Selected text: ROUTE 2 FI
Compiled by: Deep Wave TechFlow
What to consider when buying cryptocurrencies in a bull market
The bull market is driving wave after wave of gains, and each coin is rising to varying degrees.
Today I want to talk about some basic principles you should consider when investing in tokens.
I think the picture below sums up well what you need to consider.
From the image above, you can see seven different categories:
basic analysis
news
Sentiment and positioning (including technical analysis)
Market sector rotation pattern recognition
Understand the different types of market players (difficult unless you are deep in the industry)
Order flow and execution
On-chain flow
Let’s start our discussion directly with some coins.
$MATIC
Polygon has lagged behind the market over the past year due to oversupply, a lack of focus in its roadmap, and a failed mid-2023 product launch.
AggLayer Mainnet launches on Friday 23rd
Polygon is becoming the dominant player in the ZK ecosystem
MATIC’s POL conversion will take place in the second quarter of 2024
POL stakers will receive airdrops of new L2 on Polygon, similar to Celestia
Similar to Eigenlayer, POL can be re-staking to earn yield on the new L2 on Polygon
Everyone has sold, downside risk is low
With an FDV of $9 billion, it's easy to see that MATIC is priced lower compared to many other L1s
We are on an upward trend and L2 will benefit from EIP-4844 (Matic should benefit from this narrative as well). The downside risk seems low for Matic, but it is a cursed coin and personally, I don't see huge upside for Matic.
$BE
It is an L1 chain with ultra-fast TPS and finality (settlement). It is a chain designed for asset exchange or trading, and is very suitable for DEX perpetual contracts. Don’t we already have a lot of DEX? Well, they still fall short compared to the CEX experience, and that’s what $SEI solves. It has the following other features:
Fastest L1
The team comes from Google, Goldman Sachs, RobinHood, and Nvidia
Raised over $130M (Jump, Coinbase Ventures, Circle, Delphi, etc.)
Developers from Terra (Smooth UX/UI)
2 billion market value, 9 billion FDV
Rotation (frequently mentioned by influencers like Hsaka)
Just launched v2
Seems poised to replace last cycle’s $LUNA, a favorite in the space
As a disadvantage, Sei’s DeFi only has 20 million US dollars of TVL, which basically has no ecosystem. However, their biggest goal is to launch a trading dex that can compete with Binance/Bybit, etc., and I don’t think it makes sense to consider TVL so early.
Bull Market Dangers
I read this quote on Twitter a few months ago and jotted it down in my notebook, can’t remember who originally said it, but it was great advice:
Don't be a person who is not bullish enough, has no long-term investment, has no diamond hands, is timid, and does not understand the power of the bull market. Profit taking after small gains. This kind of person cannot make a lot of money because he has no courage, no vision, and cannot withstand pressure. Day trader types, technical analysis types...
But don’t be that person who believes every narrative, holds positions and investments out of excessive optimism, and reaps generational paper gains. This is all good. But he couldn't fully understand the market, so he made bigger bets and kept betting. This man would not leave his pocket for safety, and most of his wealth was returned to the market. The reason for his success became the reason for his failure.
What kind of investor should you be?
Become the biggest Degen. The kind of people who believe in everything and believe that the future is bright, make bigger bets and go long on your long-term positions. But at some point, the man suddenly quits the market entirely and laughs about the huge fortune he just made in a Ponzi scheme that is about to collapse and never come back.
Investors who do well in a bear market in 2022 may struggle in a bull market, at least initially. The reason is that he cannot respond to two different market environments in the same way, and only those who adapt can perform well again.
In a bull market, on the contrary, money is greedy and therefore there is a lot of speculation. The best thing you can do in a bubble is invest in promises and projects that can't yet be quantified. A perfect example is Worldcoin. They want to scan the eyes of everyone in the world, and Sam Altman is the founder of the project. It's easier to reach a valuation in the hundreds of millions or even billions when you don't understand something and hear everyone talking about how it's going to revolutionize an industry. You start to see projects using new technology or new platforms, and new partnerships, and everything looks great.
If you look carefully, you will find that some coins with no revenue and zero activity are still promising, and they perform much better than coins with a stable revenue stream. Next time you see a project, don’t ignore it because it doesn’t have a mature product yet, doesn’t have many users, or because it doesn’t generate enough revenue. Those should not be reasons why you refuse to invest in this coin. If you want to make crazy money, embrace speculation.
Many people believe that once a coin is hyped, it is too late or too risky to buy it, but think about it another way, the main purpose of a coin is to create hype. Therefore, once a token is hyped, it has already shown the ability to speculate, so it is less risky.
