Not financial advice – April 2022

Welcome to my Not financial advice – April 2022 post!

Hi everyone!

I’m honestly really enjoying this little series I’m doing… it’s definitely making me think a lot more throughout the month about where I think things are going.

If you’d like to check out last month’s entry to see how right or wrong I’ve been, click on over here:

Not financial advice – March 2022

I get a lot out of @edicted‘s predictions, even if he often feels like he should do the opposite of what he predicts. His Market Watch series is maybe my favourite series on Hive. He’s very unsureidly predicting a 90k-108k price for Bitcoin in May based on previous market cycles. I’m a lot less optimistic and I’ll tell you why…

I think we can still assume that Bitcoin still drives the whole crypto market, and that crypto is still viewed as a pretty risky asset.

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Investors, particularly institutional investors are still watching the US Fed super closely. On the 15-16th of March, the US Fed announced a .25% interest rate increase – which caused a bit of a market surge for both stocks and crypto because it reduced some of the uncertainty caused after the January 25-26 meeting.

This surge is only a short-term thing though, the sell off in December and January was a little more extreme than necessary and so this recent surge is really just a correction. The US Fed had said, back in December I think, that interest rates would increase throughout 2022 and the US Fed will reduce its balance sheet as early as March.

Everyone was trying to frontrun the Fed by selling off first… and money was sitting on the sidelines. Now that the Fed, in March only said that interest rates would increase by that tiny amount and so money that was sitting on the sidelines has flowed back in now that some uncertainty has been removed.

Today though, we got this:

Fed’s balance sheet runoff will be rapid, Brainard says

This is going to cause investors to get back to the sidelines. This means that prices for both stocks and crypto (and unfortunately probably not real estate due to demand and supply chain issues) will drop for the remainder of this year I think.

The other problem is that the onchain analytics of both BTC and ETH have been dropping as well…

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Since November of last year, BTC usage has been in decline…

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… the same as Ethereum.

It’s not a bad thing obviously, every ecosystem has ebbs and flows, peaks and troughs… but it shows that adoption isn’t going up… which means new money isn’t entering the crypto space.

Without new money coming in… prices of crypto assets will stagnate or decline.

Overall I’m incredibly optimistic about the crypto space, and I love the Web3 attitude of everyone building in all directions. In the short-term though, until the US Fed has finished selling off its balance sheet and stops raising interest rates…. or until there is a new and exciting innovation in the crypto space, I don’t see any new money coming in.

Even LUNA buying $10B of BTC isn’t going to move the prices, since they are buying the BTC with the money made from selling LUNA/Terra. This is money that’s already in the cryptospace. It’s not new money coming in.

The good news is… the next year might present some great buying opportunities.

The bad news is… you’re probably not going to be able to retire off your crypto riches.

This was always going to be the problem with institutional investors coming into the crypto space – crypto is now far more likely to follow the same ebbs and flows of other risky investments. That said, I’m fairly confident that the next time the crypto space shows all the indications of a bull market, we’ll have more institutional investors and companies starting to invest in. Especially if the US government has started to release regulation guidance by that point.

Once the Fed starts selling assets off its balance sheet, we’ll see further decreases in the S&P 500, NASDAQ and crypto marketcaps. With the invasion of Ukraine by Russian military further disrupting supply chains, plus the Covid pandemic still very much being a thing (Shanghai has been pretty shut down over the last 6 days – potentially huge supply chain affects) with the US likely to see a rise in cases over the next month or two, I’d say we’re still going into a crypto bear market.

Not a recession… I think the US Fed will change it’s mind if it starts to worry about a recession, but it’s trying to fight the inflation caused by supply chain issues at the moment and thinks the markets can handle being a little less hot.

So, with a bear market most likely on the way, am I excited about anything?

Yes!

I’ve been, pretty haphazardly admittedly, collecting my LARYNX tokens from the Speak Network.

It’s pretty complicated, but the Speak Network is a decentralized video platform called 3Speak.tv. Videos take up a ton of system resources… both in storage and processing power, so the Speak Network has set up a means to reward users that help provide that infrastructure.

A content creator uploads a video to 3Speak.tv and it will cost them BROCA tokens to do so. The BROCA tokens will go to the Mills (the people providing their computer to store and process the video). If people like the video they’ll earn SPEAK and BROCA tokens for it. They can stake the SPEAK tokens to increase their own voting power, and use BROCA to upload more videos. The LARYNX tokens have to be burned if you want to be a Mill (ie, your computer processes and stores the videos). The more you burn the more SPEAK and BROCA you earn. Viewers can also earn BROCA tokens by watching ads.

It’s pretty complicated and a lot of it still needs to be built out… but essentially it means that the people uploading videos, the people processing the videos and the people watching ads on the videos all earn for their time and effort.

Basically you can claim your LARYNX tokens once a month. I don’t know if I’ll ever provide infrastructure for this network, but I’m sure at some point I’ll upload videos. You can trade any of these tokens directly for HIVE… so that’s always useful.

It disappeared because I already claimed it for this month, but if you go to https://www.dlux.io/dex#larynx you should see a little gift and the word claim where the red circle is. Click that and you’ll get your LARYNX tokens.

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I’ve also been enjoying the #POSH community on Hive. This is a good example of their daily post. The way that it works is that you find a great post on Hive that you really enjoyed, that’s less than 6 hours old, and I’ve personally been trying to pick posts with not many upvotes. You then take that post and publish the link as well as the hashtag #HIVE on Twitter.

Here’s an example:
https://twitter.com/CryptoAdam4/status/1507019872739287046

The #POSH curators liked this post, so they gave it a decent upvote… and I earned POSH tokens and they sent me some HIVE tokens as well. Even if the curators don’t pick it, you still earn POSH tokens. This is literally an everybody wins scenario. Good Hive posts get more exposure to a greater audience on Twitter… the author of the post gets a bonus, and you receive some tokens.

This will help HIVE with its SEO… and hopefully bring more people to the Hive blockchain so they can also get rewarded for their content.

The secondary benefit is that while you’re uplifting others, others might uplift you too… so you might get some upvotes. However, people can only do this once a day, so you’ll have to make your post real good.

Everybody wins!

Each POSH token is worth about $0.05 – but I do think there is a solid opportunity for growth since it has so many positive benefits for the network as a whole. Definitely better than traditional social media where you create all the content and the platform makes all the money.

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I’m also still very excited about Splinterlands.

The development team has increased by a lot of pretty experienced people and they’re starting to push a ton of content out on their Twitch channel Splinterlands.tv.

I do think consistent exposure to the vast audience of Twitch (140 million unique monthly visitors) will be a huge benefit, even though it will take some time to fill out their channel roster. I imagine eventually this channel will be running 24 hours a day.

Their building out their lore and the stories behind the characters on the cards.

There is a lot going on… and Splinterlands continues to build slowly but surely over time. Compared to all the issues that Axie Infinity is going through – dropping 45% of its daily users since last November, things do look promising in the Splinterlands.

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AXS is Axie Infinity’s governance token and still sits with a marketcap of $4 billion.

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SLP is the token that you need in Axie Infinity to breed the creatures to battle with… and still has a $850 million marketcap.

The problem is… Axie Infinity was built on unsustainable tokenomics. People have been highlighting this for years which is why I’ve never played it. I was certainly interested in the biggest #Play2Earn game, especially after watching the uplifting effects it had in countries like the Philippines – but after reading this post I had to stay away. At it’s core, Axie Infinity can only survive if new players continually add new money into the game.

You get rewards from winning Axie battles… but those rewards come from creating new Axie creatures… and at some point in the tokenomics the cost of creating new creatures dramatically outweighs the rewards.

The governance token for Splinterlands is much younger and has a $58 million dollar marketcap.

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Splinterlands doesn’t require a constant stream of new players to balance the earnings/costs like Axie Infinity does. If the userbase stagnates or declines the economics of the game still works out well. If the playerbase continues to be as supportive as its been over the last few years, then the game’s developers will continue to be profitable forever.

The Splinterlands team creates a pack edition to sell to its customers. The current pack Chaos Legion sells for $4 USD. Users can play for free… but in order to actually earn anything they need to purchase a Spellbook for $10 USD.

Each game you win, you win DEC tokens:

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The DEC prize pool is created every day (technically every 3 seconds). If DEC is worth $0.001 (a tenth of a cent) then 1 million DEC tokens are created that day. Currently DEC is worth $0.00164112 on the markets, so 1.6 million DEC tokens are created and supplied to the winners of that day. If lots of people are playing that day, you win less… and if less people are playing you win more. The day after the season ends, I definitely notice a huge uptick in the DEC that I win.

You can also win reward cards when you complete a daily quest or as your end of the season reward. This means that your collection is always expanding, and the options and strategy available to you is always expanding.

I think this style of tokenomics is totally sustainable… as long as at least one other person in the world wants to play against you and/or wants to purchase a reward card off you or purchase your DEC. If no one does, then it’s a bust obviously… but the game is continuously getting more and more strategic, is really fun, has tournaments and will get a lot more involved when it releases its Land expansion.

Every new card edition release has seen a massive spike of enthusiasm and I don’t expect that to subside anytime soon. Each new card edition brings a ton of strategy change. It’s been super interesting watching the meta evolve, even over different weeks as people figure out new ways to combat older metas.

I don’t know what the price of the DEC token will do, and to be honest it doesn’t really matter. As long as I can buy more cards with it (and these cards tend to adjust in price depending on what DEC is doing) I’m happy.

The secondary market has cards ranging in price from $32,000 USD to $0.02. You can totally build some really devastating decks with a bunch of $0.02 cards. The thrill of finding an expensive reward card in your loot box or a super rare card in a pack is amazing, so I really do think this game has legs for years to come… especially as more and more features are released.

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There are 111 days left in the SPS airdrop. There are 6.9 million packs available for sale. Of the packs purchased, only 52% of those packs have been opened. Whenever the packs hit a million milestone another Chaos Legion legendary card is airdropped to everyone (based on how many card packs they purchased).

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I think what is going to happen is that only about half the packs that get purchased will be opened, maybe less… until the Chaos Legion card edition is completely sold out and all the airdropped cards are unlocked and airdropped to players.

I think this will happen after the SPS airdrop is completed, which means people won’t really need to hold onto DEC anymore, and the price will drop down to $0.001. (If it drops below $0.001 then less is printed and given out to winners until demand brings it back to $0.001). Once all the airdrops are unlocked, a massive percentage of cards will be unlocked (card packs opened after airdrops are unlocked can contain the airdropped legendary cards as well). The market will be flooded with these newly opened Chaos Legion cards and that’s exactly when I intend to go shopping and pick up lots of new cards to bolster my collection with.

I’ve been extremely patient, waiting for all the Splinterlands cards to get cheaper. At that point the only way to get SPS (apart from buying it) will be to win it in tournaments. My collection isn’t super competitive at the moment, but at that point I’m confident it will be.

I’m not 100% of course, but I am relatively confident that by this time next year, SPS has a higher price than it does now, despite the reduced investment into the cryptocurrency marketcap.

This is the price of SPS right now… I hope I remember to revisit in a year:

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Is there anything in the cryptosphere that you’re excited about for the next year?

I’m also keen on Koinos, Gala Games and Mint/Dixel tokens, but I need to spend a lot more time researching them. So much to be excited about!

Thanks so much for reading my Not financial advice – April 2022 post! If you want to check out last two months post, please click on these ol guy:

Not financial advice – February 2022
Not financial advice – March 2022

Good luck! Please let me know your thoughts or questions in the comments!

Featured Image Photo by Tezos on Unsplash

I originally published this last night on my blog: https://lifebe.com.au/opinion/not-financial-advice-april-2022/ which usually automatically co-publishes on Hive... it didn't work for some reason. Blurgh.

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