just $9. Link here 👇
💂Permission to Join
A proposal appeared this week on Aave’s governance page asking to add the company Fireblocks as a ‘whitelister’ for one or more deployments of Aave Arc. But who are they, what is Aave Arc and why is there a whitelist?
DeFi lending and borrowing protocols have boomed in popularity over the last 18 months, including Aave, which currently tops the charts in terms of Total Volume Locked in.
They work by allowing users to deposit their tokens into liquidity pools, where other users can borrow them while paying interest. All the loans are over-collateralised, meaning that users need to have more value deposited in the protocol than they can borrow.
Anyone with an Ethereum wallet can connect and use the market pools without any KYC (Know Your Customer), which can prevent large, institutional players from entering due to security, compliance and risk perspectives.
Aave Arc will provide an independent, permissioned liquidity pool requiring all users to be fully verified. This then opens up the world of DeFi, acting as a bridge (or arc) to compliance-conscious investors.
Whitelisters act as the security bouncer at the door – no I.D, no party. They will be regulated entities that manage the KYC/KYB (Know Your Business) and monitor transactions.
Originally planned to launch in July this year, the platform has been delayed but is getting ready for launch, with Fireblocks, an institutional custody firm, proposing itself as a whitelister.
So Aave is taking a big step to bring institutional money into the protocol. The good news is that Aave token holders will still govern both platforms (albeit with some veto rights for the whitelisters), and the arrival of ‘smart money’ may be the first bridge of many into the DeFi ecosystem.
⚛️ Atomic Stablecoin + Smart Contracts
September has seen altcoins like Solana, Fantom, and Avax reach major milestones and soar to new all-time highs. Another project that was gaining momentum before the recent pullback was Cosmos (Atom). Cosmos touts itself as “the internet of blockchains”, claiming scalability and interoperability. Like Cardano, Cosmos also recently launched smart contracts and announced the creation of a stablecoin to its ecosystem.
Sommelier, a test net protocol for financial transactions on Cosmos, partnered with Mysten Labs to provide smart contract applications to the entire Cosmos ecosystem and increase liquidity transaction speeds. (Mysten Labs created the blockchain network for Facebook’s Diem.)
Osmosis is a dex on Cosmos, which has seen a recent surge of over $500 Million TVL. Osmosis recently announced a partnership with e-Money, a blockchain payment platform, to introduce eEUR, the first stablecoin on Osmosis. If you are wondering how the upcoming regulations will affect the eEUR, to satisfy consumers and regulators, e-Money has brought a fresh new approach to the backing of this stablecoin.
eEUR will be fully backed by bank deposits and government bonds.
They will undergo quarterly audits by Ernst & Young to ensure transparency.
eEUR will offer multi-currency support.
It will be interest-bearing, having both positive and negative rates.
Although Atom has seen a price increase of nearly 600% since the beginning of the year, some believe it still has room to grow. Check out our analysis tools to determine where you think Cosmos can go!
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.