The Wolf Den #313 - When Does A Narrative Become Priced In?
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This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin. I really encourage you to check them out.When does a narrative become priced in?We often use the saying “buy the rumor, sell the news” to remind ourselves to act with conviction on information that is known by all market participants. The truth is, assets, in particular in the crypto space, often do not price in events as fast as we may think, and we don’t have to be super early for large asymmetric gains. I just had Dan Held on the podcast and we had an interesting conversation about this exact topic. It is my belief that an asset goes through stages of pricing in narratives. It doesn’t just happen when the news hits the wire. In general, when a narrative is strong enough to impact price, there are 4 waves of money rolling into the asset, each for different reasons. The first group to act on a narrative is the insiders - early well-versed investors in the know. Bitcoin’s Taproot upgrade is currently a perfect example of this. Most people have forgotten it is coming and will act once they are reminded of this narrative. Anyone with a Bitcoin position right now with Taproot in mind can consider themselves an investor in the know, as we have likely already locked in at a favorable price.The second stage is the arrival of the narrative or the lead up to the event itself. It’s often considered too late to act when the event has already occurred, but this often isn't true. Take Cardano’s recent smart contract announcement. Followers of the community knew this was coming for a very long time. Now that the mainstream crypto world is catching on to the announcement, the hype has rebuilt around the asset, causing the price to rise. There is still a second half to the ball game, the actual implementation of the narrative/event. If Cardano has risen this much without any evidence of smart contract usage, imagine where it can go over the next few years assuming everything goes to plan.The third wave of pricing in an asset is the impact that the narrative/event has on the asset. Ethereum’s EIP-1559 is a great example of a real-time deflationary impact on an asset and investors reacting to the effects. Anyone in the know knew exactly what to expect. Now that the action has arrived and the ETH burning is a success, more FOMO has kicked in, leading Ethereum ever so slightly closer to pricing in its true potential. We all know Ethereum 2.0 is inevitable, and should reasonably expect that it has a positive impact for years to come.Eventually, the news or fundamental event will be fully priced in as the world recognizes its value. This is the 4th wave. This is when Bitcoin is globally recognized, Ethereum 2.0 is successfully operating and so on. Dan Held and I dove into this topic at length, which will release this Thursday. We focused specifically on Bitcoin and how it fits into this framework, but the idea can apply to evaluating any asset. IF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.COI will have a major announcement today on my 1:30 PM EDT Livestream (no more 2 PM, we are moving up 30 minutes!). I do not have the link setup yet, but please tune in to YouTube and subscribe to my channel - https://youtube.com/scottmelkerIn This Issue:When Does A Narrative Become Priced In?Bitcoin Thoughts And AnalysisAltcoin ChartsPayPal Launches Crypto Services in UKCoinbase Puts Their Money Where Their Mouth IsUSDC Is Changing Up Its Reserve CompositionEthereum Rocks Are BubblingMy Recommended Platforms And Tools
The Wolf Den #313 - When Does A Narrative Become Priced In?
The Wolf Den #313 - When Does A Narrative…
The Wolf Den #313 - When Does A Narrative Become Priced In?
This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin. I really encourage you to check them out.When does a narrative become priced in?We often use the saying “buy the rumor, sell the news” to remind ourselves to act with conviction on information that is known by all market participants. The truth is, assets, in particular in the crypto space, often do not price in events as fast as we may think, and we don’t have to be super early for large asymmetric gains. I just had Dan Held on the podcast and we had an interesting conversation about this exact topic. It is my belief that an asset goes through stages of pricing in narratives. It doesn’t just happen when the news hits the wire. In general, when a narrative is strong enough to impact price, there are 4 waves of money rolling into the asset, each for different reasons. The first group to act on a narrative is the insiders - early well-versed investors in the know. Bitcoin’s Taproot upgrade is currently a perfect example of this. Most people have forgotten it is coming and will act once they are reminded of this narrative. Anyone with a Bitcoin position right now with Taproot in mind can consider themselves an investor in the know, as we have likely already locked in at a favorable price.The second stage is the arrival of the narrative or the lead up to the event itself. It’s often considered too late to act when the event has already occurred, but this often isn't true. Take Cardano’s recent smart contract announcement. Followers of the community knew this was coming for a very long time. Now that the mainstream crypto world is catching on to the announcement, the hype has rebuilt around the asset, causing the price to rise. There is still a second half to the ball game, the actual implementation of the narrative/event. If Cardano has risen this much without any evidence of smart contract usage, imagine where it can go over the next few years assuming everything goes to plan.The third wave of pricing in an asset is the impact that the narrative/event has on the asset. Ethereum’s EIP-1559 is a great example of a real-time deflationary impact on an asset and investors reacting to the effects. Anyone in the know knew exactly what to expect. Now that the action has arrived and the ETH burning is a success, more FOMO has kicked in, leading Ethereum ever so slightly closer to pricing in its true potential. We all know Ethereum 2.0 is inevitable, and should reasonably expect that it has a positive impact for years to come.Eventually, the news or fundamental event will be fully priced in as the world recognizes its value. This is the 4th wave. This is when Bitcoin is globally recognized, Ethereum 2.0 is successfully operating and so on. Dan Held and I dove into this topic at length, which will release this Thursday. We focused specifically on Bitcoin and how it fits into this framework, but the idea can apply to evaluating any asset. IF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.COI will have a major announcement today on my 1:30 PM EDT Livestream (no more 2 PM, we are moving up 30 minutes!). I do not have the link setup yet, but please tune in to YouTube and subscribe to my channel - https://youtube.com/scottmelkerIn This Issue:When Does A Narrative Become Priced In?Bitcoin Thoughts And AnalysisAltcoin ChartsPayPal Launches Crypto Services in UKCoinbase Puts Their Money Where Their Mouth IsUSDC Is Changing Up Its Reserve CompositionEthereum Rocks Are BubblingMy Recommended Platforms And Tools