Epistemological status: thick, tight, solid
Mood: 7/10 comfy
Half-baked thoughts on inputs driving Ether price action:
- ~50%: MACRO RISK AVERSION/AFFINITY (Risk On/Risk off) - CURRENT IMPACT: Cautiously positive, volatile
- Historically high levels of correlation with legacy markets after March's Covid crash have tapered off, but this remains the largest determinant, by far.
- ~25%: FLIGHT FROM FIAT - CURRENT IMPACT: Strongly positive, volatile
- AKA the BRRRRR effect. Central banks around the world continue the debasement party, incentivizing the move into assets. Metals, equities, derivatives and yes, crypto. This is the Paul Tudor Jones angle, and it's gaining traction - [1], [2]. There are signs of dollar strength (hat tip: u/yeahdave4) but the pivot point here will be Powell's "profoundly consequential" speechifying on Thursday. Side note: Jackson Hole, where Fed people (alternatively, reptile Illuminati) gather each year, is lowkey creepy.
- ~15%: BTC INFLUENCE: Neutral, volatile
- Although its dominance is on a years-long downward trajectory that's likely to accelerate, grandaddio remains the prime mover. Major areas of resistance & support impact the entire crypto market, although my guess is that we're going to see progressive dis-entanglement as we head into 2021.
- ~10%: DEFI MONEY GAMES: - CURRENT IMPACT: Strongly positive, steady
- Shit is still janky, but it's undoubtedly the future. Innovation, iteration, investment and yes, large-scale fuck-ups continue to happen at break-neck speed in the DeFi space. One can quibble w/ the methodology behind this parabolic chart, but not with the fact that it's parabolic. I predict more than $50 BN locked in the space by EOY.
- ~10%: DEVELOPMENT TRENDS - CURRENT IMPACT: Cautiously positive, steady
- Phase 0, layer 2 and EIP1559 developments - see this excellent wrap-up from Anthony Sassano on the latter, whose Daily Gwei is warmly recommended. We've reached a critical mass of thesis-based investors who are monitoring these closely. Ethereum circa now is a wildly successful sandbox--Ethereum scaled up x1000, buttressed by a harder monetary policy, is a tectonic shift on the scale of the steam engine or transistor.
Short (1mo) term, the current zig-zagging is precisely what's necessary for sustained appreciation through the rest of the year. A few weeks of choppy ranging allows overheated RSIs to cool off, new supports to lock in & profit taking to play out in orderly fashion. This scenario is contingent on no major shocks, but it seems like the likeliest course of events as of now.
Attempting to time major ETH or BTC moves here strikes me as foolish, margin plays doubly so. If you want to degen, I recommend tight--i.e., $5--stops.
More interesting & potentially profitable: careful capital deployment in liquidity pools & yield farming.
Keep an eye out for the re-launch of the BZX protocol.
Next post: DeFi alpha.
