Thread by @TheEwansEffect

A lot of "Analysts" will try to write a lot of stuff about predicting trends in the Crypto space, and they end up leaving you more confused.

Let me be your filter.

A short 🧵 on two simple ways you can predict trends and position yourself to make the most money in DeFi:

RT.

Capitalizing on Trends is key to making it as an Investor especially in Cryptocurrencies/Decentralized Finance, knowing when & why you need to rotate your capital & be on the watch for certain protocols before the noise.

It's not as hard as you think, let's dive in:

The first thing you need to watch out for is

• Total value locked: Or TVL for short. It's simply the amount of liquidity locked or deposited in a protocol or Ecosystem, can be in the form of staking pools, farms, etc.

Why is this important and why is it an indicator of trends?

It is because TVL incentivizes building & development.

Investors, whales and even retail are attracted to liquidity as it is the soul of any Decentralized protocol, not only does it signify money rotating in the ecosystem, it also signifies underground developer activity.

And this in turn causes more people to build and deploy on that protocol, and as such innovation gradually takes place.

For example, how I predicted this #Cronos drift before the social media hype, it was simply due to the TVL increase:

• Starting from 2022, TVL has been increasing silently although the effect wasn't seen on the price of Cronos itself.

Like clockwork, Memecoins launched on Cronos and became successful, suddenly everyone's talking about the opps. on #CronosChain, but we were positioned...

... and with this little bit of info, you can as well, or you don't like seeing the future?

Rn Cronos has the highest Social dominance amongst all chains.

Cc: @NewsCronos

• The second is what I like to call "The Follow Effect"

As @SamuelXeus would say, Money does indeed follow innovation.

When $DOGE, $SHIBA, #SAFEMOON, #SAFEMARS and the likes came on board,

What happened?

When $AXS started leading the market last year, what happened?

When $SOL went on a parabolic run, what happened?

The answer to all these is simple:

Others followed suit.

When people saw the massive wealth transfer in Memecoins. It sparked a major rally in others.

We started seeing a lot more being deployed and true degens being born, leading to Capital inflow in the meme coin sector and a massive wealth transfer for those who knew how to play.

When Shiba, doge and the rest came on board; Babydoge, Cummies e.t.c came on the ride.

When $AXS first started it's run, other GameFi tokens started gaining more recognition. Started seeing moves from $SAND, $TLM and various others.

After $SOL ran, $EGLD did an impressive run from like 70$ to $300

$ROSE, another L1 pulled a wicked move, (bought this one personally at $0.05 & currently my largest L1 bag).

The Follow Effect leverages on one key psychological principle:

"The next big thing."

Once people feel they missed something, they'd instinctively try to find "the next big thing" with characteristics of the one they missed, unknowingly increasing demand & pushing the price of the next thing.

The Follow Effect is also attributed to being the cause of Capital rotation we see between chains as well.

So ask yourself, whenever something moves or goes parabolic, what is the next, low capped one that has similar features?

You might just get lucky, anon.

That should be it. Obviously there's more, and it's advisable not to make investment decisions off these two metrics alone, so they should in light of this serve more as guide to your already existing investing principles.

Hope you enjoyed it!

TD:LR

Spotting trends & capital inflow in DeFi:

• Total Value Locked.

• The Follow Effect.

🚀

In case you enjoyed & learnt from this,

Follow me @TheEwansEffect for more enlightening threads on DeFi, and do me a favor by retweeting the start of the thread.

Also check out my previous threads for more DeFi knowledge:

https://twitter.com/TheEwansEffect/status/1509974912680747016?t=XlXETQiwXa6ELy8JVDFFlA&s=19

Also I do occasionally call some solid coins & trades I feel would be profitable for you.

• Learn & Earn with me.

https://twitter.com/TheEwansEffect/status/1510719435392364548?t=XlXETQiwXa6ELy8JVDFFlA&s=19

• Turn on Notifications, and Trade responsibly as nothing is Financial advice.

With this, ask yourself two questions.

1. What protocol has been having steady TVL increase without a reflection in Price?

2. What token has had or you feel will have a parabolic rally anytime soon?

I know the answer to these two but your comments should be fun.😂

Thank you, and have a day as lovely as you!