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PvP Szn (and Portfolio Management)
This is going to be a post about navigating PvP markets and not getting chopped up. Before we get started, I am looking for some front end help on something (primarily landing page design/dev), so if you are interested or know someone who is kick ass, feel free to reach out to me at email@example.com or on Twitter.
The genesis for this comes from the feeling that the same people are all chasing the same tokens, and most token’s lose their momentum extremely quickly. So I am going to present what I think is the best way to navigate the current meta, and how I would manage my portfolio to maximize returns during it (as always, not financial advice, purely educational purposes). Below, in no particular order, is my “guide” on how to make it in today’s increasingly competitive environment:
Be Early to Good Launches → You don’t have to make it into a private sale to do well in new launches, and it does not have to be “underfollowed” for the token to go up. A recent example is CHR / Chronos. I flagged this (among others) in my last post in the paid sub exclusive section, as a project that smart money is definitely watching, and could be positioned to do well. At time of writing, the token is up ~75% from most buys within the first 2hr of launch. I flagged a few other new or upcoming launches that I think also falls into this camp, so be sure to check that out. This doesn’t mean ape every new launch, and you need to do your own due diligence on any project. But an easy exercise I have found myself doing is
Building a list of all upcoming launches (you might stumble across some private sales this way too, more on this later)
Digging in their discords periodically to find out if the project will be launching soon, or if there are pre-farming opportunities
Making a calendar of all upcoming launches
Execute on launches where you think the fundamentals are there, early tokenomics aren’t egregious, the project seems like it has capital/effort behind it
zkSync Eventually → Right now, it seems most projects that launch on the chain are rugs/scams. According to Nansen, the early whale bridgers are sitting in just ETH, USDC and MUTE, suggesting significant dry powder on the chain. This reminds me of early Arbitrum vibes. I think eventually once real projects launch on the chain, they will do very well.
Side note: Nansen also notes that the early whales are mostly farming ETH/USDC pools across Syncswap, Izumi Finance, Mute and Velocore
My New Wallet Watching Meta → The PvP market means that blindly copy trading wallets is not good enough. Instead you need to develop your own process for how to build a “barbell” of market alpha from your wallets. What I have found particularly useful is finding and setting up alerts on:
Great market direction traders: looking for people with a high hit rate on swings in BTC/ETH to give you some guard rails on which way the winds are blowing. Market direction matters, as a 10% move down in ETH means a 20-70% move down for most alts
Mid cap, catalyst/narrative pros: here you are looking for people that bought things like JOE before it pumped, or LVL, RDNT, THE, etc. This will be a source of idea discovery, which you can pounce on if/when you feel comfortable with market direction and/or project momentum.
If your a degen, new launch pros → Even wallets that are great at shitcoining (bc that is what most new launches are), they are going to have a sort of VC style approach of aping into 100 projects, and 5 of them will be high enough in return to justify the exercise.
Follow The Strength → Some of the time, especially on more established projects, the price is telling you which projects are good (for better or worse). If a token holds up while ETH is weak, someone is buying the dip (likely smarter money than the sellers), and usually means the token will hold up while the market gets weaker and do well when things improve
Hustle Private Sales → Now, you have to have a good nose for BS to do this effectively, because you can’t just blindly buy into presales. But if you start building out a network of people that are in the right group chats, you can easily find some of these opportunities. You can also use the list from point #1 as a starting point and try to find projects that are in or have upcoming private sale opportunities. Biggest things to focus on would likely be project quality, unlock period, starting valuation
Again, these are the ways I would approach the meta, but there are for sure others. I would match however you plan to fight the chop with your trading style and amount of time you have to allocate to investing in the space. Next I will add some high level portfolio management thoughts, as a sort of addendum to my original “Portfolio Management” piece.
But before we do that, a small advertisement for the paid version of the newsletter. As a paid sub, not only do you receive access to the “exclusive” paid research, where we flagged things like GRAIL, CHR, and GMX. You also receive:
Monthly whale watching (which will come out over the weekend for April)
Access to the Research Hub discord, which now has a community of 500+ where you can network, research new projects together and uncover unique insights.
You also receive early access to all things chainEDGE, including preferential pricing, direct lines to me for feature requests, etc
I’m also running a one-time special offer over the next 30 days for new annual subs at a 30% discount to the current rate, so if you are on the fence and want an insane amount of value at a good deal, now is the time to sign up.
Portfolio Management, Revised
These are not hard and fast rules, just how I would personally approach it. I am going to focus on starting with a small amount (which can mean $5k to some or $1mm to others). And as another reminder, none of this is financial advice, and is purely educational. Let’s start with some high level points:
Farming: only worth it if the risk matches the reward. 20% on GLP is a great risk reward vs. 100% APR on some brand new shitcoin with extreme volatility
Trading on leverage is almost never worth it
Long term holds (other than ETH) usually don’t work because in a PvP market, momentum on most projects dies quickly or a competitor will spin up and steal market share
Use smart money wallet watching for token discovery and entries, but come up with your own exit plan (whether that is a return/loss threshold, a catalyst or a certain amount of smart money sells/signals)
Define your return objectives. You are probably not going to 30x your portfolio overnight.
With those out of the way, I will present my personal portfolio management thoughts into 3 risk buckets:
Low risk→ best to stick with holding spot ETH, maybe a bit in things like GLP for some income. That is it. When people ask me for “low risk” in crypto, that is about all I can really say (and even GLP has smart contract risks)
Higher risk → if you are trying to multiply your capital 5x+, ETH is not going to get you there (at least anytime soon). Applying the wallet watching barbell (which chainEDGE is great for), I would size positions at 20-30% max, which will keep you in the game regardless of a bad outcome. And DCA into entries where volatility can be your friend. In this bucket I would focus more on established projects that still have momentum, an upcoming meaningful catalyst or a narrative brings them some life. And then have discipline on losers and winners. A project starts missing milestones and you think momentum is lost? Maybe trim your position. A project doubles a week after you bought? Trim your position. PvP means most tokens will lose their momentum, and some will give back all their gains very quickly, so play everything tight and manage positions quickly. It is not an “investor’s” market. I’d have just 2-3 core positions that you know very well, and then hold some stables back in case the market tanks and then a small allocation for established, higher quality launches
Highest risk → If you are trying to run up your portfolio 10x, the only way to do it in today’s market is either spotting something special early (like GRAIL) or VC style approach to shitcoining. All the popular tokens are not going to 10x anytime soon, so your GMX, GNS, etc are not the place to be fishing (in my opinion). If you go this route, you need to be spending a lot of time networking, researching, developing a good wallet list for what you are trying to accomplish. And farming is likely not worth it in anyway (unless you find something day 1). Even though you are max risk, I would still be very patient, and not blindly ape every new token pair that is launched. But if you find some good shitcoining wallets (I will talk about a few in this weekend’s paid whale watching post) + set up alerts on them, I think you can still have positive outcomes, though prepare to lose some/a lot of money before you see any success. I personally started with the VC approach, throwing 1 ETH into every new launch that seemed like not a rug on BSC that was below $500k market cap, and eventually caught a 30x and then a 20x shortly after.
If you have the time and are completely crazy, you can even “mentally trade” the new launches for awhile to build up some muscle memory. For each one you look at, say this will do well, this will definitely rug, whatever and take notes.
I’m going to wrap it up here, but hopefully this is a good high level starter guide of how I would personally manage today’s market as a non-whale. And before anyone says this is dumb, this is just how I would do it, which is shaped on my experience in crypto, so there are likely other and better ways to approach it, but this is how I look at it. As always, drop any questions, feedback, deep dive requests or whatever into the comments, and good luck out there.
Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.