SPS' $1+ Potential - 10B MC?

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SPS is giving a clear bottom signal

I have never seen such a signal indicated so distinctly to be honest. It's basically out of the chart text book and it says: when price falls and volume rises, this is a bullish indication. Just look how beautifully it is playing out here over the last weeks:

It's really quite something; week after week volume has been increasing and week after week price was falling making a new ATL. We are now once again testing the upper resistance of the falling wedge. In the past this has always lead to quite a bit of a rally and as stated here, I fully expect for it to happen again. Due to the reasons listed in this post I am very confident that the bottom is in for SPS. But if that is the case (it will take some months to confirm it), we can actually start to ask a new question: how high can SPS actually go in this cycle?

10-20 cents?

Some have pointed out that the 10-20 cents area seems quite realistic for a high for this bull cycle which will probably conclude some time in 2025. While I don't disagree that this is a very realistic target, it is also very conservative. One of the reasons given for this target is that if one compares the MC of SPS in 2021 when the token price was at $1, it would again be a similar MC with SPS at over 1.1B and at 10-20 cents. But I disagree: we cannot compare SPS to almost 2 years ago. A lot has happened since then:

• The game itself has gone through a lot of modernization and development
• SPS has much more utility (staking, proposals)
• LAND and SOULKEEP are around the corner
  etc.

And that leaves out even more to come in 2024 and beyond. It therefore doesn't seem right to expect a similar MC as in 2021.

Axie Infinity had a 160B MC(!)

At its peak, Axie infinity had a price of over $160 and a supply of around 100M (correct me if I am wrong), giving it a 160B+ MC. That was quite big and perhaps it was an outlier. But it is clear that web3 gaming is only going to grow, so perhaps we will see many games surpassing that in the future.

Interestingly, when looking for the top web3 games, Axie Infinity is now only barely in the top 10:

There are of course many metrics to rank web3 games; one way is to look at the active wallets (we know of course that a majority are bots, but this is true in all of the games). But it's quite encouraging to see Splinterlands at #2! The successful pre-sale of REBELLION has clearly shown that the game is alive and well. If it stays in the top 10 in the coming years, this should translate into a pretty impressive MC imo. Just how high? Well, if we take conservative numbers, it doesn't seem too outrageous to assume a 10B MC. That would still be a fraction of what AXIE had and AXIE is now well below Splinterlands.

What would SPS' price be at a 10B MC?

Inflation for SPS is still very high with around 1M distributed daily. It is reducing by around 1% a month (very rough numbers), and if we look at the time frame of e.g., mid 2025 this would add up to a supply of around 1.8B. However, this does not account for the flywheel that will start as soon as DEC runs out and will burn a significant amount of SPS during that process (at least a couple of hundred million). If the 1.8B supply is anywhere close to what we will actually have, it would mean that we would need a price of around $5.5 to reach a MC of 10B.

$5.5... a Pipe Dream?

I have to agree, this does seem quite high. It seems fantastical to be honest with a token price of around 1.5 cents now. But Splinterlands is at top 3 game, and we are getting a lot of stuff in the next months and years. I don't see how this could make the game worse unless they screw up the core or lose their edge. But if anything, the team seems more focused than ever.

If anything, a 10B MC seems almost too low. We can assume that the flywheel will burn a couple of hundred million SPS in the next 1-2 years, thereby reducing the supply and rising the price. If the game stays up in the ranking, a 10B MC definitely seems very, very conservative.

While a 10B MC seems possible, perhaps what is holding back a bit is that this would imply a 366x increase from the 1.5 cents we currently have. It is very rare nowadays to suggest these kinds of increases, but I have always said that SPS at (under) 2 cents was ridiculous. I don't think the token should have ever fallen this dramatically, since the intrinsic value was always much higher. I'd like to see your views on these numbers; do you feel they are realistic or too high (or low?!)?

 

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