Hello friends.
Along with the merge, there was a brand new shitcoin released to the market. ETH Proof Of Work. This coin crashed instantly since the majority of traders sold all of their airdropped tokens, and has only now started to make a comeback. The people who bought this coin are already very deep underwater, and it is in a very strong downtrend on the higher time frame. On the lower time frame, however, it has nearly doubled in price and may be primed for further upside.
We can look at some of the fundamentals of this coin.
ETHW Supply: 120,524,000 tokens
Price: $8
Market cap: $964,192,000
One thing to think about when trading ETHW is that it should probably always be worth a lot less than ETC. This is because Ethereum Classic has been forked long before ETHW, and has built up a strong retail speculator community and a pretty good narrative. Their token also gains far more volume from traders, which adds to the idea that it should be more valuable.
ETC supply: 137,021,000 tokens
Price: $29
Market cap: $3,973,609,000
So as we can see, ETC is currently worth over 4 times as much as ETHW despite this rally. This valuation is logical since ETC reported a volume of $610 million today whereas ETHW could only muster up a meager $127 million.
The ETC community is strong and has a lot of low-intelligence fanboys who will buy this coin and hold it to their graves. The ETHW community has literally no fans, and the only people who are buying it are the ones who hope to sell it for a higher price a few days later. They don't feel "loyal" to their community, which is not good for a bubble to form.
In fact, not only is this lower price logical but we even think that ETHW is actually dramatically OVER valued. We think a fair price would be something like 5-10% of the ETC market cap, since the ETHW project is very risky, shows almost no cohesive community narrative, and has very poor volume.
A whale likely saw an opportunity for a pump and dump scheme with ETHW at a cheap price of $4.10, and decided to execute the following strategy. Another reason the whale might have wanted to pump the token was that it was being heavily shorted into the low-- the funding rate went as low as -1.3%, which means a ton of traders were shorting and the price to short was extremely high. By pumping the token when there are many shorts, the whale can obtain additional exit liquidity by liquidating the short positions.
Buy a bunch of ETHW tokens on perpetual futures markets for cheap prices
Accumulate as many ETHW tokens as possible on the spot market without increasing the price
Use market buy orders to make the price of ETHW form a parabolic rally which will cause retail suckers to buy the token
Close the ETHW perpetual long position at a profit
Short the ETHW token on perpetual futures
Sell all of the spot ETHW tokens
Close the ETHW perpetual short position
All finished, the whale may be able to make off with a profit of many tens or even hundreds of millions of dollars. All of this profit for the whale comes from retail traders who decide to buy into the hype and purchase a rising coin for a high price. The larger the market cap of the pumped asset, the more capital the whale needs in order to execute the pump, but the more profit the whale may be able to extract. This is because many retail traders are only comfortable trading the top 100 coins for example, so since ETC is not in the top 100, they will not contribute liquidity to the whale exit fund and the profit will be lower than it might be if it was a top 100 coin.
Since this coin is not yet listed on Binance, the whale may also pay Binance money for them to hold off listing the token until it peaks. This is because when the token lists on the largest exchange, Binance, a lot of retail traders who only trade Binance-listed coins will flock to buy it. The whale only wants this to happen when he sells, since then he will have someone to sell to. This is why listings on large exchanges are best seen as a bearish event.
At the current moment, we are likely in the phase where the market manipulator uses limit buy orders to accumulate the token. Since the token is super illiquid, they can't buy very much without moving the prices upwards. Soon they may choose to ignite a huge rally to bait retail traders into buying the coin.
The hardest part of trading a pump and dump like this is figuring out exactly where the peak will be. It's all a matter of how high the manipulator plans to move the coin. If they want to push it to $10, they can. If they want to push it even higher to $20, they can do that as well. If they want to start selling right now at 8 bucks, they could even do that.
But what they will always do, assuming their goal is to make a maximum profit at all costs, is maximize liquidity taken from retail traders. They want to be able to sell the most amount of tokens for the highest price possible. To this end, the peak should not come until we see a very large spike in volume, and also an extremely sharp move to the upside. This kind of volume spike and parabolic price action will attract retail traders like moths to a light, and that will be the perfect time for the manipulator to exit.
It should be expected that a structure similar to the LUNC pump and dump ultimately forms. Take a look at that here:
We shorted almost the exact top of this coin by knowing what to look for. The biggest key for shorting this kind of pump is to wait for a big sharp selloff. This will hint that the manipulators have stopped pumping the token and are now selling all of their coins as quickly as possible.
Once you short the top of one of these kinds of things, the best strategy is to hold onto the trade for the long term. It's tempting to close it when the prices collapse, but since the long-term direction of the asset is zero, you will make a lot more by riding it down much lower.
So, what is the plan for us? How will we trade this token? Well, we don't want to be long on this thing. It's really a terrible coin, and for all we know the whale is already done with their pump and has begun to sell. So we will sit and wait for now. If at some point soon, the price of ETC is let's say $15, and it has rallied in a strong parabolic manner with high volume, then we will start to pay attention and be waiting eagerly to pounce, like a falcon perching above a mouse that is hiding in its hole, and waiting for the mouse to pop out its head. When the price makes a convincing break from the trend of pumping, only then will we short this coin. And we will hold the short for a long time, probably several weeks, unless something changes.
Along with the merge, there was a brand new shitcoin released to the market. ETH Proof Of Work. This coin crashed instantly since the majority of traders sold all of their airdropped tokens, and has only now started to make a comeback. The people who bought this coin are already very deep underwater, and it is in a very strong downtrend on the higher time frame. On the lower time frame, however, it has nearly doubled in price and may be primed for further upside.
We can look at some of the fundamentals of this coin.
ETHW Supply: 120,524,000 tokens
Price: $8
Market cap: $964,192,000
One thing to think about when trading ETHW is that it should probably always be worth a lot less than ETC. This is because Ethereum Classic has been forked long before ETHW, and has built up a strong retail speculator community and a pretty good narrative. Their token also gains far more volume from traders, which adds to the idea that it should be more valuable.
ETC supply: 137,021,000 tokens
Price: $29
Market cap: $3,973,609,000
So as we can see, ETC is currently worth over 4 times as much as ETHW despite this rally. This valuation is logical since ETC reported a volume of $610 million today whereas ETHW could only muster up a meager $127 million.
The ETC community is strong and has a lot of low-intelligence fanboys who will buy this coin and hold it to their graves. The ETHW community has literally no fans, and the only people who are buying it are the ones who hope to sell it for a higher price a few days later. They don't feel "loyal" to their community, which is not good for a bubble to form.
In fact, not only is this lower price logical but we even think that ETHW is actually dramatically OVER valued. We think a fair price would be something like 5-10% of the ETC market cap, since the ETHW project is very risky, shows almost no cohesive community narrative, and has very poor volume.
A whale likely saw an opportunity for a pump and dump scheme with ETHW at a cheap price of $4.10, and decided to execute the following strategy. Another reason the whale might have wanted to pump the token was that it was being heavily shorted into the low-- the funding rate went as low as -1.3%, which means a ton of traders were shorting and the price to short was extremely high. By pumping the token when there are many shorts, the whale can obtain additional exit liquidity by liquidating the short positions.
Buy a bunch of ETHW tokens on perpetual futures markets for cheap prices
Accumulate as many ETHW tokens as possible on the spot market without increasing the price
Use market buy orders to make the price of ETHW form a parabolic rally which will cause retail suckers to buy the token
Close the ETHW perpetual long position at a profit
Short the ETHW token on perpetual futures
Sell all of the spot ETHW tokens
Close the ETHW perpetual short position
All finished, the whale may be able to make off with a profit of many tens or even hundreds of millions of dollars. All of this profit for the whale comes from retail traders who decide to buy into the hype and purchase a rising coin for a high price. The larger the market cap of the pumped asset, the more capital the whale needs in order to execute the pump, but the more profit the whale may be able to extract. This is because many retail traders are only comfortable trading the top 100 coins for example, so since ETC is not in the top 100, they will not contribute liquidity to the whale exit fund and the profit will be lower than it might be if it was a top 100 coin.
Since this coin is not yet listed on Binance, the whale may also pay Binance money for them to hold off listing the token until it peaks. This is because when the token lists on the largest exchange, Binance, a lot of retail traders who only trade Binance-listed coins will flock to buy it. The whale only wants this to happen when he sells, since then he will have someone to sell to. This is why listings on large exchanges are best seen as a bearish event.
At the current moment, we are likely in the phase where the market manipulator uses limit buy orders to accumulate the token. Since the token is super illiquid, they can't buy very much without moving the prices upwards. Soon they may choose to ignite a huge rally to bait retail traders into buying the coin.
The hardest part of trading a pump and dump like this is figuring out exactly where the peak will be. It's all a matter of how high the manipulator plans to move the coin. If they want to push it to $10, they can. If they want to push it even higher to $20, they can do that as well. If they want to start selling right now at 8 bucks, they could even do that.
But what they will always do, assuming their goal is to make a maximum profit at all costs, is maximize liquidity taken from retail traders. They want to be able to sell the most amount of tokens for the highest price possible. To this end, the peak should not come until we see a very large spike in volume, and also an extremely sharp move to the upside. This kind of volume spike and parabolic price action will attract retail traders like moths to a light, and that will be the perfect time for the manipulator to exit.
It should be expected that a structure similar to the LUNC pump and dump ultimately forms. Take a look at that here:
We shorted almost the exact top of this coin by knowing what to look for. The biggest key for shorting this kind of pump is to wait for a big sharp selloff. This will hint that the manipulators have stopped pumping the token and are now selling all of their coins as quickly as possible.
Once you short the top of one of these kinds of things, the best strategy is to hold onto the trade for the long term. It's tempting to close it when the prices collapse, but since the long-term direction of the asset is zero, you will make a lot more by riding it down much lower.
So, what is the plan for us? How will we trade this token? Well, we don't want to be long on this thing. It's really a terrible coin, and for all we know the whale is already done with their pump and has begun to sell. So we will sit and wait for now. If at some point soon, the price of ETC is let's say $15, and it has rallied in a strong parabolic manner with high volume, then we will start to pay attention and be waiting eagerly to pounce, like a falcon perching above a mouse that is hiding in its hole, and waiting for the mouse to pop out its head. When the price makes a convincing break from the trend of pumping, only then will we short this coin. And we will hold the short for a long time, probably several weeks, unless something changes.
Comment:
ETHW pumped as we expected it to. Now it's time to look for opportunities to short this coin. Keep in mind, it might go higher in the short term, but in the long term, it will trend towards a much lower price!!