A Case Study In Narrative Trading

Even in a bear market, there is always a fresh narrative to make money within crypto.
That’s because crypto is still an inefficient and small market. Coins, unlike stocks, don’t require billions and trillions of buy pressure to rocket up. In an inefficient market, “fundamentals” are not super important short-term. What is really important is the narratives and what will get people rushing to buy a coin. Luckily, there are always new narratives forming, even during a bear market.
This past week was the perfect example, as LDO, FET, and BONK all had massive run-ups.
Below we will examine each one, but first, it’s worth mentioning that we aren’t going to go too deep into the details regarding what each of these assets do. As we mentioned above, this is narrative trading… not investing.
Still, there is a lesson to be had.
Lido (LDO)
Lido is the dominant liquid staking derivative (LSD). This means that Lido makes staked ETH liquid and tradeable by giving users the liquid asset stETH in return for staking their ETH in Lido. We’ve previously discussed liquid staking and Coinbase’s version of it here if you want to catch up.
It’s a great value prop, resulting in Lido holding $6.51 billion in user assets – the most of any DeFi protocol.
But this isn’t anything new. So why did LDO and the LSD narrative take off this week?
A couple reasons:

Not bad.
Fetch.ai (FET)
AI is all the rage these days. You’re talking about it. Your mom is talking about it. Your dog is talking about it. ChatGPT is talking about it. And now, crypto is talking about it.
Everybody is itching to get ahead of the inevitable AI and crypto crossover, and this week, the winning coin was Fetch.ai’s FET.
Fetch.ai is “creating AI platforms and services that let anyone build and deploy AI services at scale, anytime and anywhere”, while the FET token is the currency of the Fetch.ai network.
It’s a cool project with perhaps some real-world use cases, but let’s be honest, that doesn’t really matter. The degens were sold at “AI”.
And those that got in early enough made a nice 77.2% gain.

Gotta love crypto.
Hunt The Narrative
In the traditional markets, there is a saying that we are sure you have heard before: Buy the rumor, sell the news.
The concept here is that rumors, stories, and narratives can drive up asset prices regardless of their underlying, quantitative value. And nowhere better can this be seen than in the crypto markets.
Simply put, there is always money out there for the taking in crypto. The market is still inefficient, and coins can go up tremendously at the drop of a dime.
Find a narrative early, invest with conviction, and get out at the top.
Is this a strategy we suggest? Not necessarily. But understanding how narratives can interplay with fundamental value can make you a better trader.
Or, you could just hodl ETH and BTC. Either option is cool.

Power Company CEO Fesses Up... Boston is Screwed

On October 27, the CEO of New England’s largest energy company sent a desperate letter to the White House.
"This represents a serious public health and safety threat," Eversource CEO Joe Nolan wrote in a letter to President Joe Biden. He then begged Joe Biden to use the federal government's emergency powers to make sure natural gas will be available in New England this winter.
There’s only one problem.
There’s nothing Biden or anyone can do at this point. All available natural gas is on its way to Europe. When large parts of New England go dark and freeze this winter, a lot of people will call it a shocking natural disaster. Or they’ll say it was because Russia invaded Ukraine.
But cities don’t go dark and freeze in the wealthiest country in the world by accident.
The sometimes controversial, and always thought-provoking and entertaining, Porter Stansberry spent the past two years researching this story. And what he's uncovered will astound you.
So do yourself a favor. Before it’s taken offline (which could happen at any time), check out this shocking video.
A major energy crisis could spread from Europe to New England this winter. It could wreak even more havoc on the economy and markets and create a once-in-a-generation opportunity for energy investors.
Click here to watch now >>

Huobi Hit With Insolvency Rumors

His Excellency Justin Sun isn’t doing too hot.
That’s because Huobi, Sun’s crypto exchange and the 16th largest exchange in the world by trading volume, might be in trouble.
Fear, Unrest, and Doubt
The problems at Huobi began like most problems in crypto have recently: with the collapse of FTX.
The demise of SBF’s monster resulted in many people losing confidence in centralized exchanges, especially unregulated ones such as Huobi.
People are on edge right now and any rumor of trouble will send them heading for the exit.
The rumor for Huobi came on January 4th, as it was reported that Huobi’s internal communication channels were shut down, year-end bonuses were canceled, massive layoffs were on the way, and all salary payments would now be in stablecoins.
That FUD was enough to send people scrambling to get out, and get out they did, with $60 million leaving the exchange on January 6th.
What Now?
Justin Sun and Houbi are both saying that everything is all good. But it’s a bit difficult to believe that after all that went down in 2022. SBF, Alex Machinsky (Celsius), and Do Kwon (Terra) all said the same things before their empires dissolved.
News that Huobi Korea is planning to split from Huobi and change its name, tied with the fact that Sun’s USDD stablecoin still hasn’t regained its peg, doesn’t make us feel any better about the situation either.
At the end of the day, Huobi is an unregulated centralized exchange. And 2022 taught us a whole lot about the dangers of trusting exchanges, especially unregulated ones.
If you have money in Huobi, play it safe and withdraw to a more secure exchange, or, even better, a cold wallet.

Crypto Bank Silvergate In Trouble

What seemed to be one of crypto’s greatest success stories is now in dire straits.
Silvergate (SI), the bank that embraced crypto and, as a result, grew from a small regional bank into a public behemoth, is now down badly following the collapse of FTX.
Layoffs and Asset Sales
The loss in consumer confidence following the FTX collapse has hit centralized entities the hardest, and Silvergate is no exception.
It was just two quarters ago that Silvergate customer deposits were at $12 billion. They now stand at $3.8 billion. To cover the $8 billion in withdrawals, Silvergate had to sell assets at a $718 million loss.
Not what you want to see from a bank.
But it gets worse.

Where Gold is REALLY Going Next

If you own gold, digital gold, or gold stocks, read this warning immediately.
The man who predicted the 2022 crash – a day before it began – predicts an event in 2023 could have a massive impact on gold.
"Prepare for a historic move," he says.
The last time he called for a move like this, you could have quadrupled your money in 16 days on a play he recommended on Vectors Gold Miners (GDX).
Today, he's posting a new recommendation, free of charge.
Click here for the full details.

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