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Q2 prediction for crypto traders: Long BTC, Short ETH

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We have already seen the peak of fear and uncertainty in the first half of the year, and expect these accumulation ranges to break upwards in the second quarter, led by BTC and several outperforming shanzhai coins.

2022 Quarter II Market Outlook

Original author: Ansem

0x4ever.eth (Twitter @0xForeverEver)

Hey! What does a person who is useful to the Internet look like? I almost decided not to write this article, and while not tweeting incessantly every day, I soon got bored, so during my break, I started leaving my thoughts here. I'm also pretty sure we've bottomed out here, and to be honest, I wouldn't be surprised if we bounced in most major markets, went into EOM, and drew the long floor for these quarterly candles. If I can get most of it done before I go to the AVAX conference in Barcelona, and it's semi-coherent, I might post it up so I can see it when I'm away from my computer. Otherwise, I guess I'm just writing this article to my future self for future reading. So, hello Q2 Z. First of all, let me clarify that I am not a financial adviser, this is not investment or financial advice, nor have I taken part in any tests of the 123 XYZ series, it's just that when I spend too much time on the web every day delve into the wonderful micro-world of cryptocurrencies with users of Wassie and Anime Avatar, The literal form of what's on your mind.

If you're a left-leaning person like me on most macro issues, there's a good chance your 2022 Bingo Card doesn't feature Russia invading Ukraine. When I sold some of my prized Internet coins in November, it was because I saw risk happening in the candle chart, not because I had any idea what the root cause was, but because the Fed might not be as lucky as their money printing machine. Incorporating macro analysis into my assessment of the cryptocurrency market is definitely a weakness for me, and one I plan to remedy in the future. So maybe the next time we have a global conflict, I'll be in the middle of the curve, not on the left. Anyway, in addition to a small number of outliers in the first quarter for most encryption in the money market is very difficult, but the odd thing is that this decline in the worst case is not isolated from the encrypted currency market, because we also see a lot of tech and growth stocks also due to the global geopolitical risk and macro conditions deteriorate under huge blow, Commodities and war stocks did well (S/ O the Homie Schiff). A lot of these technical charts look the same as the blanket drop we saw during the first DeFi summer of 2020, and these are multi-billion dollar companies that employ a lot of people. Pray for those who enter 2022 with short term volatility.

Bitcoin's comparative advantage is particularly important here, given that this is the first time in its history that its pillar of value has been fully exposed to the world. Many Ukrainians who fled their country because of Russia's invasion can't use their traditional financial system after they move, but as most native cryptocurrency people know, their withdrawal of Bitcoin is trivial. We've seen Canada restrict the bank accounts of citizens who took part in protests the government deemed unacceptable, and we've seen the Russian ruble lose 50 percent of its value against the dollar in a matter of days. There has never been a period when non-sovereign currencies like Bitcoin have been so important, and the chart reflects that reality. In addition, we have seen some strength in the crypto market, seeing some mid-cap stocks up 3-4 times while the rest of the market is down, which reinforces my original thesis that we will continue to see bear markets in some sectors while we are in bull markets.

"Looking ahead to 2022, we'll see if certain sectors continue to experience bear cycles in the macro bull cycle in cryptocurrencies, or if we have another market-wide -90% drop like previous cycles. The challenge for traders is to determine what the current mispricing in the market is and how to exploit it and find out what new trends are developing before the crowd notices."

- Someone in Brooklyn said it before the New York night preliminaries

Given their comparative advantage, I would expect cryptocurrencies to lead a recovery if investor sentiment on macro conditions improves. We've been hovering between 33K-45K throughout the quarter, and we haven't made a new low since the day Russia invaded Ukraine, which is also the day many boom commodities like gold hit local highs. In my view, bitcoin's 30K-60K range is multi-year re-accumulation, and the following trend will most closely resemble its rise to the previous 2017 high in late 2020. The question is how long this accumulation will last. Many are down more than 80% from their fourth-quarter highs, and some have fully retraced their late-2020 bull run, but some have recovered much faster than others. Being bullish is unpopular here, just as being bearish is unpopular in November. I believe we have seen the peak of fear and uncertainty in the first half of the year, and expect these accumulation ranges to break upwards in the second quarter, led by BTC and several outstanding copycats.

First Quarter Review

The macro

From my short work as a macroeconomic expert, I have identified four main things that would be bad for the market if they happened and were not priced into current prices:

1. The situation between Russia and Ukraine escalated to neighboring countries of NATO member states

2. The Fed raised interest rates faster than the market expected

3. Putin thinks using nuclear weapons is a good idea

China has aggressively entered this arena with their personal imperialist pursuits

In my view, most of these things are unlikely and we are more likely to continue to deal with the existing Russia-Ukraine situation + the current Fed QT timeline. But again, I'm not an expert on these things, and I've been reading material from people who are more expert than me. That's why I'm relying mostly on charts here, because I can identify who's taking risks by looking at the candle chart, rather than by guessing what Putin and Xi jinping are thinking on a daily basis. Especially these twoThe articleLet me take a look at the currentSituation and macro contextThere's a good general overview, and there are several different ways it could play out.

The currency

Bitcoin is at the center of its first midlife crisis. For most of its life, this supposedly safe digital gold haven has traded as a risky asset alongside high-growth assets for most of its life. Now in the spotlight at a time of high inflation and global conflict. So how will it behave? Many people called me stupid for saying that BTC would no longer be traded as a risky asset in the near future, given its parabolic rise and fall in history. In my opinion, this has changed in the last two years. In each BTC cycle, we see a parabolic blowout top followed by lower highs + lows until the timeline approaches the next halving, and then we restart the cycle. In contrast, this cycle we let bitcoin trade near its February 2021 high for several months, then sold off in May, then re-accumulated over the summer, and retested those early-year highs in the fourth quarter of 2021. We have established a 400-plus day trading range in this area, unlike the 2018 price action which was a successive lower peak.

If Bitcoin can't perform well in the current macro context, then it has failed in its intended use as an asset, which is why I think it is highly unlikely that the current range will be broken. I believe there are two main types of people buying/trading BTC, those who trade with other riskier assets and those who have accumulated for a long time for situations like the one we are currently in. The latter group is growing every day, while the former group will continue to shrink, and there are many better opportunities in cryptocurrency for those who want to take on more risk, and as more money comes into the space, I think the new money will diversify their strategies accordingly. I have to stress that I think it's ridiculous to be both bullish on gold and bearish on bitcoin. I am confident that BTC will soon catch up with gold's outperformance. If you are bearish on cryptocurrencies in general this year and are looking to cut most of your positions, I think there are still a lot of copycats that are overvalued and could be a good opportunity to short and hedge your BTC holdings on a rally.

The etheric fang

I covered most of my thoughts on Ethereum in detail in my last article, so I won't go into them here because nothing has changed. I still believe it's easy to find other tokens that outperform ETH when market risk increases, and WHEN market risk decreases, I think BTC has a stronger performance here than Ethereum. For the merger, I think the best play is Lido, liquidity Pledge solution, as it largely benefits users who want to participate in ETH pledge but still want to get their funds for other parts of DeFi. They recently had a round led by A16Zfinancing"They say they have used the service to pledge their ETH. Lido is well positioned to support institutional and retail investors through their services, as well as other L1s as they are multi-chain.

The overall cryptocurrency market

While not reflected in the price, the influx of money and attention into the cryptocurrency space has not slowed at all over the past few months. We've seen a lot of new funds spring up, cryptocurrency native fund raisings, partnerships between traditional companies and cryptocurrency native companies, NFT partnerships, and more. There's no better source of Daily information on cryptocurrency than Darren Lau's The Daily Ape, and I still don't know how he keeps up with everything that's going on every day. Something noteworthy happened:

·Consensus raised $450 million at a valuation of $7 billion;

·Stripe adds support for cryptography;

·Immutable raised $200 million at a $2.5 billion valuation;

· FC Barcelona plans to launch its own cryptocurrency and NFTs

·Spartan Group announced a $200 million meta-cosmic fund

• Bain Capital Ventures launched a $560 million crypto fund

·Alchemy raised $200 million at $1 billion valuation;

·FTX raised $400 million;

· Sequoia Capital launches $600 million crypto fund

Honestly, there's a lot of news to attach here, and it's clear that there's a whole bunch of people paying attention to the cryptocurrency market right now.

Other aspects

· The first NFT marketplace for Strange Clans launched on JUNO.

·Aurory White paper + game design released

·Yuga Labs (BAYC) purchased Punks & AMP; Meebits copyright, which allows users to control intellectual property.

Second quarter 2022

我的主要关注点仍然是 Cosmos 生态系统和 BTC 的复苏，我已经从 OSMO 和 JUNO 等表现出色的项目获得了利润，并将其投入到 LUNA 和 RUNE 中，我减仓了了许多表现不佳的 Token ，但直到年今年底前，我可能会继续留在这个生态系统项目内（指 Cosmos）。对我来说，多链世界的最终游戏看起来就像应用程序特定的区块链。它们彼此共存，彼此之间的通信也很容易。我们还没有触及 IBC 可能实现的表面，我很高兴看到 Interchain 账户和 IBC 的智能合约，期待它们一但实施启动后的工作表现。随着加密货币市场的成熟，我们将看到越来越少的无用 Token 被附加到不需要它们的应用程序上，而更多的 Token 的需求是与整个协议的增长紧密相连。本季度所有表现最好的协议都是具有强大 Token 经济学的协议，这并非巧合。我已经将我的大部分基础设施业务整合到 POKT 和 Genesys Go 中，这两个在过去几个月中都有大幅下跌，但如果市场转好，我希望它们能做得很好。对于 GameFi，我仍然看好 DFK，在市场下跌趋势中，开发速度一点都没有放缓，我们还没有看到游戏中的经济是如何运作的，一旦游戏中的公会、土地、pvp 和它的第一个跨链扩展到 Avalanche 子网。等待 Strange Clans 第二次发布 NFTs 和 Aurory 的测试版的发布，Treeverse 应该在今年晚些时候推出。如果我对这里的反弹的看法是正确的，我将寻求在本季度末减仓降低规避风险，不要指望像 btc 和 eth 这样的主流货币会直接回到历史高点，因此在进一步盘整之前，会在相对高点进行减仓。

Cosmos: Osmo, Juno, LUNAtics and THORchads

If you're already heavily configured in the Cosmos ecosystem, you haven't experienced most of the downward trend in the rest of the market. Osmo and Juno, the two main cosmos clones besides Atom, are mostly on the rise, while other clones are down 80-90% from their all-time highs.

Osmo, as the primary DEX in COSMOS, has benefited greatly from the overall growth of IBC, especially as we are in the early stages of Cosmos DeFi. Unlike many other applications running on L1, Osmo is both its own chain and its own application, so it is not as restricted as other AMMs. There are two major innovations that set it apart from the other dex, probably because it was designed as an application chain specifically for this scenario.

· Custom automated market making and autonomous liquidity pools

· Cross-chain functions /IBC assets

Vision of Osmosis

Osmo's recent superstream pledge is also novel, allowing users to bind and pledge their assets in LP pools.Osmosis has a very strong development team and community that is aligned with their core vision of IBC cross-chain functionality in their Cosmos Hub.

Juno has positioned itself as the premier L1. It was mostly airdropped to Atom pledgers, and the core idea was to be a community-oriented protocol focused on cross-chain smart contracts. With a much smaller valuation than most other L1s, Juno has a lot of momentum and upside if they can successfully become the first place other than Luna to launch new DApps. I really didn't like the recent Governance proposal for Proposition 16, which suggested removing funds from an account because they apparently received pledge drops at multiple addresses. I think it sets a bad precedent to restrict individual users in this way and hope it doesn't pass, or at least is reproposed in some way.

Based on the first quarter report,

"Terra Luna is the only place in the cryptocurrency space where you can directly bet on stablecoin growth and the growth of the L1 smart contract ecosystem. For that reason, LUNA is my favorite of all the biggest L1s, and going into 2022, I bet their ecosystem growth, stablecoin growth, and IBC growth in general will propel them past the competition."

Anchor was one of the only apps to significantly increase its TVL on its platform in q1, with ITS TVL at $15.7 billion, only trailing Aave at $3 billion, and this uptrend should continue with the addition of new assets such as sAvax and the launch of Anchor V2. The Luna Foundation's decision to purchase Bitcoin to increase their reserves to support their stablecoin $UST will make Terra USD more resilient to market selloff and increase confidence in the ecosystem. A big part of Luna's growth phase is building confidence in their stablecoin, both retail and institutional. They already have strong support from well-known companies like Jump, Alameda and 3AC, and $UST is able to hold the exchange rate even when the market is most volatile. As their coffers grow and $UST grows, the risk of decoupling becomes smaller. There are also systems being implemented to assess risks within the system. Kujira and Risk Harbor, for example, won't bet on Do Kwon and Co this year. Since the growth of UST is directly related to the dwindling supply of LUNA, this growth continues to have a significant impact on its prices.

In addition to Terra USD's growth, Terra's DeFi has also started to rebound. Astroport, Terra's primary DEX, consistently trades in excess of $200 million a day and is as liquid as Osmosis. Currently, most of the volume is coming from Luna-UST and bLuna-Luna pairs, but Astro should see more activity as more DApps are launched and become available. There have been a number of other innovative protocols launched recently in the Terra ecosystem that are not very competitive with the existing DeFi protocols, so it will be interesting to see how much market share they can grab.

Thorchain (RUNE) is one of my favorite asset packs for 2021, right next to Solana. It has lost some of its popularity over the past year after several hacks last summer, but developers continue to work steadily. The core focus of Rune is to make a cross-chain DEX that allows native exchange between different chains. Thorchain is designed to bind nodes to provide three times more Rune collateral than other assets to increase liquidity, so as TVL within Thorchain grows, so does the demand for Rune. For me, the most interesting part of the Rune community comes from bitcoin holders, as they are generally not that interested in ETH or DeFi. Access to this target market is very beneficial for Thorchain and its future. There are a large number of BTCS currently earning nothing and should be one of the most attractive value vehicles for those who are very fond of passive buying and holding low-risk returns. Rune has had problems with hackers in the past, so rebuilding investor confidence will be important.

最近，它推出的 Thor Synths 和即将到来的 Luna Integration 已经成为对话的重要的催化剂，因为 Luna 一直表现出色，再加上 BTC 持有人和 Luna 持有人之间的联系将连接最去中心化的货币和最去中心化的稳定币。简而言之，Thor Synth 允许用户存入 Rune，并收到他们想要的资产的合成资产，该资产已经作为 Rune 配对的 LP 存在于 Thorchain 上。由于这些资产存在于 Thorchain 区块链上，Thor Synth 的持有者可以从较低的费用和较快的确认中获益，而 LP 持有者，由于 synth 持有者放弃了他们在 LP 中的份额以获得对一种资产的定向访问而从收入的增加中获益。这些是 Rune 的 ThorFi 产品的第一部分，未来将包括借款/贷款和储蓄账户。Rune 的 Token 经济学与 Luna 的 Token 经济学相媲美，这两个协议的定位都很好，可以继续从 DeFi 的其他部分吸引流动性。

GameFi returns vs DeFi returns and speculative premiums in the metasverse

加密货币的收益率从何而来，这些平台的用户又是谁？挖矿一直是 DeFi 新用户最受欢迎的活动之一，它有许多不同的形式，几乎所有的形式都导致了被新用户挖出的相关 Token 的价格走势不佳。我一直在思考的一个问题是，哪些设计会阻止这种趋势，或者说，所有使用 Token 排放来激励用户的 DeFi 应用都会出现这种情况。最近，随着 GameFi 的推出，我认为我们已经看到了一种新颖的方法来确定这些 Token 的估值，因为这些游戏为协议引入了一群新的用户。为了比较 GameFi 和 DeFi，我们可以先看看常规 DeFi 应用中的收益率来自哪里，如 dexes 或借/贷平台。对于大多数借贷平台来说，收益率主要来自三个方面：

1. Token emissions

2. Speculators

3. The Borrower using this Agreement

大量的 DeFi 应用本质上是通货膨胀的，因为它们以自己的原生 Token 向用户支付奖励，所以一部分奖励来自这些排放。此外，总有一些投机者购买/出售这些 Token ，但很少使用这些平台。这并不直接影响你的 APR，但它确实影响你的投资回报率。如果你是一个平台的早期用户，在它流行之前，你会从更多的投机者押注项目未来的成功而受益。最后，想要使用杠杆的借款人将向愿意借出其资产的人支付可变利率。对于在 dex 上挖矿，你可以用向 LP 提供流动性的相关费用报酬来代替借款人。

如果一个游戏内的经济设计得足够好，除了协议的基本用户外，还有人在玩游戏，那么它就为系统增加了另一层需求，而这层需求之前并不存在。对于 Axie，有一群完全独立的用户在玩游戏，他们之前与加密货币没有任何关系，但系统的设计并不一定是每个用户对协议的 Token 的需求都是正面的。大多数从公会或游戏中的其他大玩家那里租借 Axies 的 Axie 玩家会立即抛出他们玩耍时获得的奖励，这就是为什么 SLP 图表大部分都只是在下跌。

1、 Token 排放

2. Speculators

3, borrower [loan agreement] or LP fees [dexes]

4, the player

积极投入到游戏竞争中的玩家将被激励在游戏中购买和使用 Token ，这是严格意义上的 DeFi 产品永远不会存在的现实。我们还没有看到一个足够有趣的游戏在系统内有长期持续的玩家，但如果一个游戏能够创造一个像这样的生态系统，它让用户有能力通过积极玩游戏来增加他们的收益。DFK 是我见过的最接近的例子，这也是我长期看好 DFK 的原因之一。DFK 生态系统中的一个例子是酒馆中的英雄和高等级英雄的不同价格。目前普通英雄的地板价是 35Jewel，而拥有 10/10 召唤物的英雄的地板价是 95Jewel，1 级英雄的地板价是 35Jewel，而 6 级英雄的地板价是 69Jewel。在 41,000 名英雄中，总共只有 90 名 6 级英雄在市场上上市，而相比之下，1 级英雄却有好几页。

In addition to investing time in improving your hero level by doing in-game missions over the past few months, it's about a 100% return, and that's before any of the advantages of higher-level heroes like advanced missions or Pvp come out. The only reason this premium exists is because players in the game value these NFTS more than other players. No other PFP project has this capability, and you can make your assets more valuable by spending time in the agreed ecosystem. It is speculators who influence the price of other NFT items that are not empowered, and NFTS that are included in a well-designed in-game economy also benefit from having more empowered items, and the more actively you play the game, the more you benefit. As I've said over the past few months, I think the best payoff for DFK will come from upgrading your hero level and finding the best summoning strategy, because in the future if people want to buy the best heroes in the game, there will be no way to recover lost time other than paying a market premium. These price differentials should continue to widen as more incentives for stronger heroes in the game are rolled out that will make farming in the liquidity pool more profitable for users, or increase the likelihood that they will earn a return on rare items for doing quests. One of the benefits of playing DFK is that the complexity of the game is largely hidden from those who don't actively study the ecosystem and mechanics. For example, most people have no idea how much extra revenue you can get by using a set of higher-level gardeners on your LP, or how much it helps to have a set of miners for early rewards, because you have no way of knowing the numbers unless you're playing the game and taking the time to do the math yourself. I'm not going to do EV calculations here, but if you want to see the value of generation 0, check out how many heroes in the tavern with 10/10 summoned items are also level 5 or higher.

Zipper in weekly updateThe DFK hero market has done a good analysis of it, so you can get a more accurate look at the distribution of heroes and how inflation is going as more and more people summon lower level heroes.

One thing that exists in both DeFi and GameFi agreements is a speculative premium that will always be ahead of product development. Due to the momentum drive of cryptocurrencies, and how much outside capital entered the space during the bull market, market valuations often outpaced the pace at which the team reached its milestones. The difficulty is determining how much of a premium your shanzhai coins currently pay and what their fair value is once the pure speculators leave. Over the past few months, we've seen retail investors completely leave much of the copycat market, evidenced in part by ethereum's recent extremely low gas fees and the lack of premiums in derivatives.

Different levels of cryptocurrency decline

我一直在说板块轮动玩法，因为我认为目前的环境与前几年的山寨币有很大的不同。你不再能祈祷你的山寨币在 bittrex 和 binance 上线，但这些币之间的基本面存在着实际差异。趋势变化极其频繁，而且市值非常的高。有人可能会指出我们在去年 2021 年第二季度出现的可笑的 dogcoin 季来反驳这一点，但我认为这也不是准确的。加密货币的基本面分析也应该包括考虑购买和出售这些 Token 的参与人口统计数据，此外，meme 价值和社区热情是一个非常强大走势指标（向上和向下）。

So let's take a look at some different shanzhai coins and their varying degrees of rebound over the past quarter to the past year. As I write this, I truly believe that these are all due for an upward bounce, but it's important to determine which ones are the most resilient and which are likely to recover fastest.

Super drop: Compound

It's been 307 days since the all-time high

That's down 89.9 percent from an all-time high.

COMP and many other "DeFi blue chips" had similar price action after their initial rally in Q1 2021. To be more precise, most of them peaked at ETH around August 2020, so almost a two-year bear market.

Given that BTC and ETH have been volatile for months without making new lows, calls for another 90% drop from here seem unwarranted, but these wouldn't be the first tokens I'd buy here.

Interestingly, it took 330 days for ETH to find a bottom after its all-time high in 2017, and then move sideways to start a new trend again.

General down: DFK

It's been 62 days since the all-time high.

Down 85% from all-time highs and 71% from the year's start.

Jewel 和其他许多元宇宙 Token 也被市场击垮了，尽管它没有像许多早期的 DeFi Token 那么糟糕，因为这些 Token 并没有长期处于下降趋势中，而且在第四季度的表现优于市场。

We don't see any signs of revival of the metasverse project yet, DFK has a catalyst after EOM's Crystalvale launch, but we need to see how the market reacts if we venture on it again.

Down slightly: BTC

It's been 126 days since the all-time high.

It's down 52.4 percent from its all-time high.

Bitcoin is down like many other assets, but it's still better than 90% of copycats and even better than some tech companies.

If we get a recovery this quarter, it looks like BTC could lead the way.

Down but up: Thorchain

It's been 301 days since the all-time high.

At its low point, it was 85% below its all-time high, but it's up about 150% from the bottom. This year is green hour, but only for a very small number of currencies.

From the summer of 2021 until now, there have been other bandit coins that have tested their bottoms, some that have rebounded more aggressively, RUNE has some basic catalysts to help it, and it seems like the time is right.

Near ATH: Terra Luna

It's been five days since the all-time high.

At its low point, it was down 58% from its all-time high and is currently down 14% from its high.

LUNA 在最近市场趋势趋于整体价格横盘的走势中引领了复苏（指上涨），并且在排名前 10 的 Token 中表现出了绝对的强大实力，其市值已经超越 Solana。

If we can see the market trend continue, expect LUNA's performance to continue, as LUNA also led the recovery after Axie last summer.

No drop: Juno

It's been 10 days since the all-time high.

It is now down 22% from its all-time high.

One of the few shanzhai coins that has been on an upward trend for most of the year has peaked at four times the year's bottom.

If you were a passive investor and took a risk in Q4, I think BTC would give you two clear outcomes: a recovery of the year opening around $46,000 or a surrender to the summer 2021 lows around $28,000. I personally prefer the former to happen first, but I think these are all equally likely price points if you don't actively watch the market. If you are actively trading, then you should look for possible strong narratives before they become the general consensus, as it is clear that even in most market downturns, there will still be some tokens that perform well.

conclusion

Q1 reflection & have spent

Be more cautious when you realize you lack an advantage [i.e. lack of macro knowledge].

More concentrated bets and less diversification without strong bias.

Be more diligent about using hedges, which are more important when the market as a whole is bearish.

应用程序链似乎是当前的元信息，比常规的治理 Token 有更强的 Token 经济学。

Favorite trade pair.

long Luna / short Eth

long Rune / short Fantom

long BTC / short Doge

long Avax / short ONE

Some bold predictions for the quarter:

BTC reaches 60K again

The exchange rate of ETH/BTC is lower than 0.055

Anchor's TVL goes beyond AAVE

Astroport's daily trading volume exceeded Pancake Swap's

ETH gas stayed low because people were more on ALT L1 and started using Rollups

More than 10 AVAX subnets were launched to attract new users

Solana became a major hub for on-chain perps and options

Other interesting things to study:

Axelar, LayerZero, FuelLabs, Agoric, Celestiums, Starknet & AMP; L3s, Danksharding, Katana, Drift Protocol, Argent Mobile/Phantom Mobile/Keplr Mobile, Risk Harbor, Ragnarok, Catalog on Ren Protocol, KyberSwap on Arbi, Pokt v&NBsp;