Final Friday, I launched Momentum Grasp — an idea of shopping for cryptocurrencies utilizing a easy set of technical evaluation guidelines.
Briefly, don’t purchase momentum belongings in the event that they don’t have… effectively… momentum.
That explains #SafeMoonSqueeze’s muted reception final week. Very like final April’s #DogeDay occasion on Twitter (NYSE:TWTR), the concerted effort was met with an enormous fats investor yawn. Creating memes is one factor. Getting others to commit real-life cash to a made-up asset is sort of one other.
I’m not ruling out an eventual return of SafeMoon (CCC:SAFEMOON-USD). Stranger issues have occurred. However SafeMoon wants excess of a wily Twitter marketing campaign to restart curiosity.
At the moment, we’re going to try 5 alt-Doge cash that may do higher.
Rising Stars: The Alt-Doge Revolution
Earlier this month, crypto investor Chris Williamson grew to become an unintentional trillionaire after a Coinbase (NASDAQ:COIN) glitch misquoted his $20 Rocket Bunny funding by a decimal level or 10. Whereas Coinbase quickly corrected the error, many different alt-Doge traders have seen equally lopsided features.
There are at all times realists, in fact. Tyler Cowen at Bloomberg not too long ago printed a bit titled “What the Crypto Crowd Doesn’t Perceive About Economics.
“A lot of you don’t perceive financial economics very effectively,” he pooh-poohed. “First, the greenback shouldn’t be on the snapping point, nor will or not it’s changed by a crypto asset. … A second level, oft uncared for within the crypto neighborhood, is that crypto costs received’t proceed to go up without end at excessive charges.” And maybe that’s true for mega-cap Boomer Cash.
However folks shopping for altcoins (notably Sh*tcoin aficionados) aren’t precisely attempting to behave like economists. Think about Exhibit 1.
As a substitute, these speculators are shopping for lottery tickets. It hardly issues that these tokens have nearly no real-world use. If it appears like the following 1,000x Dogecoin (CCC:DOGE-USD) or Safemoon, punters will wager no matter they’ve.
I’m not going to faux as if I can predict the following trillion-dollar winner. There are 1.1 million Ethereum (CCC:ETH-USD) and Binance (CCC:BNB-USD) tokens out globally, and solely 705 (or 0.064%) have a market capitalization above $1 million.
However I can offer you some patterns that tilt the percentages barely extra in your favor. In any case, 0.064% continues to be a one-in-1,560 likelihood of selecting a winner — far increased than the one-in-844,512 odds of profitable $50,000 within the Powerball lottery.
- Copycat Names. Alt-Doge traders are a surprisingly conservative bunch relating to shopping for what they know. So Shiba Inu (CCC:SHIB-USD) will naturally outperform one thing like Lamp888Token.
- Cult Following. Tokens depend on content material creators to unfold the phrase — the extra rabid its fanbase, the larger the prospect of making viral memes.
- Momentum. Folks purchase cash which are going up, so I received’t contact something that hasn’t proven at the very least a 40% worth improve in current weeks. (See final Friday’s electronic mail for extra about momentum).
That helps slim the sphere significantly.
- BabyDogeCoin (CCC:BABYDOGE-USD). “In case you like Doge then you definitely’ll fall in love with Child Doge Coin,” the token’s web site proudly states. They actually have some extent; the Binance token has already amassed 50k followers on Twitter and has 100,000 holders. Its comparatively small $23 million market cap additionally provides this a possible 100x upside.
- Shikoku Inu (CCC:SHIKO-USD). Crypto copycat builders have wasted no time in creating the following Shiba Inu / Dogecoin lookalike. SHIKO is especially egregious, copying 97.1% of SafeMoon’s underlying code (which itself is a replica of RFILIQ). It even brings among the spelling errors of the unique work. Maybe it would have a few of that worth magic too.
- Rabbit Finance (CCC:RABBIT-USD). The leveraged yield farming token has amassed 85k Twitter followers in stunningly quick order. With yield farm APRs exceeding 100%, it’s not exhausting to see how crypto speculators may flip this new animal into the mascot of the crypto kingdom.
- Goes Up Increased (CCC:GUH-USD). Some builders have totally embraced the shoulder-shrugging motive why cryptos go up. Nonetheless, GUH’s group has taken it to a different degree. By burning person tokens, GUH ought to theoretically sometime attain Bitcoin’s price-per-coin.
- Bonus: WTF Token. Walnut.Finance turned heads final week when a tank-top-wearing fan took to the Belgium/Finland Euro 2020 discipline. “Sporting a swimsuit and selling a web site referred to as ‘WTF Coin,’ … the lady jumped the gates and jogged onto the sphere.”
Are these cash value something? In all probability not. It’s exhausting to think about a world the place copycat tokens do a lot for society.
However is placing in $100 in these a greater wager than Powerball tickets? I’d wager so.
Falling to Earth: Boomer Cash Proceed to Slide
It’s not simply Bitcoin (CCC:BTC-USD) that’s feeling blue as of late. Prior to now week, 70 of the highest 100 cash by market cap have misplaced cash. The Grayscale Bitcoin Belief’s (OTCMKTS:GBTC) $24 billion belongings beneath administration (AUM) is barely increased than firstly of the yr.
Moonshot traders largely don’t appear to care. Their $0.02-$0.07 Dogecoin entry costs imply most early traders are nonetheless deep within the black. Solely the latecomers are licking their wounds.
However Bitcoin’s stagnation may imply a brand new “crypto winter” for different currencies too. An identical shakeout in 2018 despatched altcoins right into a multi-year deep freeze as traders pulled cash out.
In different phrases, don’t purchase “blue chip” cryptocurrencies as a result of they appear safer than altcoins. When a deep freeze occurs, not even Bitcoin is safe from the reckoning.
Are you seeking to add extra danger? Alex Sirois explores 10 new penny stock names that might go 10x.
Will any altcoin ultimately eclipse Bitcoin? Chris MacDonald isn’t so certain. However he does have some steering for these seeking the next king of cryptocurrencies.
And eventually, are you able to keep away from crypto taxes whereas saving a creating nation? Joanna Makris weighs in on the rise of “Bitcoin citizenship” and provides pointers for anybody who’s dreamed of working an under-the-table offshore sportsbook.
By the Numbers: Likelihood and Payoffs
|$60,000||Bitcoin goal worth by J.P. Morgan strategist Nikolaos Panigirtzogloy. “If Bitcoin isn’t capable of break again above the $60,000 mark quickly, momentum alerts will collapse, in flip resulting in a cascading downdraft,” he wrote in April.|
|-36%||Losses seen by Bitcoin traders since Mr. Panigirtzogloy printed his notice.|
|-69%||Losses by SafeMoon traders had they purchased the cryptocurrency on the time. The J.P Morgan notice coincided with SafeMoon’s peak worth.|
|500%||Achieve by traders who purchased into FEG (Feed Each Gorilla) Token. Smaller altcoins have changed extra vital tokens and cryptos because the dominant speculative performs in current weeks.|
Closing Ideas: Having the Conviction to Promote
Once I purchase a brand new funding, I typically have a smile on my face. That new holding may someday develop into value a brand new automobile. Possibly even a brand new home. It’s all attainable when that profit-and-loss column nonetheless exhibits “$0.” (These with youngsters may also have felt that have earlier than).
However saying “goodbye” to an funding isn’t at all times as simple. Not even for me.
That’s as a result of promoting includes locking in income or losses. The second you’ve pulled the set off, all that limitless potential disappears. It means without end lacking out on any future upside.
But, Momentum Masters will know that promoting is as necessary as shopping for. When momentum belongings decelerate (or mean-reverting belongings go up), it’s higher to take income than to sit down on a sinking ship.
FREE REPORT: 17 Reddit Penny Shares to Purchase Now
Thomas Yeung is an professional relating to discovering fast-paced development alternatives on Reddit. He beneficial Dogecoin earlier than it skyrocketed over 8,000%, Ripple earlier than it flew up greater than 480% and Cardano earlier than it soared 460%. Now, in a brand new report, he’s naming 17 of his favourite Reddit penny shares. Claim your FREE COPY here!
On the date of publication, Tom Yeung didn’t have (both immediately or not directly) any positions within the securities talked about on this article.
Tom Yeung, CFA, is a registered funding advisor on a mission to carry simplicity to the world of investing.