This article is part 3 of the Flash Crash Discussion, this includes my watch list for right now. I will also use the metrics we discussed in part 2 to show my reasoning.
Key Strategies Reviewed
Before we dive into the list, I want to again point out a few important concepts. BTC and Ethereum are perfect for the long-term holder who likes to dollar-cost-average. When holding mainly the two, an investor does not need to make many moves they just buy in slowly and hold. Getting involved into practically any other token (alt coins) introduces a much different level of risk. We saw this risk expressed in real time during the recent flash crash. Holders who mainly held BTC/ETH had much less of a swing downward regarding portfolio value. Holders who have mostly alt coins really felt the pain with many tokens dropping well over 30%.
If you want to dabble in alt coins, you need a strategy. You need an entry strategy, this is your buy in, do you dollar-cost-average, or do you lump sum a large dip such as this one. The lower market cap the token you are buying, the less percentage weight it should carry in your total portfolio. When buying a token, compare it to like tokens that are larger, and pick an initial sell price. This first sell might look something like sell your initial investment value at a 2-5x return.
Say you invested 1,000$ into DOT and the value went up 5x, you could sell 20% of your now 5,000$ and you would have all your initial investment protected. I use this strategy with any token under 10-15Billion dollar market cap. From that point the sky is the limit, it might be smart to write down some price targets for future profit taking. When I have sold most of my price targets, I like to leave what we call a “moon bag”, when I am finished with many projects, this is about 20% of the tokens left, incase the project has another leg upward. Strategies are personal, I also like to sell 33% at three different targets when I know I am just swing trading a project. I did this with Convex Finance, I sold 33% of my bag at a 3x, 33% at a 5x and the rest at a 6x. Just remember, everything functions differently than the stock market, alt coins wildly fluctuate, and you can easily miss an opportunity if you are overly greedy.
DOT- Look at the main image of this article, there you can see the metrics in part 2 in action on the DOT/USD chart. You will notice the Candlesticks have dropped below the bottom Bollinger Band; this indicates we are about as low as we have been for several weeks. Combine this information with the staggering 27 Relative strength index (RSI). Remember the RSI indicates momentum and buying and or selling power, RSI below 30 indicates heavily oversold. Now we do not need to be professional traders because we are focusing on fundamentals, DOT is fundamentally very strong. DOT is a pick on the list that is beaten, and down, and forgotten about, this is how we swing trade longer term time frames. For those of you that have been reading we bought DOT very early in the year and sold the news on the parachain auctions around 45-50$. We are now redeploying funds on this discounted price with the same backing fundamentals.
AVAX- makes the list because I believe it will repeat the success of Solana in the next few months. For those of you that have been reading we entered AVAX at ~50$ and did not sell the 140$ push we recently saw. AVAX was a bit of a tougher buy in before the crash, but I bought some more around 90$ because I believe it will rebound with strength to the 225$ range. My first sell target for AVAX is 223$ because I like to sell slightly below psychological round numbers or factors of 5/10 etc. Looking at the AVAX chart we are not seeing the same story as DOT, we are seeing strength, it rejected this market crash and barely dropped below the moving average. I believe AVAX will ride the upper Bollinger band again soon. AVAX is where I do most of my defi and farming, I have my largest weight in the ecosystem overall because the farms on trader JOE and the emerging ecosystem.
Terra (LUNA)- (please note we swing traded Luna and thankfully exited the project before it crashed) makes the list as another strong token resisting the market dump. We were buying into Terra recently at 38$ and I am not selling a single token until 88.5$. The price targets for LUNA short term are around 90$ and again, I like to sell below psychological levels. LUNA currently is riding the upper BB on the daily chart showing immense hype and attraction. LUNA might not be at the best buy in price now, but it would not hurt to have some exposure. One great thing about LUNA is that you can just profit take right into UST, their stable coin, and get a 20% yield using the anchor protocol, and terra station wallet.
ATOM- Cosmos (ATOM) is a project I covered September 15th that I believe is incredibly undervalued. ATOM was showing extreme hype right before this crash and has not yet rebounded. The ATOM chart looks like DOT in that it has dropped below the lower band, and the RSI is on the lower side. ATOM has strong fundamentals; LUNA is built upon its blockchain along with many others. ATOM aims to be interoperable with every major blockchain, while still providing low fees and fast transactions. I am currently staking my ATOM on the kraken exchange for ease of use. I have also staked ATOM in the exodus wallet previously.
SAND- We have been watching SAND for a few months as a metaverse play. SAND made it onto our first watch list around 70 cents and we have been looking for a buy in ever since. This appears to be the time if you want some exposure, we believe SAND will overtake the price of Axie Infinity over time and grow to be the largest market cap metaverse token. SAND is showing similar strength like AVAX and LUNA and barely dropped below the moving average. The RSI is still above 50, I did not buy SAND this week.
Elrond- EGLD we have not covered before but we swing traded it during the summer crash and have been following the project for most of the year. EGLD was showing strength before this crash also. The daily chart is like DOT breaking past the low band, EGLD has an RSI in the mid-30s also. For EGLD I want to show the EGLD/ETH chart to show its relative discount vs. Ethereum, all this data combined is a buy in for me. We can see a massive cool off vs. Ethereum over this crash. A full discussion on the EGLD thesis will come soon.
UOS & PYR- [Ultra] or UOS we recently covered and my first buy in was around 70-80 cents, PYR, I started buying this week, they are both on Kucoin. These two tokens are more speculative high-risk bets, but we are covering them because they are both safer than investing in a single game. Ultra aims to overtake steam for PC gaming by using blockchain and NFTs to build an ecosystem. Vulcan Forged (PYR) has a different take by having several games built within the ecosystem and allowing for play to earn incentives. Vulcan Forged players can earn NFTS that they can then stake for rewards and or trade. It is important to note that PYR is partnered with Polygon (we love polygon) and Sandbox (SAND).
MATIC- I have been buying MATIC since about 70 cents, I have been dollar-cost-averaging and staking for months. I am not buying MATIC now because it has pumped in price too much recently, I would however place it in my top 3 favorite projects.
This is a list of some of the main tokens and projects I am looking to buy right now. For those of you that have followed along, you know I am not a professional trader and prefer to trade with fundamentals and market psychology. I wanted to try something a little bit different this time around and show some simple metrics I use to be more efficient with my buy ins. Please do your own research, this information is education, not financial advice. Stay safe out there!