On the January 27 episode of the Trading Pit
👉 Hands down, the easiest, fastest way to find signal in crypto metrics without sacrificing on execution: https://t.me/+w8kQSxHOdkEyMmJk
Trader Round Table: How to Trade an Emerging Narrative
Narrative-Driven Trading: Not all narratives are equal; some, especially those pushed by regulatory bodies or political leaders like the President of the United States, hold more weight. The "Made in USA" token narrative is a key focus, with the potential to drive regulatory changes and investment.
Filtering Tokens: Traders should filter tokens based on volume and market cap. High volume and market capitalization are indicators of more tradable tokens. Established tokens are often the easiest to assess within new narratives.
Volatility and Opportunity: New tokens can offer high volatility and outsized gains but also carry higher risk. Mid-cap tokens can experience sudden surges in volume, which can be profitable.
Narrative Life Cycles: Narratives tend to have a limited lifespan. They typically follow a 30-60-90 day cycle, and the market can quickly "bleed dry" any narrative.
Broader Market Context: Traders should always consider the broader market, including liquidity and demand. Even compelling narratives may not lead to immediate price action if liquidity is low or overall market demand is weak.
Market Run-Down
Bitcoin's Cooling-Off: Bitcoin is currently in a cooling-off period. There is no major buying or selling pressure, and hedge funds are returning capital. Bitcoin is range-bound with key areas of support and resistance that can be used to inform potential trades.
Ethereum's Strategy: Ethereum is not seen as a strong trading asset for the short term, but rather as a buy-and-hold opportunity. It may decline further before a major price increase. The focus should be on its long-term potential, particularly its financialization and composable DeFi primitives.
Solana's Cautionary Approach: Solana shows a similar lower high structure to Bitcoin, and trades should be considered with caution.
The Flow Report
Stagnant ETF Flows: ETF flows for both Bitcoin and Ethereum are currently stagnant. This indicates a need for a catalyst to reignite the market. Un-staking of ETH is outpacing new investments in ETH ETFs, which adds negative price pressure.
Emerging Bitcoin Holders: A new class of long-term Bitcoin holders (over one year) is emerging, and they are currently selling, possibly due to tax implications.
Ethereum's Financialization: There is optimism for Ethereum's future, especially in the financialization of assets and its composable DeFi primitives. Ether Strategy is emerging as a project for Ethereum similar to MicroStrategy for Bitcoin.
Alt Season Expectations: An alt season is still expected, and regulatory changes are likely to play a significant role.
Regulatory Shift: There has been a shift in the regulatory landscape from suppression to support of crypto. This will likely impact market dynamics and valuations.
Bretton Woods III: A new thesis around a strategic reserve of crypto assets is developing, pointing to a potential Bretton Woods III moment. World Liberty Financial, backed by Trump, is accumulating a portfolio of crypto assets, aligning with this idea.
Coinbase Premium: The Coinbase premium for Bitcoin is starting to rise, which could be a positive signal, but this trend must be sustained.
Ethena and USDE: The yield on staked USDE for Ethena is linked to staking rewards and funding rates. The product is sensitive to market conditions, and the funding rates, which contribute to the yield, have been declining.
Follow the team:
Espresso Newsletter https://bit.ly/espressobrew
On Twitter @Marconiwight @TheWhale_hunter @rangesnipe @mrbenlilly @xChanging_Good
Disclosure Statement This content is for entertainment purposes only. Nothing shared during this broadcast is or should be considered financial advice. The views and thoughts shared here are simply opinions. Do your own research and consult a registered financial advisor before making any investments.
Share this post