Markets
How to play the current market?
Everything seems to be red on the market. And the timeline is filled with predictions of dooms and collapse.
Many people have already capitulated and left crypto. But sticking through this period is necessary for crazy returns of crypto.
Here are my thoughts on how to play the current market.
#1. Everyone is afraid.
If you open Twitter, everyone is talking about Macro. How Tariffs are wrecking our markets, why the prices keep going down, and so on.
To be honest, these are legitimate concerns. The new US Tariffs are crazy high. And almost everyone, from economists and market analysts, is bashing on the policy.
But I feel like crypto has moved too much into fear. I don't think Trump will let the economy and markets crash under his term.
Since every new administration can blame the previous govt at the beginning. Trump seems to be front-loading all the difficult tasks so that he can have a better time later.
Plus, the Stablecoin flows and US M2 Money Supply are increasing rapidly. That's a lot of dry powder waiting to be deployed.
Sooner or later the sentiment will shift, and all that dry powder will cause a violent move up. I'm thinking late Q2 and early Q3.
#2. Stack Bitcoin
While the retail is afraid, TradFi seems to be bullish on BTC.
Institutions are also taking tokenization and stablecoins seriously as well.
Recently, Fidelity filed for onchain US Treasury Fund. Since we can't directly profit from institutions tokenizing assets, the best proxy could be BTC.
So a significant percentage of my portfolio is now allocated to BTC.
#4. Accumulate long-term projects
The goal is for you to accumulate projects that you'll be comfortable holding for 6-12 months. These should be outperforming Bitcoin at that time period.
Here are some qualities to look for:
- Defensible moats. I've talked about various kinds of moats for crypto protocols before. I don't want projects can be forked and out-executed by some new competitor.
- Proven team with a long-term vision. We need them to keep working on the projects to deliver on their vision and dominate their category.
- Relevant in the long term. It shouldn't dump just cuz a new memecoin came on the scene. The project should have solid fundamentals. And should not be dependent on the narrative of the month.
Pendle and Fluid are some examples of projects like that.
Here's how to do it:
- Create a watchlist of tokens you want to buy.
- Set alerts for when they dip below your "easy buy" price. For example, Hyperliquid at <$15 or Solana below $100.
- Buy when the price hits your targets. Alternatively, you can use limit orders to automate this step. I personally use Jupiter for Solana assets.
This method will give you solid entries without constantly staring at charts.
#4. Stable up and farm
The current market is choppy. I don't recommend chasing random altcoin pumps. Instead, keep a significant percentage of your portfolio in stables and earn a yield on them.
If you want simple farms, DefiLlama gives a great list. Make sure that you're farming only safe protocols.
A few options include Fluid, Aave, Pendle, and Euler. Another option are some farms on Sonic to earn points for the Sonic Airdrop
If you are comfortable with advanced strategies, there are other options. Morpho offers many opportunities. Some liquidity pools that pairs USDC with Principal-tokens of the yield-bearing stablecoins have high APRs with relatively low risk.
This will give you steady gains that keep your portfolio growing.
#5. Pockets of opportunity
There's always a narrative pumping somewhere in crypto.
DeFi on Berachain is hot. And Sonic has been trending for some time. Right now, it is getting a bit too crowded.
Right now, I'm exploring the Abstract ecosystem. It's not a typical DeFi environment. It doesn't have many financial apps. It's mostly games.
But because of this, there's less competition and more opportunities. Some of the plays my team shared on TDE Pro have booked profits.
If you want a community to discuss crypto in depth, join the waitlist for the next batch of TDE Pro.
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Sector Analysis
How to profit from the most successful crypto product?
Everyone knows that Stablecoins are the most successful crypto product out there.
The above chart tracks the total market cap of stablecoins in DeFi. The total stablecoin market cap is at an ATH of $235B.
Not only that, but it just won't stop growing. So how do guys like us get exposure to it?
Crypto Native Issuers
Leading stablecoins like USDC and USDT don't have tokens that we can invest. They are issued by centralized companies that we don't have access to.
But crypto-native projects are catching up. Here are the best issuers of decentralized stablecoins.
#1. Ethena. We've talked about them several times already.
- USDe, their first stablecoin, is the biggest semi-decentralized stablecoin issuer with a market cap of ~$5.4B.
- USDtb, another stablecoin from them, also grew rapidly to ~$1.4B.
- They also have a lot of upcoming catalysts. iUSDe is an sUSDe wrapper for TradFi. Converge is their permissioned layer-1 chain for institutions.
They're one of the few protocols that make a lot of revenue.
The only concern with $ENA is the emission schedule of $ENA. Only 64% of the total $ENA is locked. Those will be unlocked over the coming months.
#2. MakerDAO is the issuer of the second largest semi-decentralized stablecoin with a market cap of $4.569B.
At one point, it was the most reliable decentralized stablecoin on the market. However, due to their focus on expansion at the cost of decentralization and competitors like Ethena, they've lost that dominance.
But they still have a lot of room to grow. $USDS, their rebranded stablecoin, only exists on four chains. In contrast, USDe is already on 19 chains.
They have a reliable model to make a profit as well: Earn interest by lending USDS. Their savings product, sUSDS, provides a relatively high stablecoin yield safely.
While the above are reliable bets on stablecoins, there are more issuers to keep in mind. Below are some that I like.
- Frax Finance
- Usual Protocol
- crvUSD from Curve Finance
- Maple Finance and Ondo have RWA exposure
- Asymmetry Finance
- Aave has $GHO
The Base Layers
Blockchains compete as platforms for hosting and facilitating the transfers of assets. Being the dominant platform for stablecoins will be beneficial for them.
#1. Ethereum. It's the top chain for stablecoins along most metrics.
- Ethereum currently hosts about 54% ($128.3B) of the stablecoin market cap.
- Year to date, the top two chains by stablecoin transfer volume are Base ($3.9T) and Ethereum ($2.9T) respectively. Base is an Ethereum L2 as well.
- In the past few weeks, there has been a notable growth in the stablecoin market capital. And a majority of those were issued on Ethereum as well.
While $ETH is doing great on the stablecoin front, we can't justify the $216B market cap of $ETH by stablecoins alone. There are other considerations while investing in $ETH. But that's a topic for another article.
#2. Tron. It's a close contender for the "stablecoin chain" title.
- Second largest host of stablecoins with $67.2B in market capitalization.
- Year to date, it has done $1.8T in stablecoin transaction volume. It ranks fourth after Base, Ethereum, and Solana.
Solana had grown a lot in stablecoin volume. But most of this activity was considered low-value transactions from bots. And with the death of memecoin mania, they've lost a lot of those stablecoin volume as well.
So while it hasn't established itself as the "stablecoin chain", it's getting there. We should be looking if the stablecoin market cap will continue to grow on Solana.
TradFi Companies.
Many TradFi companies are launching their stablecoin projects. PayPal has PYUSD, BlackRock has BUIDL, Fidelity is planning their version, and so on.
But we can't just invest in those companies. Approaching them as a stablecoin exposure wouldn't make much sense.
But there are two that we should be highlighted.
- #1. Coinbase. They have a minority equity stake in Circle, the company that issues USDC, which is the second-largest stablecoin.
If you are a crypto native who doesn't buy stocks, you can buy $COIN directly on Base chain.
- #2. Circle. On Tuesday, they filed for paperwork for Initial Public Offering. Once it goes public, you can directly get exposure to the growth of USDC.
When the stablecoin narrative gets hot, you'll probably see lower market cap projects that'll act as a beta play. So keep an eye out for them as well.
🚀 DeFi Catalysts
Mantle introduced Mantle Banking. It'll be a crypto neobank that helps users spend, save, and invest across their fiat and crypto finances all in one account.
Frax Finance has $FXS, frxETH, and sfrxETH into Solana. It's a new market for Frax to grow.
f(x) Protocol introduced fxSAVE. It's a yield-bearing token built on top of the $wstETH strategy of f(x) V2 Stability Pool.
Everclear started its token buyback program. 75% of protocol revenue will be used for quarterly buybacks of $CLEAR.
Ondo Finance is building Ondo Chain and Ondo Global Markets. It promises to be the infrastructure to enable stocks to come onchain.
Kamino Finance introduced Kamino Meta-Swap. It's a meta-aggregator that claims to provide the best price execution for any token swaps on Solana.
Tether has released USD₮0 on Unichain. The chain users should get benefits like lower cost, lower slippage for stablecoin swaps, and more.
Optimism has launched the interop devnet. The goal is to make all the OP Chains connected to the Superchain feel like a single L1.
Shardeum announced the launch of its blockchain on April 15th. It claims to be the "world's first EVM-based autoscaling blockchain".
Swell Network announced a rebranding to Swolechain.
🪂 Airdrop Alpha
Initia has released its airdrop checker. They'll initially distribute 5% of the total network supply) to network testers, advocates, and users.
Fogochain is partnering with Pyth Network to launch Fogo Flames, the points program from the Fogochain.
Ostium, a protocol to long or short forex, stock indices, commodities, & crypto from your wallet, has started its points program.
🐦⬛ X Hits
- AI prompts for crypto research.
- Future of memecoins: social currencies.
- RobotFi: dreams of onchain robots.
- L2 security and finalization roadmap from Vitalik.
- Stablecoins and dollar dominance.
😂 Meme
Until next time,
Edgy
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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