Alpha Mail #61
22Loops, Generating Liquidity, and BLUR
PARTNER: THE HAVEN
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Looposhi is a crypto trader and investor active since 2013.
“There's no such thing as great traders in this space.
People get lucky, or people are lying.”
JIM TALBOT: GENERATING SUPPLY
There is a good amount of supply overhead on BTC.
How does the market fill these asks, you may ask?
In a low liquidity environment where demand is still relatively low. The market needs to generate liquidity to force a move into those sellers.
There's a level obvious to everybody at $25,200. We all have it marked and in my opinion, it’s the most obvious yet dumb short bait you could take right now.
SFP traders are salivating, thinking they have a top-short. With three failed breakouts; the shorts keep building, and where does everyone put their stops? Above the highs, obviously. This is good risk management, right?
Whilst it seems good RR, the probability of you becoming someone else's exit liquidity increases.
How often we reject here before a squeeze higher depends on the aggression of short sellers.
In my opinion, putting your stop loss above those highs is just providing liquidity to spot sellers.
When you leave a stop market buy order, you allow someone the opportunity and liquidity to sell into that stop loss once enough stops have been generated in that area.
The likely outcome is you get stopped and invalidated before taking a breakout long that proceeds to dump to your original target.
Be patient. Avoid the bait, and wait for the stop hunt.
Become the hunter, not the hunted.
Ahhh yes. Finally, we have free money dropped into our wallets again. It’s been a while, but with those moments, the market tends to reveal its wonderful split in participant psychology.
First, let’s do the details of the drop.
BLUR marked around 360 million $BLUR tokens for the aidrop. It means as of right now ($1.25), BLUR has a market cap of around $480m. It will be a small chunk of the overall BLUR supply as we look towards a total of around 3 billion once all of the tokens are released.
There are a couple of ways of looking at this, and it’s really going to be down to you as a trader, investor or believer in the space.
Lots of people sell airdrops on day 1; the feeling of having “free” money placed into your wallet is attractive and usually results in an immediate thought process of cashing in.
More experienced airdrop recipients will tell you that day 1 sales rarely work out in your favour.
The psychology tends to spiral on day 1, participants look to sell, price crashes lower, more people panic sell, Twitter threads pop up on the inflated value of the product and why it’s all a scam. More people sell, and before you know it, the market is down 88% from the listing price (this is BLUR, by the way.)
But then, 24 hours later, the price has 3x’d off the lows, and most people are now in turmoil, knowing they could have had triple the $ value if they’d just held on.
But regardless of the price dynamics within the airdrop structure, what’s the future for BLUR?
Given the recent stats on BLUR and not ignoring that a lot of volume has come through participation for the airdrop, the future looks incredibly strong for the platform.
It comes down to your belief. For many, being airdropped a token for what has the potential/already is the largest NFT platform in the space and deposing OpenSea has huge value.
If you believe in the future of the space and you now own a (free) chunk of the largest platform, selling for these price totals feels premature.
For me, the potential growth for NFTs, the disruptive (and successful) launch of BLUR and ability to actually challenge what has previously been unchallengeable represents a huge value proposition for the future.
Of course, things can change, OpenSea has been trying to react, but while BLUR remains in the driving seat, then I’ll continue to hold.
The airdrop salt sheet is created for a reason, and now having accomplished some steps along the way begins to look more enticing.
While being a meme, there is some truth in the path it portrays. Those early sellers who may have been believers in the space but the draw of free money was too much to withstand are forced back into the market.
With all the back and forth in the markets, for me, being handed a free bag of a top NFT platform’s tokens is an opportunity for a risk-free hold. I aim to simply stake, generate and let BLUR do their thing.
And given the fearful, reactive and quite simply panicked responses in recent days by OpenSea who are now actively acknowledging that BLUR is a problem for them, it begs the question, when $SEA?