Market Meditations | March 24, 2021
Crypto underdog has found it’s way to the Top 10 this week
Everyone loves an underdog. What about a crypto underdog?
Today we focus on THETA ?
How has this coin silently become top 9 by market capitalisation and what do you need to know before you take a position in it? All answers revealed today ?
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Crypto. Bitcoin jumped this morning after Tesla CEO Elon Musk said the electric vehicle maker is now accepting the cryptocurrency as a payment option. The force of this tweet managed to overshadow the typical negative impact of a strengthening dollar. This, helped the cryptocurrency stay bid. In other news, the Ethereum Layer 2 network Hermez that uses ZK-Rollups has gone live.
Legacy. The S&P 500 and the Dow rose today on a boost from economy-linked financial and industrial stocks as Fed Chair Jerome Powell and Treasury Secretary Janet Yellen offered an optimistic view of a recovery from the coronavirus pandemic.
We are extremely grateful for our partner ? Phemex. This collaboration makes our free content production possible ? As well as receiving free bitcoin and discounts for signing up, Phemex have launched Crypto Asset Management ? Their savings accounts allow you to earn crypto passive income and as Warren Buffet famously said, ‘you want to find ways to make money while you sleep’.
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This lesser known cryptocurrency stealthily climbed its way into the #9 spot of crypto by market cap. In this article, we’ll review what the Theta project is, why the coin is rallying, and how traders can go about trading the token. In just under a month, THETA has quintupled in price. Opening around $3 in the month of March and surging to a high of $15 shortly thereafter.
⏯️Put simply, Theta is a blockchain based peer-to-peer network that decentralizes video streaming. Theta believes that the current process for streaming videos is highly inefficient:
Today, content creators have to work with intermediaries like YouTube or Twitch to share work, often leading to rebuffering, higher load times, or poor quality when systems are congested.
The nature of centralised middlemen also means less income for streamers as everyone including the middlemen takes a cut of the profit.
Theta leverages the blockchain to solve for such inefficiencies ?
Theta enables independent network users to pool resources that content creators currently rely on intermediaries for. The blockchain rewards users who supply a resource like bandwidth, for example, with the THETA token. Additionally, by decentralising the network the stream quality improves rebuffering, and load times are reduced since creators are no longer at the mercy of the centralised infrastructure. Finally, content creators are rewarded for their work directly with THETA token and with no middleman their profits increase.
Many have cited the launch of its mainnet as the reason for THETA’s parabolic price rally whilst others have pointed out that the price truly began its aggressive ascent once the P2P streaming service was successfully tested. Regardless, the coin is on the radar of many traders and there’s a few things all THETA traders should take note of ?
1️⃣Over 55% of all coins have already been staked and this number is on the rise. Staking tokens requires you to lock-up your coins for a fixed period of time, which means that anyone who has staked tokens has no intention of selling their coins in the near future. This reduces the selling pressure drastically and is bullish for THETA as long as demand is present ?
2️⃣According to Wu Blockchain, 61% of THETA tokens are owned by the top 10% of network users. In other words, a large supply is owned by a select few. This dynamic enables the few individuals with the majority supply to manipulate the market ?
Therefore, if you’re planning to trade THETA, you could consider the following:
✅ Wait for a HTF candle to close before taking an entry. It’s common that when a few individuals manipulate the market, they briefly push the price past a resistance level for a few hours to encourage other participants to pile on longs, then they push the price back down trapping liquidity above. ? Being patient with your entries can pay off.
✅ Decrease your position size. In a manipulated mark, long wicks to the downside and upside are common. This is because whales looking to fill large buy orders, for example, need the liquidity from your stop loss or open short position. By decreasing your average position size, it allows you to ride a position with a relatively loose stop whilst still maintaining a healthy risk to reward ratio.
✅ Consider using a trailing stop. With a coin that seems to go “up only” it can be hard to know when to take profit. Sell too early and potentially miss out on gains. Sell too late and your massive profit turns into a loss. A trailing stop allows you to set a stop loss that moves with price based on a ? defined percentage or dollar amount away from a security’s current market price. Check out my full Stop Loss ?Tutorial ?!
BLOCKCHAIN NEWS & ANALYSIS
Revolutionising Ethereum and NFTs
StarkWare raises $75 million in Series B funding round led by Paradigm, The Block reports ? As Ethereum’s scaling efforts heat up, the startup hopes to position itself as the infrastructure backbone across decentralised finance, NFTs, and security ✅ The holy trinity, if you like.
StarkWare Industries scaling and security solutions to overcome the limitations of Ethereum’s existing technology are certainly welcome ? It is no secret that Ethereum transaction fees have been soaring.
Climbing above $18 this week compared to roughly $0.08 at the beginning of 2020 ? One could argue this is one of the key limitations that has given rise to so-called ‘Ethereum Killers’ such as Polkadot ?
“StarkWare offers the lowest cost, highest throughput solution with privacy on Ethereum”. That’s good timing, considering the surge in activity across the market for non-fungible tokens ⏰
CRYPTO NEWS & ANALYSIS
TIME Magazine Hiring Crypto CFO?
Seven years in executive leadership positions, understanding of advanced accounting, and outstanding team management skills are three of many things you’d expect to see on a job description for the CFO of a major company. But TIME Magazine has tacked on a mere six words onto the end of their CFO job posting: “comfort with bitcoin and other cryptocurrency.”
Could you have imagined even a year ago that a traditional media conglomerate as influential as TIME Magazine would publicly seek out an executive with experience in crypto? It’s another confirmation that crypto is going mainstream. It is precisely this adoption and forward thinking that over several years can dramatically increase the ‘fair value” of crypto assets ⬆️
Whilst traders are able to capitalise on small price movements in both directions (upside and downside), it’s generally easier to trade with, not against the trend. Understanding the macroeconomic shift of major corporations adopting cryptocurrency can help us remember that our high time frame bias is bullish. On the other hand, however, we must prioritise technical analysis when taking trades, so if price action is showcasing weakness, our HTF bullish bias should not stop us from taking a short ?
Elevate Your Thoughts with Second Order Thinking
Things are not always what they seem. Often our actions have unintended consequences and as Ray Dalio has said, “failing to consider second and third-order consequences is the cause of a lot of painfully bad decisions”. So what is second order thinking and how can we use it to avoid “painfully bad decisions”❓
First order thinking is the process of considering direct consequences. Let’s take a falling market. First order thinking says, the price is falling, we are losing money and therefore we should sell. Second order thinking is the process of considering all the knock on impacts arising from these direct consequences. It says, because everyone is losing money, they are panic selling meaning the price is low and therefore this is a great time to buy.
Second order thinking can elevate our thoughts and help us understand future outcomes but how can we apply this to our own lives?
Always be curious and question everything. Diving deeper into a problem allows you to understand probable knock on effects and plan accordingly.
Write down the intended consequences of an action / event and then consider the subsequent consequences of each of these. This will allow you to understand all possible outcomes.
Think across time. ? What will the consequences be in 1 minute, 1 day, 1 year, 10 years and so on? This ensures that we are always prepared for the future.
We can also use this mental model to create insights into investing and personal finance:
Always consider your investment decisions on a portfolio level. Each time you buy or sell an asset you change the makeup of your overall portfolio. Make sure you are not accidently increasing exposure to a certain asset or altering the risk profile.
When spending money, think about the future financial impact. Will this purchase save me money or cost me more in the future?
Think about the time impacts of an investment. Some investments such as regular purchases of index funds require no maintenance whereas others such as an investment into a business may take up the majority of your time. When investing, always consider not just how much money it costs you, but also how much time. ⌚
Second order thinking is a powerful tool we can use to supercharge our decision making process. Be deliberate with your thoughts and elevate your ability to build wealth.
Ethereum, DeFi and NFTs with Camila Russo
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The best founders are obsessed with seeing their product succeed, regardless of the actions they must take. When investing in a project, always vet the founder.
The best way to spot opportunities in any sector is to get involved. Find something you are interested in, interact with the community and you will be able to understand what the sector is missing.
To understand DeFi you must become a user. To start, buy Eth, transfer it to a non-custodial wallet such as Metamask and you will be ready to interact with any DeFi protocol on the Ethereum network.
Lending stablecoins using DeFi is a great introduction to the ecosystem. ? Use Uniswap to exchange your Eth to a stablecoin such as DAI or USDC and then lend this out on a platform such as Yearn. To learn more about earning yield on stablecoins, check out our passive income guide.
Always check the source of your crypto news. ? Many crypto news sources will be invested in the space and therefore be prone to bias. Do your own research and ensure you are making decisions based on reliable information.
Expectations often exceed fundamentals. Whilst new technologies have the potential to cause substantial change to society, adoption does not happen instantly. Look for sectors of the market you think this may be happening in and invest cautiously.
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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.