Crypto Weekly Roundup: WAGMI

Disclaimer: This post contains the thoughts of a medium stupid person (me) on crypto, a volatile and risky asset class. It is not investment advice, and you should do your own research. All information is for educational purposes only. Please don’t take risks with money you’re not willing to lose.

It’s been a good few weeks for bulls as Bitcoin ETF inflows have overwhelmed all other narratives, and Bitcoin ripped up to $50k before taking a breather today on a relatively bad inflation print in the US.

Overall we’ve been through nearly a month of “sell the news” discourse, which more or less ended with the revelation that a huge amount of GBTC outflows was the FTX Estate selling about a billion dollars worth right after approval.

Two of the last five trading days have seen $500 million in inflows to the combined ETF products. For reference, Saylor only owns about $9 billion in total Bitcoin. If these levels keep up, I think we’re likely to see all-time highs by early Q2.

ETH Season:

There’s been plenty of chatter about how ETH season is obviously next. Just the last few days have seen the beginnings of what is to me an absolutely absurd victory lap as ETH led for like 18 hours.

I do think the idea that “ETFs are bullish” proving itself out is probably net good for ETH, but so far the market doesn’t seem all that interested. Even less so in the alleged ETH beta.

Measuring from the ETF going live, ETH’s performance has been extremely lackluster, and I am quite skeptical of this narrative as a standalone for a couple of reasons.

First, it’s going to be a bit harder to convince RIAs (registered investment advisors) and clients to buy the “second” crypto and I think the majority of the flows will continue to be around Bitcoin in the medium term. ETH will certainly benefit from flows, but the narrative will be a bit weaker.

Second, it seems clear this will not stop at ETH, even if the legal path for non-ETH coins is much more muddy. The SEC seems quite likely to lose the case against Coinbase declaring coins like Solana a security, and all we really need over the next 6 months are filings for other alt-coin ETFs to drive narrative. Those filings seem quite likely to come in short order if ETH is approved.

This is one of those things where I’m not interested in front-running the trade to prove how smart I am. If ETH season really is next, I’m happy to rotate some SOL into ETH beta once SOL / ETH falls off more than 25% from the local top following a rapid 5x.

Just buy and hold strength is my basic position.

The only other major narrative play for ETH is the Dencun Upgrade, which includes EIP-4844 and is designed to reduce transaction costs, especially on L2s, across the network.

It’s slated for March, and it’ll be a fine little thing for Bankless to talk about. I’m not technical enough to analyze it, but even big ETH boosters don’t seem to think it’ll meaningfully fix ETH’s high fees. We’ll see how it goes, but for now, transaction costs and speed remain an issue for ETH, and have opened the door for the alt-L1s to lead this cycle again.

Current Positioning:

My current bags (and I would stress I do not recommend this allocation - it is by the grace of some kind of celestial entity that I find myself here) haven’t changed much except WIF has rallied a lot.

I plan to sell more WIF (worth roughly $1.15 million at the time of this writing) on the way past all-time highs here and hopefully get the chance to sell a lot into a major listing like Binance spot if it comes.

But for the rest of my portfolio, I’m quite happy with it. DMT gives me a little cover on ETH beta, and if I see anything really interesting (things under consideration below) then I’ll rotate. Mostly though, I don’t see the need to do much before all-time highs for Bitcoin.

Also worth remembering how much stuff launched or revealed itself after Bitcoin’s all-time high in 2020. I don’t think this is the time to chase what the general public finds interesting just yet. That comes later.

So far so good.

Things to Watch:

BEAM/DMT/Gaming Chains:

BEAM is Pentoshi’s gaming chain and has a subnet on Avalanche focused on giving the BEAM token buy/burn utility as well as functioning as the native gas token of the chain.

It’s had an incredible run since the bull market started, and in general, I love this type of value capture mechanism.

People keep asking me why I’m so obsessed with DMT and Sanko, and the answer is that they are gunning to build something similar to this type of broad platform, except the market cap is $10 million instead of $1.7 billion.

Similar to the Solana/ETH trade, I think that’s an obvious comp/story to drive a repricing if they keep shipping.

The Sanko L3 with DMT as the native token goes live in March, along with a new marketplace, all featuring buy/burn mechanisms, so I’m banking on that being a major catalyst.

TAO/AI Memes:

I finally did a bit more serious research on Bittensor/TAO (knower published a really good, more technical piece here).

TAO is the token of Bittensor and it uses crypto to reward participants for contributing computational resources or AI models to its decentralized collective. Over time rewards and slashing will identify the best nodes/contributors and ideally decentralize the top LLMs.

There are some primitive apps connected to Bittensor, and some seem interesting.

I’m way out of my depth here on a technical level, but I view all trading in crypto as a meme, and people are practically begging for AI exposure. Current FDV is $3.4 billion, which sounds low to me instinctively given the opportunity.

I’m probably not gonna buy any AI coins this cycle, or at least not this early, because frankly I’m skeptical of this being a workable solution before we even know what OpenAI is going to be, but as more info/apps come out I will keep an eye on it.

It’s an excellent meme for this cycle, and I have no doubt the narrative will do well. My issue would be I have no real idea how to ID which one is best, or what the competitive risks are, so for now I’ll probably just stick to trading dog money, which is much easier to understand.