🧠 Happy Friday, PokPok fam!

We're thrilled to bring you the latest edition of the PokPok Pulse.

This week has been nothing short of incredible, and we can't wait to share some exciting updates with you. 🔥 

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This Week’s Juice 🧃

• Bitcoin Dominance hits Macro Highs @ 56.5% 🚀 eyes on 60% 👀 
• The path for the Fed Rate cut is all clear! Potential hard cuts ahead 🛠️ 🛣️ 
• Economy: Unemployment Rate over expected by 0.2% 🔥 @ 4.3% 🏦 
• Economy: Non-Farm Payrolls under expected by 61K 🐔 @ 114K 🏦 
• US Gov. moves $2B of BTC this week after Bitcoin Reserve Bill 👀 

What’s on today?

🔷 Market Analysis ✨

🔷 Our portfolio allocation strategy 📈

🔷 Yield Farming Opportunities 🚜🥛

🔷 VC Investments & Token Unlocks 🪙

Got any suggestions? Send us a message!

Getting up to speed! ⭐

US Fed Interest Rate Pivot + Economic Reports 📉 

Here are the main key economic reports for this week. The worse we get — the harder the pivot.

Report

Result

What does this mean for crypto/economy?

Fed Interest Rate Decision

No change, as expected.

Dovish feedback from the fed giving insights on potential future cuts.

Unemployment Rate

Over expected by 0.2% 🔥 🔥🔥 @ 4.3%

U.R. has been increasing for the past few months, marking a high from November 2021. Higher U.R means weaker labour markets which suggests more slack for the economy. This allows for larger rate cuts without worrying much about inflation.

Non-Farm Payrolls

Under expected by 61K 🐔 @ 114K

Low NFP marks slower job growth meaning less inflationary pressure on wages. This “cooling” job market pushes for rate cuts even more.

Given the results of economic reports in the past couple of weeks and today, the probabilities of a harder rate cut have shifted significantly!

This is how fast things change! We’ve now got a 70.5% chance of getting a 50bps rate cut in September, which is massive.

Put your bull hats on boys, this Winter’s got some liquidity! 🥳 

Ethereum Spot ETF Update 🔹 

Key Points:

• Volume has cooled off in the past few days — averaging ~$400M. As mentioned before, this is not a key indicator of demand (yet) as we’d need to gather a bit more data.
• What we do know is net flows are looking a bit more green with ETHE outflows cooling off — 1 August being the lowest outflow for ETHE @ $78M.

US Gov. starts to move BTC

The US government had ~$2B Bitcoin transferred from its wallet, following the Bitcoin Reserve Bill proposal, which has sparked speculation about its potential impact on the already challenging crypto market. While the bill, if passed, would authorize repurchasing the sold Bitcoin, the short-term selling pressure may compound the ongoing Mt. Gox distribution effect.

Market Analysis ✨

BTC Dominance

BTC Dominance reaches new highs since April 2021 @ ~56.5%. We’re looking at a potential increase to 60% as we lead into September’s rate cut.

What does this mean for crypto and alts?

As BTC Dominance increases, capital flows remain flowing out of alts and into BTC (or USDT, see chart below).

The crypto market is still against going full risk-on, however, the desperation for profits continues with memecoins taking the limelight (for now).

We may irritate you with our belief that memecoins investments should be minimised or avoided, however, the moment you want to be serious about making consistent profits, you’ll realise that there’s no liquidity or cash flow in memes, other than the cash flow the devs make from your buys. 😁 

Alts will continue to bleed until after the cut, which is why it’s extremely difficult to place any long-term or leveraged positions in alts at the moment.

Eyes on any alt longs at all times 👀 

BTC Analysis

In our strategy section on Monday, we mentioned looking at BTC making an SFP of the ~63k level as the next potential entry for longs.

Turns out, we had this play through yesterday: a take of the previous ATH lacking in delta to the upside and a swing failure, quite smoothly to ~62.5k.

Just before posting this, we’ve got another sweep to the local low and a chunk of negative delta (longs liquidating & shorts opening) — we’d be looking at having a Swing Failure of the 62.2k low (test just below the low and bounce) and if there’s a good reaction, retake 67k as the next target.

We may well not even have a swing failure and continue to the upside as we’ve already gotten a lot of long liquidations on today’s market reaction for Unemployment & Non-Farm Payroll. For this reason, I’d say any open longs to not panic just yet.

However, if we do lose 62.7k and close below, we may look to come even lower, potentially going into the 50s.

It does seem like we’re getting some leveraged shorts coming at these levels which might be taken out.

Any longs open should check the delta at 67k. If there is little buying demand, it may be a good time to take a profit, however, the next target after that would be our 70k high again.

Ethereum Analysis

Ethereum has been significantly underperforming BTC during the past few days, making new lows.

• Targetting 2,925 → 2,850 for ETH as a potential low and long opportunity (line in the sand to not break)
• Primarily due to ETF Outflows and its volatility — nothing to be worried about at the moment
• Increases in BTC dominance may have led to ETH sell-offs too

Altcoin Analysis

• TOTAL3 representing altcoins signals a further bleeding of alts over the next few weeks (TOTAL3 against BTCUSD continues its downtrend)
• We advise caution on longing altcoins due to their further underperformance against BTC over the next couple of months leading to mid-September.
• Target: ~540B as a potential bounce back for TOTAL3, however will likely range up to November without significant movement.
• Target: ~8.9M for TOTAL3/BTCUSD to watch out for potential back in altcoin dominance.

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Investment Strategy 📈

As alts continue to bleed, Bitcoin Dominance tops highs and the stock market is on a potential freefall, we’re aiming for a 60% long exposure level with a focus on lower-risk blue-chip assets until after the rate cut.

At the same time, we are keeping reserve capital available for dollar cost averaging in conviction altcoins and redistributing and yield farming profits to these alts for future gains.

We're currently building a hedge fund model which can be packaged into your own personal hedge funds, here are our current experimental allocations for current market conditions:

Type

% Allocation

Yield Farming

20%

Focus on projects with low token unlocks

Short-Term Strategy

10%

e.g trades (or else in USDC lending)

Risk-Off/Stable Lending

40%

e.g USDC lending

Long-Term Strategy

28%

e.g Bluechips & Long term plays

Hedging

2%

e.g Protective Puts

DeFi & Yield Farming 🚜🥛

Chain Performance

• Significant decreases in TVL in the past week as DeFi/Altcoins continue to bleed
• An interesting outlier is Scroll which surged ~62% in TVL this month. It could be good to look at potential Yield Farming opportunities there to capitalise on an increase in volumes.

Concentrated Liquidity Farming

We advise against concentrated liquidity farming if you don’t have experience with full-range farming. This is because, while there are high yields, due to the bleeding nature of alts at the moment, you are likely to see much more impermanent loss due to downside volatility.

If you are looking to do CL farming before the market turns around after the rate cut, we’d say choose more stable blue-chip pairs to utilise, where you wouldn’t have to rebalance as much.

Yield Farming Opportunities

1. High Risk/High Yield

• We’ve got our eyes on the long-term performance of the Sui blockchain which has done pretty well in the first half of 2024.
• Great opportunity for Sui holders who want to DCA during a bleeding market.
• Sui Blockchain TVL has decreased significantly, yet yields remain pretty high as volume is maintained.
• This could be a golden opportunity as there is more demand for liquidity in the market after the Fed pivot.

2. Medium Risk (BLUECHIP + POINTS)

• As we mentioned Scroll as leading the TVL increases for the past month, we thought we’d give you an opportunity which fits for the next few months!
• Tranchess allows for liquid restaking of ETH while collecting leveraged yield from points farming without any additional risk!
• By holding the yield tokens earned from staking weETH at 8.6% APR, you earn 40x the points on ether.fi which would result in ~0.27% DAILY!

3. Stable/Low Risk

• Superform calls themselves the “universal yield marketplace”, and they aren’t wrong!
• One of the key projects mentioned in the VC Investments section today, Morpho, has an EUSD pool on Base in which you can currently earn ~27% APY which is pretty crazy for stablecoins.
• Similar to last week’s USD+ on ExtraFi, however, we’ve got a 30-day average @ 26.82% APY for Morpho EUSD which gives us a bit more confidence in sustainability! 🔥
• On top of that, using Superform’s yield protocol gives you points for their future token Airdrop 👀 (calling all airdrop farmers) 🔈️ 

Altcoin Zone 🪙

Upcoming Token Unlocks

In a bleeding market with high BTC Dominance, we want to stay relatively far from projects with high token unlocks. Take this as “projects with high inflation” which may have sell pressure:

• $W - 3 August 2024 - 33.33% of M.Cap ($138.9m) 🔴🔴🔴
• $ENA - 4 August 2024 - 0.82% of M.Cap ($5.44m) 🟢 
• $IMX - 9 August 2024 - 2.11% of M.Cap ($42.54m) 🟡 
• $XAI - 9 August 2024 - 6.91% of M.Cap ($9.55m) 🔴

VC Investment Highlights

Yesterday, MORPHO had a massive $50M investment round by huge names such as a16z, Coinbase Venture, Pantera Capital etc.

What is Morpho?

Morpho is a decentralised lending protocol (noncustodial), similar to Aave and Compound.

We’re big fans of DeFi Lending as it:

• Allows us to earn yield
• Permits the market to grow through lending
• Encourages crypto adoption due to liquidity available
• Potential utility tokens to invest in (revenue sharing?)

They recently launched on Base, which is awesome to hear too. It seems that their newest protocol version is focused on Morpho Blue, where they engage DeFi lending using trustless smart contracts.

They seem pretty established in the DeFi space and could be not only an interesting DeFi play but also an Infrastructure investment as they build on other platforms!

Their governance token $MORPHO seems like the best way to gain exposure to the platform if you wish. It does look like the company plans to do revenue sharing in the future for protocol fees collected, which would be the incentive to hold other than governance voting.

Pro Tip: We need projects to provide additional incentives other than governance for tokens to be successful and not just an airdrop farm. If the protocol is successful and has this aspect of revenue sharing, it could be an interesting thought to look at!

It does seem that investors and team members hold a large proportion of the supply distribution, however, the launch is said to be done in a decentralised way so perhaps there is a more convenient approach to avoid future sell pressure.

• News Highlights
• Altcoin Picks
• Altcoin Technical Analysis

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.