For the past three weeks we have demonstrated how to spot hot token opportunities and today we are going to run through the key lessons learnt along the way.
Identifying Hot Tokens 101
NFT As Collateral
With Nansen’s On-Chain data, you can secure an edge in the crypto and NFT markets:
🤲 Exciting New Opportunities. See where funds are moving their money.
💥 Perform Due Diligence. Get more information on projects or tokens.
🌀 Defend Your Positions. Create smart alerts to track over 100 million ETH wallets.
🔥 Track The Biggest NFT Traders. See what the most profitable NFT wallets are investing in
To grow your crypto portfolio today check out the Nansen website. Currently, they are running a 7 day trial for just $9. Link here 👇
⏰ Top Headlines
🔥 Identifying Hot Tokens - 101
This focused on the first stage of discovering profit opportunities: using Nansen to find what the most successful crypto investors are doing right now:
(1) Look at smart money token holdings. Nansen shows the flow of tokens into smart money addresses - one method of spotting what top crypto investors are doing with their assets.
(2) Sort the data to identify more opportunities. By sorting the data using variables such as smart money segments, we can find the most suitable opportunities for our trading system.
Applied to Today: Smart Money Token Holdings
Nansen.ai: 02/03/2022 - Smart Money Token Flows
3 of the top 5 coins are well known DeFi assets that facilitate earning yield. This demonstrates that smart money is currently flowing into low risk yield opportunities.
2 of the top 5 are less known tokens that we may want to dive deeper into, taking into consideration that these are very high risk with more due diligence required.
To find the full lesson, check out part 1 of the series.
Our second lesson considered diving into project fundamentals to understand what metrics we can use to aid our decision making process:
(1) Live token distribution. This identifies the risk of one wallet holding too great a percentage of the supply.
(2) Measure adoption through the number of unique wallet addresses.
Applied to today: $BETA token
Nansen.ai: 02/03/2022 - Top Holders of $BETA Token
Whilst there are two smart money investors in the top 5 holders, the project’s wallet holds 85% of the supply. Further research is required to understand why this is the case.
To find the full lesson, check out part 2 of the series.
Our final lesson focused on following the activity of established investors:
(1) Consider top crypto investors who hold the subject token. Using Nansen we can establish which smart money wallet addresses have shown faith in the project.
(2) Dive deeper into whale transactions. Once these wallets are identified, we are able to examine exactly what these investors are doing with the token.
Applied to today: $BETA Token
Nansen.ai: 02/03/2022 - Top Smart Money Holders for $BETA token
There is an abundance of established funds invested in the project; however with the current information at our disposal, we are not aware of their involvement.
We would therefore look deeper into these addresses to understand how these wallets came to own these tokens.
To find the full lesson, check out part 3 of the series.
Identifying hot tokens can uncover huge opportunities for profits and having the right tools is crucial. Using Nansen we are able to find what the most successful crypto investors are doing and then dive deeper to understand why.
💲 Dollar Warfare
The dollar rose to a two-year high recently as the Russian Ruble crashed. Analysts said investors were fleeing from risk assets to safe havens, but there’s more to it as well as an impact on crypto:
The DXY is a weighted index used to measure the dollar against a basket of six world currencies (Euro, Swiss Franc, Japanese Yen, Canadian dollar, British Pound, Swedish Krona).
There is an inverse correlation between dollar strength and other markets but none stronger than with Bitcoin.
As TaschaLabs points out, over the last eight years “54% of y-o-y BTC price change can be explained by DXY alone”. Much higher than with gold (24%) or the S&P 500 (7%).
She points to four key macro factors that will impact dollar strength this year:
U.S. Current Account – the value of a currency goes down if it imports more than it exports. In a post-Covid recovery a reduction in imports is better for the dollar.
U.S. Capital Inflow – conversely, with the Fed tightening the economy, investors might leave the U.S. stock market in fear of a long bear.
Fed Rate Hikes – borrowing dollars to invest abroad becomes more expensive, so less companies do it, raising the dollar value further.
Fed Quantitative Tightening – when the Fed reduces its balance sheet, it directly removes liquidity and increases the value of the dollar.
😀 Collateralized Loans Get Punked
A few short years ago, if you had told anyone that you were going to collateralize a loan with an NFT, they would have laughed you out of town, that is if they even knew what an NFT was. As the saying goes, times are changing. No longer are NFTs just a cool profile picture, the entire market has changed.
Now you can hold NFTs for passive income, they can represent an in-game character, early access to a game, or even a social club. Another way to make your NFT work for you is a collateralized loan, and the largest one on record just took place.
An $8 million loan collateralized by 101 CryptoPunks was facilitated by MetaStreet on a peer-to-peer lending platform NFTfi.
The loan has an APR of 10% & a 30-day duration.
The identity of the borrower has not been disclosed.
As institutional interest in NFTs builds, so will lending secured by digital collectibles.
MetaStreet is a liquidity scaling solution that received $3 million in seed funding and $11 million in initial protocol liquidity just this year. They also facilitated another enormous loan, breaking the record at the time, for $1.42 million collateralized by an Autoglyph. MetaStreet prides itself on extending the purchasing power for the entire industry.
According to MetaStreet CEO & co-founder David Choi, “NFT collectors want to free up capital more efficiently and don’t want their crypto assets to turn to virtual dust.”
Federal Reserve Chairman Jerome Powell just stated that it is possible to have more than one reserve currency. Wow. This is going to happen faster than I ever thought - Pomp
$BTC accumulation phase begins.Newbies who joined last year are evolving to long-term holders. The market cap for 6-month+ old BTC takes 52% now. It was 13% at the cyclic top.Unlikely to hit the previous low($28k) as the newbies will wait for other newbies in the next cycle. (Chart) - Ki Young Ju
Is BTC digital gold?
What have we learnt about cryptocurrencies through the recent Russia-Ukraine conflict?
Find out in tomorrow’s newsletter where we will share primary research and analysis on the topic.
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