Many lack understanding of who/what is really driving these markets and have not capitulated, assuming that PA today is just an over-reaction to yday's comments by Powell

This includes those on CT, but importantly, almost everyone on other platforms - ETF buyers, Reddit, Tiktok Those who say “Powell doesn’t matter” are likely the same ppl who weaponized 50 bps of rate cuts in September as the lever to be long

If you pay attention, the final conclusion of their argument never changes, no matter the circumstances

Happy to be wrong but an observation

Any Sailors left in December?

I am expressing a LTF short around BTC off the following factors:
1) Saylor is possibly done bidding this month & next
2) As a continuation of 1), low seasonality diminishes the required re-allocation to BTC that would otherwise be needed for a Saylor-less order book
3) Contemporary markets were not expecting Powell's hawkishness, and will need to time to re-price this in

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1) Although it is not possible to say for certain, I believe Saylor may have already started his blackout

I think Saylor may have attempted to structure a convert (which if successful would have been bullish for LTF demand), but was not able to get there on terms. His last convert was done at $3B face / $672 strike, the latter of which was a ~55% premium over the US VWAP on 11/19. He would have normally priced one in by now (15th/16th) around FQE; I am assuming he was not able to do so with current MSTR price (~$350) too low, representing what would be a dilutive tranche relative to November's. This is purely hypothetical; from my experience in structuring similar notes, I could see that being an issue directly as a covenant per the original loan package, or simply a bogey that prospective investors couldn't get excited around

If this is true, the market will require an entity / group of entities to substitute for the ~$17B of BTC purchases that Saylor made on behalf of MSTR from the Oct. 31st onward. This represents ~$3B/wk on average in gross demand

Naturally, an argument arises that demand for MSTR could have been substituted away in different vehicles, if MSTR did not exist. This is apt but I believe it is not a perfect 1:1 sleeve which I have covered previously. For every $1 that enters MSTR, my guess is that ~$0.30-40 would enter an ETF product. This is especially relevant for something like the convert: a unique instrument that opens up the palate for non-traditional / credit investors. Therefore possibly ~$10B of demand would still need to effectively be made up via ETFs or a sterling idiosyncratic spot bid elsewhere

Some exceptions to this exist, which I list out in the subsequent note below

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2) The impasse for the remainder of the month is that low seasonality may start kicking in

We have seen the impact firsthand of low seasonality back in August - when managers/allocators go on vacation. There is an add'l bogey here as well that many participants found themselves offside today, expecting a Santa rally built off the back of a dovish Powell. @FedGuy12 does a nice job opining around his surprise in the latest @fejau_inc video. Noted inflation hawks such as @DannyDayan5 were even shocked at Powell's sudden shift in demeanor and move away from the "restrictive policy" conditioning he layered in September. The dots were especially hawkish, with 4 people even advocating for no cut today, and only 5 committee members voting for 3+ in 2025

Seasonality should not be understated; the last Fed move that generated a reversal was 12/21 (per @AviFelman), in contrast to the infamous 12/23 "pivot" presser where 9 rate cuts were priced in after Jerome's surprise dovishness.

From Dec. 13th to Dec. 31st last year, BTC flattened around $42K despite the bullish undertones underpinning markets elsewhere (SPX rallied +300 bps) and the catalyst of an upcoming BTC ETF

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3) The managers best suited to provide step in for a missing Saylor may have their hands full with fire drills elsewhere (eg. interpreting what this means for longer dated bonds, growth equities, value equities, etc)

Digesting today's presser likely takes a few days. Is it possible that BTC finds a bid as *the* solution? Yes, of course. However, one must acquit that an add'l layer of complexity has been observed that was not present going into FOMC

There is also the added wrinkle that is BOJ's minutes for 2025 (which we will know about shortly). I view the LTF bounce this evening as coinciding with the news around the December rate pause. However, with the USDJPY rising against Japan, I believe Ueda may be inclined to set expectations for more hawkish guidance, hiking (or towing the line around one) as soon as possibly next month (Jan) More thoughts on MSTR here

https://x.com/lazyvillager1/status/1869183095049441376?s=46&t=EZUQzxqzI0jyJhwDoB76gQ

A brief SOLiloquy (short thread)

Herein are some brief thoughts on what I believe should be relative (and believe this has already started, but should continue) downside for Solana in December against other assets

I am short from ~$235-240 and believe this is the last great asymmetric set-up of the year. Caveat that I am short other assets as well (BTC because the gap between Saylor buying and the ETF is only continuing to grow; tend to think ETH will carry well to the downside if/when it falls)

The punchline is that Solana has been mostly untested this year and is showing signs of exhaustion wrt major tailwinds having unwound (or are in the process of unwinding).

In my view, what has truly elevated Solana this year to be the best performing liquid asset of scale YTD are the following drivers:

i) a much more vibrant and diverse ecosystem than its competitors boasting fast transaction speeds,

ii) the most robust casino where memecoin participants are happy to denominate in SOL,

iii) mid-year inflows where I believe many fund managers and large liquid participants found themselves displaced by the lack of ETH ETF appetite, undergoing an existential crisis around future allocation

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Today, I believe all 3 drivers are weakened, and highly vulnerable with significant fat available to be trimmed. Below I reason why -

1. As the dominant L1 boasting both speed and diversity, I believe HYPE and ETH/BASE have emerged as highly viable threats in ways that were unexpected and are unsolved for.

See below a chart of Artemis flows and you can go back and zoom out on 1W and 1M time frames as well.

This is the most significant siphoning away from SOL this year toward EVM - and can also be observed in different ways other than just flows as well. We can observe case studies of the "hottest" sector in AI memecoins (previous stalwarts in GOAT, FARTCOIN, ZEREBRO and AI16Z all having their valuations halved) whereas the VIRTUAL & agent ecosystem flourish in the same time frame.

I would also argue that Solana has not had a real competitor in the L1 space for quite some time and though it is early - the appetite for HYPE that we have seen is undeniable to be filled in the short term wrt its democratic ownership & team prowess

2. Solana has not had a real supply cliff event yet in 2024 - and has not been tested in a significant way

Whereas majors have been tested in major ways (BTC with MTGOX & Germany and ETH with the ETH ETF) SOL has been mostly left alone outside of 1 week where Jump sold in the summer (and was quickly looked over given ETH capitulated much more soon after).

SOL has had its best months performing as BTC beta eating the lion's share of flows away from ETH (already dissipating) and very lackluster alts that did not command any attention

The supply event would be the below:

In the liquid fund world - there should only 2 options to realize a cash distribution event for the GPs in FY2024: as a % of realized gains or as a % of unrealized gains (but have a clawback against a high water mark the previous year). In either scenario, given Solana's outperformance last year as well, I believe liquid managers will be induced to sell SOL as a) the best performing asset YoY and/or b) the belief that formerly lagging parts of their portfolio have untapped upside that would be better captured via holding & observing alts that have now seemingly found H1/H4/1 trending strength

This is further activated by the popularity of the Galaxy auction (SOL cost basis at $80-100) where managers who participated can capture spread on notional SOL (eg. sell the 1/3 of locked supply that was bought near ATHs and then "get that back" via the first March unlock cliff)

3. Exit liquidity for the SOL ETF is now dulled by the rising of dino coins and a possible XRP ETF

XRP's performance has likely been informed by 2 main reasons: a) its proximity to Bitwise as being next-in-line for an ETF product after ETH, and b) the rumor around 0% capital gains tax for US-based crypto-currencies. Given the provenance in the asset (one of the oldest) and the resignation of SEC chair Gary Gensler - even if the odds of an XRP ETF are even or lower to that of SOL's - one cannot take away from the idea that it is taking away from the pie that was formerly all SOL's to eat

4. Complacency

The sentiment is difficult to precisely quantify but intuitively I believe we have reached an impasse around the hubris around SOL that matches the inverse when it occurred on the other foot a few years ago: when ETH let SOL catch-up mirrored by a seemingly impenetrable moat

The following examples come to mind:

i) "Network extensions vs L2"; DRIFT vs HL; a display of the "can do no wrong" attitude

ii) very popular mentions that "no one would ever want to bridge over to BASE" away from SOL despite clear evidence to the contrary

iii) Former ETH stalwarts completely capitulating weeks ahead of a 35% gap up in ETH where some have aggressively called for much lower ETHSOL targets (eg. 0.027 ETHSOL) out of seemingly nowhere

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In short, over the next 30 days, I believe the argument for the marginal buyer around Solana is the weakest it's been this year (ETF flow parity with ETH as a clear driver of spot, which SOL lacks; attention amongst alts is much more spread out wrt dispersion than before) and the case for the seller is simultaneously the strongest (profit-taking; users who have made life-changing money via memecoins & holding in SOL selling to secure wealth)

Funding here continues to be elevated as longs continue to try to push for upside, spurred by the recent (but brief) ATH break that was fully catalyzed by leverage
Incentivized by my opponents advocating for a pro SOL position instead, please see below more information around the quality of net flows using @artemis__xyz

The first takeaway is that ETH MN has indeed been a net negative outflow to other ecosystems each month. There is not one month where it hasn't been negative. YTD, ~7B of outflows have occurred from ETH. This is indisputable

However what is more interesting to me is the vacuum of flows and SOL's ownership of such flows in productive months (productive defined as when on-chain conditions are hot) vs other L1s and EVM L2s

My opinion of course being that SOL's price action on a LTF basis is at minimum a partial by-product around flows in/out.

The cornerstone of my thesis is that flows to SOL will cease to be programmatic in the sense they have been, severely impacting PA on a LTF basis

Let's start with cum'l net flows YTD -

Solana has been linearly growing month over month representing consistent additions MoM. We can similarly observe that BASE, the original line, made a much bigger jump in November against any other ecosystem on a % basis

Shower thoughts on Hyperliquid ($HYPE)

> Literally in the shower typing this on my phone

Generally stray from chipping in on single names directly and everyone has thrown in their hats already so this may not be too novel. Also I’m not the strongest when it comes to alt selection

That being said -

I see 3 simple tailwinds for HYPE. My punchline is of that today’s estimates that I have reviewed (2-4B FDV), I believe they are too conservative and that the run/rate should be closer to 8B+ FDV based on existing comps

1. I believe the Community has largely forgotten on what a good linear executed airdrop looks like where the express purpose of participation is not simply to farm an allocation. That playbook has not been recreated once yet truly in 2024. Furthermore given the “success” of HLP, most traders are simply down money and likely to exchange for fiat wealth upfront. This is sufficient incentive to test the lower bound valuation right away. Although it may appear consensus that HL will do well, I believe that in reality most people intend to sell their allocation

2. Given the ease in comparing readily available metrics (volume, TVL) I believe we have over emphasized Hyperliquid’s similarity to trading and LP protocols. Over time the ecosystem should experience a re-rating effect (that we have seen on APE, DEGEN, etc) that comes from future sinks that are HYPE-specific

3. What underscores this launch uniquely and what I have not seen being discussed elsewhere is the cannibalization of flows from competing EVM adjacent L1s. In the last several months there have been OTC deals allowing liquid funds and participants reduced entries into what are now very bloated valuations relative to TVL and vibrancy of ecosystem.

Most of these were designed around forming a laggard bet around “the next SOL killer.” This showcases 2 things: a) appetite to recycle the 0 to 100 playbook and b) a lack of fluency around what truly forms sustained capital

The emergence of HyperLiquid is a shift that everyone must decide at the same time - instead of on a staggered, private timeline - where they want to position. Therefore “new money” may not not needed to buoy resilience as the flow of funds may come from existing faucets today

At the end of the day there will be beta to majors so all numbers used here assume the current market environment of ~100K BTC et al. This can be adjusted based on health elsewhere Disclosure: I have points and therefore am biased toward HL doing well.

However my personal positioning elsewhere is informed by the view I share above

The last supper (short, simple thread)

Below I will discuss why ~100K was a highly asymmetric short set-up from my perspective. The punchline is that the market is highly (still) offside wrt being long

Since Trump's win, I have been carefully observing & monitoring flows with the belief that there would be an irrational rally of craving exposure. It was clear the day after Trump's win to me that getting long was the best risk-reward:

a) irrationality would likely last for some time (although I did not suspect we could try for 100K so soon) and ,
b) if this was truly a regime shift than current levels (75K BTC / 2.7K ETH) would be highly constructive entries

Over the last few days, I surmised that that these flows showed early signs of exhaustion and we would tilted toward seeing a correction (independent of whether this was truly a regime shift or not), with whether or not we had surpassed 100K BTC being irrelevant.

The main drivers of this are as following:

1. Very few people understand MSTR's financial structure and there was enough people that (wrongly) assumed his Convertible was not spent yet, and still, that his ATM offering was some boundless fountain of youth. Having done more work on MSTR than anyone else, I knew that every time he announces the 2nd closing of a convert - the buying finishes within a day or 2 of that usually. Saylor having done 4.6B between 11/11-11/17 with half of that this last week is showing clear signs of a slowdown. Most people do not comprehend that MSTR and ETF products are competing products - and the velocity of one also informs the other

2. Fidelity is actually the better vehicle to visualize retail demand ebbs & flows as IBIT is always lagging. During this last month and also in the original heated rally between February and March, Fidelity (being the 2nd largest month) has shown visibility around correcting pre-Trump and where there is a chop. Friday was the first non-starter day for Fidelity at a measly ~$20M with cum'l inflows excl. IBIT actually being negative. I suspect today's flows and tomorrow will show this

3. Leverage creeping up insidiously (on-chain) but also across multiple assets - with 60%+ on memes and ETH/SOL being at 40% respectively (having creeped up in short, impulsive gaps in the evenings). During the Friday session, mostly everything had slowed with the absence of BTC (propelled entirely by Saylor)

4. Lack of short positioning - from watching books and rhetoric of people I watch, I surmised that people were very hesitant to short such a seemingly scary point (100K) and that this has largely invalidated shorts for most people who had stubbornly kept this positioning post-Trump. I felt that this was anchoring bias that would prevent new short OI from forming

5. Algo-led rallies with no spot follow-thru. Had noticed that a basket of 2021 alts (UNI, AVAX, COMP) had chosen to put in - all at the same time - 15% candles in the span of an hour after-hours on Friday. I do not view this move on OTHERS being sustainable especially now that we are back at March resistance of 325B+. I believed this would likely induce FOMO and leverage over the weekend, further creating the pinata to burst over this week as participants find themselves offside by lack of BTC strength

6. Utter complacency - over time, I noticed that first cyclers had gone from trying to call local tops in the first week to being silent, and then a growing union with very respected figureheads from previous cycles calling for higher, where the conversation had evolved from "is the top here" to "I know what a top looks like and this is not it"

I believe the majority of these aspects are still in-play, with panic & indecision having not seeded itself yet.

In my view this is still an area where people are in "dip-buying" mode, viewing this as an opportunity to gross up size in likely having missed the first part of this move starting at 75K+. The market has formed a dependance on 3B from ETFs + 5B from Saylor a week

Certainly at least some people will doubt whether or not I actually thought about the below in constructing a short or even being long - and so for for that reason I am making all recordings done over the last 2 weeks free (over the next 48H) - where I shared these ideas live.

If you have the patience to audit then I am happy for these to be consumed: lazyvillager1.substack.com/publish/posts

See also below for a thread around exhibits for some of the points above in more detail 11/7 - ETH Long (pt 1)

https://x.com/lazyvillager1/status/1854649640479866888

My BASE Case for where the puck is going next

Since Trump's win on 11/5, COIN and BTC have led the way forward (+70% and +16%, respectively). My bias remains in ETH and adjacent to a thread I wrote back in October around memecoins (following tweet), I believe that multiple points of strength are aligning for the BASE L2 ecosystem to:

- "win" the battle against competing L2s and even ETH MN itself as the de facto ecosystem of choice to house memes, consumers dApps and attention

- compete as the premier EVM-aligned ecosystem in parallel to SOL's "all-in-one" robust casino

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My core belief is simple; ETH is still an integral center of the digital asset ecosystem, with all & any spin-offs to-date reliant on two key principles to drive positive network effects:

a) the "underlying" coin must see relative strength to its competitors, and
b) the "underlying" coin must have "scarcity" (more on this later)

Therefore - in this race for attention - in most cases you are mostly betting on one coin (even if just a simplifying measure) to visualize strength. In the following weeks (and this has already started), you will see an argument made from the CT populace on why a given individual coin MAY win (SOL killer, meme) or why an app supported by a coin MAY win (utility-token, DEFI governance, etc).

I am here to present an argument for why a strong risk-adjusted option from today is to bet on the ecosystem WITHOUT a coin.

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In my view, the way BASE has organized itself creates the strongest potential for sustained adoption, with the double-edged sword being that it is likely reliant on an ETH resurgence.

However, given that I believe ETH is currently under-utilized - if/when relative value between BTC <> ETH <> SOL lifts over the coming weeks, there must & will be a sink to house this newly created & recycled wealth.

BASE should win this as:

1) The interconnection of "faucets" on BASE has greatly evolved this year - and is underappreciated,

2) BASE is of key strategic value to COIN, with an actual balance sheet to create support,

3) BASE has been battle-tested this year - and the response has been sterling

I have positioned myself accordingly and will discuss in the following thread what my rationale is, and the risks/mitigants involved in re-directing on-chain flows toward what I believe is the most vibrant playground: BASE. Thread below discussing memecoins and the environment they typically succeed in

The punchline is that low-cap memecoins typically offer uncorrelated returns, and that on-chain activity typically heats up pre- and post- periods of significant uncertainty

https://x.com/lazyvillager1/status/1846844712260350281

Why I think ETH is a highly asymmetric long here
(1 post, very simple, no thread)

I discussed the below on my stream yesterday (around $2700) but I believe very few people have thought about ETH (from a price perspective, not technical) more than I have from both sides (short & long). This is the first time I have bought a meaningful amount of spot ETH since 2021, and herein are the reasons:

1. Coinbase's +30% move on 11/6
Pent-up demand was clearly demonstrated yesterday with Trump winning: this logically follows given that coins (which have universal penetration) are better liquid proxies and +EV that can participate in price discovery going into, and around, Trump's election odds vs. the more binary bet that CB was.

CB is a US-domiciled Company where the unlocking of regulation is highly relevant. This pertains to not only developing novel revenue streams (perps in the US) and facilitating seigniorage <> BASE chain but also the primitive "easy" stuff - having consistent access to bank accounts, highly visible vendor OpEx, reliable cash collection methods - stuff that most companies take for granted otherwise.

Coinbase and its derivatives (staking, DeFi) are fundamentally most tied to Ethereum as a primitive - both in terms of price (more highly correlated than other assets) and ethos. This "lag" in price between CB <> ETH is the gap that I am targeting being lifted.

2. ETHA volumes and ETF expectations
With record ETHA volumes yesterday and today (with noticeable flows on both CB and Kraken), I believe ETF flows will be constructive. The flows do not have to be eye-popping as the reference benchmark is effectively zero. Over the last 2 weeks, cum'l flows have been ($75)M - and that is leading into the election with ETHBTC and ETHSOL eroding vastly over October. I believe that even modest flows - as long as they are continuous - will be enough to lift & generate back-end demand. ETH remains the only vehicle with an ETF product other than BTC where a) flows are visible and b) available for immediate injection.

3. Valuation gap
If we are to believe that Trump unlocks "new capital" coming in: we must ask whether or not this new capital verges more highly on the side of retail or institutional. Put in other words - why has "[this participant]" not participated yet?

I believe that ETH is the superior intersection for institutional entry - which is in some ways proven by its lack of appetite in the summer. New capital did not show up - which is more linked to the low seasonality and unwillingness to evaluate "digital silver" where fund managers were either taking vacations or rolling-off new decisions.

Today, Bitcoin is at its MC all-time high.
Solana breached a new MC all-time high today.

ETH is ~30% down from its 2024 high and ~45% down from its prior all-time high.

Trad evaluates opportunities in a different way than retail does. They search for two things: a) precedents and b) implied discounts. There will be individuals who look at price history amongst managers and relate: why has Ethereum slowed behind and does it deserve to be the only laggard here? In the air where everything else re-rates, I believe dry powder will be less comfortable bidding assets where value seems stretched vs the discount that ETH appears to be at.

4. Clearance of supply
The fulcrum of why I was short the ETH ETF in August was two reasons:

1) supply and cost basis from previous cycles did not have an organic opportunity to participate in 2024 given the rehashing of multiple LST/LRT farms (where ETH was staked) and,
2) most alt managers were heavily overweight ETH as beta to their benchmark (BTC).

When other assets (memes, SOL, etc) received a bid post-liquidation wick on 8/5, crypto-native funds were displaced and had to reorganize their emerging re-allocation strategy (which I believe now is heavily overweight SOL).

Today, I believe that most individuals/participants who remain in ETH are anchored to a vastly different price anchor than where BTC/SOL strategists are. It is by far the most challenged asset to-date, and where supply for other assets may form at reasonable junctures (at ATH, +5% from ATH, etc), existing ETH stewards are likely targeting terminal prices set much higher than today.

5. What the market has shown
Excitement about upcoming catalysts are splashy: - a surge in DeFi coins (all ETH-adjacent) looking for the cash flow switch - rumor-milling (underdiscussed in the midst of BTC ATH excitement) of "staking" enabled for the ETH ETF (which creates yield and aligned to the thread below which I wrote earlier this year)

----------------------------
In summary, the reasons which I believe have led to ETH lagging this year - a poor showing on the ETH ETF from low seasonality, existing over-weight supply and in the midst of this unreasonable price expectations - are likely now reversed and can enable material price discovery.

ETH has been the most over-used short leg to hedge majors and alts after August, and this complacent positioning lays the groundwork to me for a violent repricing. I am hedging this with shorts elsewhere (persistent with my view on BTC's glass ceiling)
How Ethereum fits into a classical portfolio

https://x.com/lazyvillager1/status/1800647269345116288

The secret is out

Yes I am long ETH Am expecting a strong print this week

The Chicken or the Egg: The Trump Trade and Bitcoin's Glass Ceiling

This is a very long thread and intends to capture my iterative development around Bitcoin's price ascension since October 15th, and to re-affirm original views made around my guest appearance on @1000xPod.

Before we begin: I want to make this very clear. This is not suggesting you long or short any coin, especially as OI/positioning remains extremely crowded over the next week. It is extremely possible (would err toward even very likely) that we challenge an ATH, which could create significant right-tail effects. Specifically, I think managing a new short position from here could be very difficult. With that being said -

Today, I seek to define the nature and intensity of flows that have have since entered Bitcoin (+$250B in BTC and +$400B in total crypto market cap since $59K lows) since mid-October, and to characterize the capped capacity that I believe exists for Q4-24 (which I believe will not be meaningfully broken).

My belief is two-fold: 1) new money remains constrained (which is a necessary pre-requisite); the heavy inflows we have observed in the last 2 weeks are highly mercenary and 2) the excess liquidity necessary to create a blow-off top (like we saw in 2021) is not present.

However, I believe the following tenets are highly under-covered and under-discussed, namely for one reason: cupboard analysis is very lazy as it pertains to why price goes up, and generally only starts becoming active when price goes down.

What you must believe:
1) The direction of the election does not drive a price-dependent outcome; rather Bitcoin is currently being used as a liquid proxy to hedge a Trump win.

2) "Easing conditions" present today for manufacturing a new TOTAL-high is insufficient. The correlation of rates and other popular heuristics to faction liquidity is much weaker than popular rhetoric suggests, with signs pointing toward price ultimately being suppressed rather than price discovery. Rehashing What was Previously Said

When Bitcoin broke ~61/62K on Columbus weekend during Asia-hours, that triggered my desire to re-run the tape of events. And so from that week onward (presented on @1000xPod later) I predicted (and will summarize here) the following:

1) BTC.D increases (and BTC itself likely challenges $70K ahead of election result)

2) In parallel, majors and alts uniformly erode against BTC - as the mercenary capital in point 1) is interested in pursuing only BTC as a lever to hedge a Trump win

3) Initial flows (with the cost basis between 61-64) get taken out before the actual election itself, leaving newly directional (and speculative) capital in

4) Through the effect of 1 through 3, independent of whoever wins, Bitcoin sells off in the medium-term

And therefore I suggested being long BTC and short "everything else"

Stoic Strength: Memecoins and Their Role in Portfolio Construction

"Memecoin dominance" has been topical YTD, with premiums accruing to both new (WIF, PEPE, MOG and POPCAT to be coined herein as the "Big Four") and old (retention of value via DOGE and SHIB, return of 2021-borne BONK and FLOKI).

The emergence of this class prompts the following questions:
1) What is a realistic range for aggregated memecoin value as a digital asset class?
2) Is there a pattern we can template toward identifying the next large-cap memecoin?
3) Is there a way to construct a case for "responsible" deployment (re: "institutional" adoption)?

My belief is that despite gross (and likely invalid) targets set for certain populist coins, memecoins are, and will remain, a unique device that can push the frontier for what is considered acceptable risk/return beyond being a quickly diminishing slope of reflexivity:

I see sustainable actionability in two ways even without new money entering the ecosystem:
1. Continued cannabilization of market share from NFTs (a ~$70B market today) - a virtually identical product wrt inherent value (or lack thereof) and community expression
2. Providing an uncorrelated return wrt BTC / other asset buckets

If we are to believe that BTC has become a macro lever (to be expanded on in a separate piece), then the argument for non-correlated assets such as memecoins - specifically those under ~$1B - may be worthwhile levers in doing 2 things:
i) hedging liquid bets elsewhere
ii) enable lagging portfolios to "catch-up" Sizing the market: building a base case TAM

During 2021 with a much more robust credit cycle in place (both in- and extra-), we were able to witness significant valuation creep in the following facets:
1) DOGE/SHIB, and
2) NFTs (BAYC/PUNKS)

Specifically, the former comprising ~$100B of value with the latter fetching ~10-15B as Veblen representatives of how easy leverage and re-hypothecation manifests into secular bets around cults and communities

Currently, both collections trade at 4-6x less than their peaks - representing the gap of funds that exists today bridging 2021 and 2024, but also the democratization of economics since - more assets in each category are noteworthy than just singular pieces of scarcity value

In aggregate, there was likely $150-300B at any given time betting on a Next Buyer or an estimate of ~10-15% of all assets

Today, Forbes estimates, based on 250 named coins spanning down to a ~$6M meme (for reference, the fast-climbing GOAT is already #20 on this list) there is ~$58B sitting in the memecoin market. The actual number is likely larger wrt capital recycling via smaller memes & pump.fun regeneration so in total possibly can consider ~3-4% of total capitalization wagering on crypto assets.

Adding in NFT value today (diluted wrt where ETH/SOL are today), we are able to posture a ceiling where the entire space possibly has an add'l ~$40-100B to grow organically - and possibly more specifically for memecoins if NFTs continue to erode against - simply by re-organizing and displacing allocation today w/o the entry of new capital

This would represent ~2-3x expansion on organized value today as a whole, with specific expansion in any given coin highly variable depending on size & momentum

The Ethical Long: Cycles and Capital Formation

Since August 11th/12th, I began writing thoughts to capture my mental model around identifying inefficient capital allocation in crypto assets, and the market forces that drive positioning on the margin – which I believe is under-recognized today due to what has been a programmatic supply overhang (re: alt emissions, chunky BTC/ETH sellers).

The dislocation created by seemingly endless supply has resulted in four mass ~1B long liquidations this year, the most recent of which broke an 8-month BTC-trading range – which I interpret as a unique opportunity to challenge microstructure underpinning a) “flight to safety” positioning and b) decomposing what actually drives liquidity & markets.

My belief is that without new money: in a scenario where total available dollars available has shrunken vs. March & where previous-cycle ATHs have settled, order-book combativeness & psychology of the buyer vs. seller are the fulcrum underpinning how and why money moves

Herein, I seek to challenge the status-quo of what is considered the “safe” risk-barbell (BTC/SOL/Memes) by framing risk-reward in a structural way: starting at the majors and subsequently walking through the conditions that must be met to create a sustained trickle-down effect buoying alts, or specifically, “OTHERS.”

This is the result of my deep dive dissecting and reviewing L5Y price / volume / dilution history for 150+ names Chapter 1: Introduction

To start: I believe that BTC can only resolve in 2 directions from here:
i) BTCUSD: down uniformly, marking the cycle-end (~20-30% p-weigh)
ii) BTC.D: down and lagging capital returns against ALTS/OTHERS (~70-80% p-weigh)

Under i) – this needs to be explained in more nuance (which I seek to do below): in contrast to popular trains of thought, I believe that the outcome of BTC is both macro-agnostic and politically-agnostic: these 2 buckets are being far-more weighed than they should be as participants seek to retroactively precursor the future, and I will break open these preconceptions

Under ii), and supporting the punchline of what I believe: OTHERS – especially targeted ones with low liquidity, short-build up, unsavory tokenomics and correspondingly low resting OI – should receive a significant demand shock creating a market signal for a full-shift in the risk-reward spectrum. This will be done without a gearing narrative, and flow according to capital efficiency.

To me, the question we should all be asking is:

Where can one find the most efficient outcome from inserting $1 of flows relative to EV of wealth creation re: market cap. expansion?

With the subsequent question being:

Is this asset still BTC (best performing single asset YTD)? Why or why not?

Macro & The Ethereum Trade

This is a very long thread and intends to capture my iterative development around ETH from ~$3200. This is not suggesting you long or short ETH in any capacity, but rather my view on market forces & fundamental analysis underpinning flows

Today's conviction in ETH is borrowed. Most traders who are long ETH are either over-exposed and "need" it to do well given their blended cost basis or are simply taking a directional view from GCR

In June, I wrote about how I believe equities would top in Q3, with the subtlety that the ETH ETF could rally into it. You can find this in my highlights

I pivoted early July, becoming incredibly bearish on Ethereum and the ETH ETF, supported by a contrarian thesis around positioning, flows & game theory. I have shared the below with a small group, whilst iterating & refining

The last 3 weeks have been incredibly difficult to hold conviction, especially given my less than ideal management of the trade. At one point, I actually pivoted long for 8 hours on the day of the ETF launch, hoping to scalp an artificially-manufactured inflow # to push up before sustained flows bringing the trade down. That did not happen and so re-assumed short positioning after

What you must believe:
1) Germany exposed the fragility in crypto reflexivity (unprepared for significant downside move even if nominal - Germany $3B sold vs BTC $1.2T asset)

2) Massive ETH supply glut that have not organically participated in the cycle in actually determining FMV bc of interventionist protocols (LST/LRTs and then the ETH ETF bubble)

3) New money will not come in to backstop ETH to the degree it is being projected / priced in Executive Summary (7/15)

Not calling a top, think prices can still be ~10% higher but the hotter this local rally is, the more convinced I am that it's correct to be HTF bearish

The way I see the tape of events is that election flows are now being front-run - which I expected to happen later in the quarter - given the white swan of Trump effectively confirming his house victory via the shooting (and the subsequent nod to a pro-crypto VP)

The bull case for ETH to me was/is:
1) $ETH manifests as an institutional yield bet
2) $BTC and $COIN flows push toward $ETH
3) Net-negative positioning is caught off-side on major announcements (eg. 19b4, S1)

To address each one:

1) The lack of appetite to support the mid-range for $ETH & lack of ability to de-correlate strongly from BTC has shown that it's still being viewed uniformly. Given the disconnected move in equities (NDX/S&P have retraced open) the "bet" at this point for $ETH if you are layering a long, is that appetite out the gate outperforms consensus estimates. I don't think that will be the case

2) There is not enough money to prop up equities, BTC and ETH. As equities unravel, I think crypto basis $$ becomes "first-out" and think we have categorically under-estimated just how much of this $$ supporting BTC is propped up on this trade (which I believe has confluence with why BTC.D has been so dominant this cycle & why the market has been so hot)

3) ETH OI is up 200M units from the lows (+20%) vs the original 19b4 move (+25%). The playbook is the same: underperformers have no option to but to allocate to ETH / stay in the trade but to endure the volatility, a lot of the money is being recycled/borrowed

The lack of reaction around the S1 announcement is quite telling IMO (40 bps). Funds aren't eager to bid ETH because they are either:
a) holding down from the first move (average $3400 entry where they are B/E) and/or
b) didn't deploy at the lows and want to see confirmation around trading flows to justify a bid.

Therefore, they are bidding alts in the interim to catch some of the lagging reflexivity

I acquit there is a lot of noise because it's difficult to discern how systematic weakness really is given there was such a massive crypto-specific selling event recently eg. (Germany). A lot of the selling has also been happening during Asian hours as well (GOX selling) so there is the chance that we are discounting prior "bearish" events that, if understated, have the potential to create more mean recursion

But I think a lot of the add'l "catalysts" that people are trying to sell you on are extremely overstated (eg. FTX claims - the bulk of these claims are going to distressed buyers who are not crypto-inclined; rate cuts are bullish, etc)

The lynchpin behind this view, to be clear, is that equities have topped at least over the next 6-12M creating widespread defensive positioning. This thesis is completely invalidated if that does not persist to be the case

Essay: Making the Case for Ethereum

This essay is the culmination of pts 1-3 I have published, where I opine around:

Pt. 1: Timing of flows
Pt. 2: The merge of TradFi participants into CryptoFi
Pt. 3: Re-imagining "yield"

Punchline: I believe ETH is greatly misunderstood and mispriced, creating an opportunity to create a cheap risk-adjusted position relative to the pool of ALL publicly available-assets today

This mispricing exists because of:
i. Structural inefficiencies with public/private institutional-grade assets
ii. Pricing heuristics

Herein I seek to create the "what you must believe" to mechanically answer how an investment in ETH solves to be a superior alternative product consumable by a $130T fixed income market+

To begin with a keynote:

Marc Rowan from Apollo addresses back in 2023 the philosophy of creating a spectrum of products enabling "excess returns at every point along the risk-reward spectrum"



Private-public opportunities are emulsifying (the notion of "private = scary" is being debunked), and similarly, what is considered an acceptable returns threshold, and the HOW TO of creating said return is ALSO broadening

In pace with this - this slow, but eager, pool of capital available to deploy into a 8-12% asset is the DEMAND upon which there needs to be a custodian to SUPPLY: ideally not by a new proctor (eg. Celsius/FTX) but something trustworthy: a BlackRock or Fidelity

Why now:
The catalyst to remove this mispricing has happened via the ETH ETF as a policy signal likely directing the flow of permanent capital rather than the temporary debt-like capital that underpins crypto today

Extrapolating how this can magnify: we seek to increase our understanding of something by measuring it against other precedents

E.g.
"New memecoin" <- How does this compare to WIF?
"Bitcoin ETF" <- How did this compared to the gold ETF?
"Ethereum ETF" <- How did this compare to the Bitcoin ETF?

The search for symmetry - even where there may be none - is where opportunities are derived - this heuristic is lazy, but usually quite efficient

However, with ETH, I believe we are entering an unprecedented outcome where prior precedents are a poor retrofit given the separation in classification: BTC is observe as a fiat-hedge whereas ETH has the potential to be a retrograde self-sustaining yield product, able to displace significant commodities & bonds flow as a superior conduit

The pool of capital and window of opportunity, can be condensed very finely via the following:

1. Fast money moved to erase pricing inefficiencies (borne out of the perceived move seen prior with BTC ETFs)
2. Slow money - without any guardrails set in place today - will soon be able to buy ETH, and therefore participate in the value accrual of the underlying network, without actually using it
3. Toxic flows at open are materially lower than that, and the discount, associated with GBTC

ETH therefore represents an instrument borne of yield - opening up the book & risk appetite as an asset that fits in the alternatives playbook, helping bridge today's gap of "premium" assets (land, AGI, tech) that has already been bid up - meanwhile ETHBTC and ETH performance in general appears to be an unpriced & plausible local bottom

Thus, while global liquidity is at a crossroads - and private markets suffer from lagging, or even fraudulent mark-to-markets (office/industrial REITs), dislocation continues to exist amongst the typical debt-equity spectrum.

The average investor is "tapped out", with the age-old "60/40 portfolio" having been defunct for many years now: ETH very well may be the sovereign answer & I under-write that inflows will be priced accordingly as soon as the 1st domino dropsapollo.com/insights-news/… Pt. 1

https://x.com/lazyvillager1/status/1800637534122168621

Crypto Valleys is a play-to-earn game that has caught the attention of CT by storm, with 20K+ and 5K+ Followers and Active Users on Twitter & Discord, respectively.

I believe there is an emerging opportunity here, and opine around 1 way on "how to win."

See my printout here Background:

I am an investor full-time working at a Top 15 AUM shop.

Separately, I have played many of these gamified yield platforms in the past and have also papered threads around the economic theory underpinning "noding" which is the starter mechanism behind most of these games

https://twitter.com/lazyvillager1/status/1475432666908352520

1/ Some observations on $AVAX

This is not a trade because a trade requires timing

Note for the bookmarkers - this tilts bearish

Which pains me since I have very fond memories of $AVAX from the previous cycle

Hopefully someone can point out where I’m missing something 2/ We often hear the notion that price precedes narrative.

$AVAX is near the price it was in December going into the Bitcoin ETF, so one must ask Sisyphus - why are you pushing the rock?

Is $AVAX going to reclaim former heights? $100 incoming?

1/ An essay:
- Digesting risk as it pertains to your own life
- Parallels between investing & poker (or other zero-sum games)
- My big bet (hint: AI x Crypto)

Some theory by a former banker and current investor 2/ First - a diatribe. I find that many of us are quite competent when evaluating career risk. We are able to easily contrast the value of our time when we can qualify it via an hourly rate or what someone else is being paid.

We are much worse when it comes to assessing...

(1/x)

gm this is my exit from stealth post; my last long-form essay was ~2 years ago

during this time I have continued to work in TradFi; I currently work in an UMM/MF tac opps strategy in NY

i pen some thoughts here on where I see institutional flows novel to crypto (2/x)

as a reminder, i use CT as a journal, specifically wrt the lens of how i see the world

eg.

vs nodes:

vs bad mgrs:

vs late pivots t-backeds:

vs snowdog (@satsdart's rug):

https://twitter.com/lazyvillager1/status/1475432666908352520

https://twitter.com/lazyvillager1/status/1494826677456625666

https://twitter.com/lazyvillager1/status/1483289855652241408

https://twitter.com/lazyvillager1/status/1462444736568987649

Good thread but think it's more simple than this (can't believe it's me the one saying this of all people)

BTC > ETH is being selected as BTC is more dogmatically positioned as being as a virtual reserve currency

@terra_money is attempting to create a 2022 Silk Road

https://twitter.com/adamscochran/status/1510368365805772803

@stablekwon understands that a currency's inherent value is driven by a) immutability and b) divisibility

BTC contextualizes UST as contemporary USD akin to vaulted gold (digital in this case) per the previous world order

1/ My thoughts on $APE as a response to @DegenSpartan's prompt on why this is gaining so much momentum

I took a long position twice - today at ~$8.50 (exited at $11.20 on a stop) and re-entered just now at $12.50 2/ To contextualize - in less exotic M&A markets, multiples help drive valuation - but we often see an incorrect application of them in the metaverse/Web3

Ex. "market cap of a token trades at x and b token trades at x/y so this can be a y profit multiple" opp - we see this often

1/ @danielesesta announced today that $TIME is exiting the (3,3) space and pivoting toward the SPAC model

As a former investment banker, I've worked on SPAC transactions & pitches, and have friends who work in business dev. at such co's post de-SPAC

Herein lies my thoughts: 2/ The key questions that I think people want answered are (and what I will attempt to do) are:

- What is a SPAC?
- What are risks involved w/ this move?
- Will this move be healthy for the protocol?
- Are t-backed coins actually dying / was this necessary?

1/ If you're running institutional capital and you whaled the (very successful) @Battleboobas launch, let me help you out with your Q4 2021 Quarterly Report to LP's 2/ "Holding "NFT: Booba's" at cost. We anticipate NFT volume on AVAX marketplace to grow ~25-30% quarter over quarter, which Booba's, given branding and art targeted to surging demographic (male, aged 18-35), should capture....