I actually have a lot of stuff to talk about right about that has nothing to do with FOMO or FUD or stable-coins or crashing markets or doubling curves or market cycles or... but the market just keeps being crazy and volatile so it's hard to focus on things that actually matter.
It's always hilarious when I link back to posts that have evergreen content mixed with the speculation of the day. Half because my speculation is always wrong, and the other half because the speculation is totally worthless 2 years later and the evergreen content is still totally valid.
And now... for more speculation!
@edicted/market-watch-bottom-barrel-support-levels
We are testing our bottom of the barrel support levels!
Thirteen days ago I gave support levels that we all need to lookout for. They are upon us much sooner than I'm comfortable with, but that's how crypto works so whatever.
- Hive has support from 50-80 cents.
- Ethereum has support from $2000-$2500.
- BNB has support from $250-$300.
- RUNE has support from $3.50-$4.
- Monero has support from $125-$150.
- ETC ETC.
Looks like all those death-crosses are playing out predictably.
Hive already flash-crashed to 45 cents and we are now grinding on that hardcore 50 cent support line. ETH is at $2,360 which is also within the range given. BNB just spiked back up to $300 after being at $270 so again that support seems to be playing out well. Rune is at $3.70... another amazing opportunity to buy and I'm once again short on stables. Surprisingly Monero is out-pre forming at $168 and is still above the hardcore support level.
LUNA REKT
I saw Luna sub $1 today. UST was trading at 34 cents; pure insanity. Essentially a 99% loss in a matter of days. So brutal. Glad I didn't own any but at this point I feel bad for the people who did. That's like a full 2-year crypto-winter's worth of losses in a single day. Pretty insane.
That being said they kind of deserved it. Everyone knew that a debt ratio higher than 100% was a really stupid idea. Everyone saw how LUNA climbed the market cap and no one questioned it. Infinite greed is infinite. This is what you get.
That's the thing about algo stable coins. Crypto is already totally unstable and volatile. By linking a stable coin to crypto collateral, that makes the collateral even more unstable and volatile in both directions. Yikes. There's got to be a better way!
How do we make less volatile assets?
The answer is and always has been and always will be: ELASTICITY. The ability for a market to expand and contract based on supply and demand is the mainstay of currency, and so far not a single crypto seems to understand this. There isn't a single cryptocurrency developer out there who's been like, "You know what? We need the price to go down right now, this market is overbought and we need to stabilize it." Nope, we never ever ever see that. It's always MOAR MOAR MOAR infinite greed lets see how high we can pump this thing. How's that working out thus far?
How can we achieve elasticity?
Well, how does the FED do it? They tighten policy when they need to bring the market down and they loosen it when they need to pump it back up. The way they do things is archaic and absurd. Crypto has so many more options, and none of them are being explored.
I've spoken a bit about this.
In it's most basic form: if we want to increase demand of an asset we can increase yield. This is akin to lowering interest rates, because crypto and fiat are opposites. Lowering interest rates is basically the same thing as increasing yields, because in crypto the user is actually the central bank. Want people to buy and hold your stable coin?
Then you need to INCREASE the yield that people get for holding the stable coin. But oh wait, LUNA/TERRA can't do that because they already had a ridiculously high static yield of 20%. Obviously during the good times they should have been reducing that 20% to as low as 1%-5%. If they were at say 3% rates right now they could jack up yields to 20%-30% right now to try and get people to buy into the system when they need it them most. Instead they are totally overblown with no more runway. Idiots.
Again, this is counterintuitive.
The idea that we need to increase inflation to increase the price and reduce inflation to reduce the price is the thing that nobody seems to understand. That's probably why no one is doing this correctly yet, because it's very hard to wrap our brains around the delayed reaction of economy over time.
What else?
The main way to stabilize the value of an asset is for products and services to actually be bought and sold in the currency. That's more of a long term goal and we can't really make that happen except by waiting for the infrastructure and vendors to appear. This will take a while, but if the market is oversold when this becomes more of a thing it will be very easy to go long.
Employees.
Another 'easy' way to stabilize a currency is for users to be paid a living wage for their work. Hive kinda does this with the whole blogging thing, and the top earners like myself make a good chunk of money, but the rewards are very subjective. We need more non-subjective jobs but this is a very difficult thing to achieve. More on this some other time.
20% on HBD
Do I think the 20% yield on HBD is stupid? No, not really. There's less than 10M HBD in circulation. Check out this cool site by @ausbitbank
https://hive.ausbit.dev/hbd
Hive basically needs to crash another 70% for the HBD haircut to even come into affect. Compared to UST, our debt ratio is very healthy, and Hive is comically oversold at the rank #200 level on the market cap. It makes sense that we would continue offering 20% during these hard times. With UST crashing into the dirt we might be able to pick up a little adoption. This is especially true with people like @khaleelkazi running around creating a liquidity pool on Polygon with the pHBD/USDC wrapped solution. Pretty cool.
But should the debt ratio start going up and if Hive did something like a 10x, then yes, the interest rate should be reduced to promote selling and conversions to create elasticity and stability for the network. Talk to me at $5 Hive and I'll change my tune.
Conclusion
The market is in a great spot right now. It's possible (however improbable) that crypto will outperform the market during a recession because crypto is already oversold before the recession happened. More likely we get another flash-crash and then we outperform the market, but whatever. Crypto is going to win out eventually just like it always does. I'm not worried.
However, the real issue is elasticity and stability. We need to be coming up with more innovative ways to make people feel safe in a escalating climate of uncertainty. That's the secret sauce that will pump crypto to the moon. Ironically pumping crypto to the moon is exactly what we don't want for stability, so the real issue is dealing with greed and lowing the price and yields back down to the ground when they get too high. Easier said than done I'm afraid.