What a week! It’s definitely been a “wave” of action in crypto over the past 7 days.

Are you prepared for what’s next? 👀 

This Week’s Juice 🧃

• 🚨 Volatility Index spiked 150%+ on Monday (highest since COVID)
• 🟢 Japan Emergency BoJ Meeting decided against further rate hikes
• 🔥 Over 75% of carry-trade unwinded preventing further panic
• 🏦 US Treasury introduces Liquidity Buybacks of $50B

What’s on today?

🔷 Market Analysis ✨

🔷 Jump Crypto & Risks of Restaking/Stable Token depegs ✨

🔷 Our portfolio allocation strategy 📈

🔷 Yield Farming Opportunities 🚜🥛

🔷 Key Token Unlocks 🪙

Got any suggestions? Send us a message!

Premium Benefit: We’ve partnered with Metrix Finance — a yield farming aggregator, and gotten our premium subscribers a 30 day FREE trial! 🔥 🔥 🔥 

Access our Yield Farming section to discover more! 😉 

Getting up to speed! ⭐

“Black Monday” 2024 - Volatility Index makes COVID-19 highs overnight

Monday was one of the toughest days we’ve had in a long time.

Not just seen in the crypto markets — but a ripple throughout both US and Global Markets. And we’ve made it though — hopefully in one piece! 😄

This was certainly a black swan event, almost impossible to predict. A humble reminder of why developing a robust portfolio and implementing hedging strategies is so critical to long-term growth. Time for the personal hedge fund. 😉 🔥 

We can see the impact of Monday using the VIX (Volatility Index) which tracks the S&P500. Often called the “fear index”, we can get insights into the amount of panic in the market. 💠 

The VIX increased over 150% on Monday, reaching a high of 65 — not seen since the COVID-19 panic, or the 2008 crash! 👀 

Since then, we’ve retraced to ~21, which shows the majority of the panic has eased. Next, we’ll mention a few of the reasons why this was short-term.

Pro Tip: Often, when the market is in panic and rushing to exit — that is the perfect time to start considering an entry.

US Treasury Introduces Liquidity Buybacks

The US Treasury has planned a buyback program which started on 7 August to inject funds into the bond market to support liquidity. This is in order to boost the economy and support the Japan Liquidity “rug pull” 🤣

• Total Buyback: ~$50B 🔥 🚀 
• August: $8.5B
• September: $31.5B
• October $10B

While there was no emergency Fed meeting this week. The panic has eased and it could be argued that an emergency rate cut may narrow the interest rate gap for the Japan Carry Trade even further.

JP Morgan says over 75% of Japan Carry Trade unwinded already! 🚀 

Source: Bloomberg

No Further Rate Hikes — Japan Emergency BoJ Meeting

Japan had its worst market crash since 1987 on Monday, too. They called an emergency meeting and decided to maintain current interest rate levels. 🚀 

This is great news and alleviates further panic towards the carry trade, however, the strategy is based on a complex system which is not only impacted by interest rates. Perhaps the unwinding may have occurred even if we hadn’t had a Japanese rate hike last week! 👀 

Ethereum Spot ETF Update 🔹 

• Average Daily Traded Volume decreased to ~$350M (~30% relative underperformance of BTC Spot ETF)
• Daily Net Flows have started turning positive as ETHE outflows stop, however still underperform the BTC Spot ETF flows
• All expected, as BTC Dominance continues to increase — we will see further underperformance of the ETH Spot ETF until this turns around.
• The real test for demand for the ETF is when BTC Dominance decreases further. 👀 

Risks of restaking/stable depegs 👀 

It’s important to consider the potential risks of using restaking tokens or stablecoins.

Jump Crypto’s recent sell-off resulted in over $400M in wstETH being pulled out and over $277M in ETH being transferred to exchanges — this raises some eyebrows as to whether a black swan event could cause these restaking tokens to depeg!

While stETH has a market cap of over $11B, a continuous amount of selling pressure or withdrawal of staked ETH may result in a collapse of the peg to ETH — similar to the Luna UST collapse.

Note: Lido’s stETH is backed by staked ETH on their platform.

This is a hypothetical event, however, this has happened many times for stablecoins in the past.

May we remind you about UST’s collapse in a more visual manner. When we all thought Terra Luna would change the world, this happened:

And this could happen again — for any synthetic asset, restaking token or stablecoin!

In fact — USDT may be at risk of a depeg in the future. Why?

Because they have never had a formal audit declaring their reserves; we could make an entire lecture about this, but here’s an interesting video you can watch from Coffeezilla. Even though 3 years old, not much has changed!

We want to encourage a robust portfolio allocation — so here’s our key tips against this:

• Diversify your stablecoin usage in crypto — and understand the risks behind each one. (e.g: Ethena’s stablecoin is dependent on positive funding rates for ETH)
• Diversify your restaking token / synthetic asset allocation.
• Key point: Don’t be dependent on any one company to determine your synthetic assets.

Market Analysis ✨

We’ve had a huge bounce to the upside from the lows on Monday. Our trade ideas from Monday have been doing extremely well — let’s investigate what’s to come!

Our proprietary TAGO Ratio is signalling a reversal in selling pressure, which may mean a bullish next couple of weeks to look forward to!

BTC Analysis

Looking at the upside 📈 🚀 

• Yesterday we had a series of MASSIVE delta surges which leads us to suspect Saylor’s $2B clip of BTC Liquidity has come into play! (🙏 please saylor don’t tweet anything)
• We’re extremely bullish about what’s to come in the next few weeks.
• Liquidations @ ~67k and @ ~70.5k 🧲 
• Current High (key macro resistance) @ 62.5k remains 🧱 
• Potential SFP short trade at 62.5k if we lack delta/demand as we retest this level (potentially during this weekend)
• Key Resistance Levels: 64.6k, 67k, 68.3k, 69.7k 🚀 
• We will be looking at taking profit at these key resistance levels (IF WE HAVE A REACTION)

Looking at the downside 📉 👀 

• Value Area High @ 57.7k
• Local Point of Control (POC) @ 56.8k
• If we fail to hold these two, we will look at further drops to 53k and potentially closing any long positions
• If this happens, we will look for long trades @ 49k lows and 44k, 41.6k.
• Weekly VWAP possible weekend retracement @ 55600 (long opportunity)

Trade Idea - Take Profit

• We have taken partial profit on long positions @ 62.5k as part of our CME Gap retracement — and high confluence as this area marks key resistance.

Ethereum Analysis

• BTC Dominance remains high — we expect continued repressed price action for ETH and alts. However, ETH could experience a “slingshot” moment at some point, so we think you shouldn’t ignore any opportunities!
• However, if BTC drops to make lower lows, ETH will certainly underperform and fall much lower, so ensure any leveraged positions have strict stop losses.
• Key Levels to the Upside: 2730, 2850, 3012, 3318, 3535
• Key Levels to the Downside: 2540, 2460, 2250, 2218, 1994
• Weekly VWAP possible weekend retracement @ 2425 (long opportunity)

Altcoin Market Analysis

• We’ve stressed against going fully risk-on in altcoins for the past few weeks. However, we’re excited to share with you that altcoins may start to outperform BTC in the next few weeks. (We hope!)
• TOTAL3/BTCUSD correlation has been fairly positive during the weekend crash, not making new lows; as might be expected. 🔥 
• Altcoins are on massive discount, we hope you have managed to take some blue-chip buying opportunities in preparation for the next few months of price action!

Investment Strategy 📈

A Risk-Off approach to your portfolio would have done you well throughout last weekend and into Monday.

Having a large portion of cash available would have allowed you to take advantage of dips and a 48k BTC low.

We’ve modified our experimental allocation for next week by making the following changes:

• Long-Term Strategy: +7% (e.g. buying BTC/ETH dip) 🔼 
• Short-Term Strategy: +5% (e.g. entering short-term altcoin positions due to potential rebounds) 🔼 
• Risk-Off/Stable Lending: -12% 🔽 

Type

% Allocation

Yield Farming

20%

Focus on projects with low token unlocks

Short-Term Strategy

15%

e.g trades (or else in USDC lending)

Risk-Off/Stable Lending

28%

e.g USDC lending

Long-Term Strategy

35%

e.g Bluechips & Long term plays

Hedging

2%

e.g Protective Puts

DeFi & Yield Farming 🚜🥛

Chain Performance

• Further TVL Bleeding as Bitcoin Dominance continues upwards
• Sui shows strength in the past week’s shakeout up over 35% in value since we mentioned their SUI/USDC pool last Friday! 🚀 

Yield Farming Opportunities

Due to the recent high volatility and continuous altcoin underperformance, we advise to limit your yield farming.

Our strategy currently allocates 20% of the portfolio to yield farming, however this is currently focused towards medium-risk assets such as ETH.

1. High Risk/High Yield

• Pool: EXA/WETH on ExtraFi (Optimism)
• Project: Exactly
• Current Yield: 0.44% Daily APR (unleveraged; up to 0.84% daily @ 2x leverage)
• Not as good as our medium-risk option in the short term however, we’re interested in lending protocols for the future, and this one is launching its own Debit Card!

2. Medium Risk (ETH/USDC) EARNING OVER 1% DAILY! 🔥

• Pool: WETH/USDC on Uniswap (Base) @ 0.30% fee
• Warning. This pool involves a concentrated range and may result in higher impermanent loss.
• Range: $2250-$2900
• Current Yield: 1.99% Daily APR 🚀 🚀 
• Who wouldn’t want to have an ETH pool earning over 1% a day, right?
• We think this is a golden opportunity in this range as liquidity has not rebalanced into a lower price range since Monday’s dump.

We used Metrix Finance to discover this amazing pool — a brand new yield farming explorer!

They have a membership, however, we managed to secure you a 30 Day Free Trial if you sign up here!

3. Stable/Low Risk

• Pool: USDC/gUSDC on Timeswap (Arbitrum)
• Current Yield: ~40% Yearly APR 🚀
• 35-40% a year for lending out stablecoins? Count me in!

Altcoin Zone 🪙

Upcoming Token Unlocks

A massive wave of token unlocks coming in the next 7 days! Here are the highlights. Be aware.

• $W - 9 August 2024 - 1.54% of M. Cap ($8.72M) 🟡 
• $CGPT - 10 August 2024 - 4.30% of M. Cap ($2.83M) 🟡 🟡 
• $CETUS - 10 August 2024 - 6.11% of M. Cap ($1.14M) 🔴 
• $GFI - 11 August 2024 - 1.59% of M. Cap ($2.82M) 🟡 
• $IO - 11 August 2024 - 1.11% of M. Cap ($1.74M) 🟡 
• $APT - 12 August 2024 - 2.41% of M. Cap ($64.54M) 🟡 
• $SAND - 14 August 2024 - 7.94% of M. Cap ($47.58M) 🔴 
• $RSS3 - 14 August 2024 - 3.33% of M. Cap ($2.44M) 🟡 
• $STRK - 15 August 2024 - 3.95% of M. Cap ($24.22M) 🟡 🟡 
• $UNI - 16 August 2024 - 1.39% of M. Cap ($51.08M) 🟡 
• $ARB - 16 August 2024 - 2.77% of M. Cap ($53.69M) 🟡 

We’re working on creating a structured system for our DeFi & Altcoin sections, so we want your feedback on which altcoins or sectors you’re most interested in. This allows us to prioritise your interests and find the best opportunities for you to dive right into!

How much of your portfolio do you allocate to altcoins?

Tell us a bit about your allocations and then submit your favourite alts/sectors!

I'm a BTC Maxi, sorry! 0-20% 20-50% 50-90% What's Bitcoin? My middle name is ALTS!

Thanks for reading today’s publication! We crave your feedback — got any suggestions for a specific analysis or questions for us?

Get in touch with at contact@tagoresearch.com or pop us a message on X at @tagoresearch.

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Disclaimer: The PokPok Pulse newsletter and any curated information provided by Tago Research are not intended as Financial Advice but as educational content for insights into the crypto market. Only invest what you can afford to lose. We are not liable for any losses incurred.