Calculated Moves & The Layer 1 Effect
A Fairly Solid Bet
I have often spoken of, what I refer to as, the layer 1 effect, and how enormously powerful it is. This dynamic was the founding thesis behind my BONK call a few weeks ago. To understand my reasoning, and why I considered it a good investment opportunity, you can check out the original article here. Essentially, BONK was experiencing a knock-on effect from Solana’s price surge. Not only that, but BONK was beginning to show signs of becoming Solana’s first “meaningful” memecoin. Needless to say, BONK has gone on to perform exceptionally well.
Since my initial publication, introducing BONK as a potential Solana-based altcoin gem, the token has gone on to rally as high as 900% and will continue to perform well, in my opinion. This has taken place in a matter of weeks and points to the incredible gains on offer in the altcoin market. However, my intention behind this article is to expound upon how I intend to further leverage the layer 1 effect in this bull market.
Yes, identifying smaller projects within a particular layer 1 ecosystem can be extremely lucrative, and I have mentioned this several times. However, it’s not the only card you can play. When a particular layer 1 performs well, up-and-coming projects within its ecosystem moon alongside it, and oftentimes, more significantly, in terms of percentage points. It’s important to note that this surge takes place due to one activity… trading.
Yes, DEX volumes begin to surge, as do their native tokens. Choosing to stack DEX tokens in a bull market can be incredibly profitable. This is my reasoning behind this particular strategy and is the motivation behind the ongoing accumulation of certain DEX tokens. As you may know, DeFi takes an extra hard beating in a bear market, and so many of these tokens are currently trading at heavy discounts, making this idea even more attractive.
Chains I am Focusing On
As I have said many times before, Solana will be the Ethereum of 2025, so, SOL-based DEXs are a no-brainer. Raydium is my main exposure at this point. We will have to see what new DEXs launch in the bull market… it always happens. In terms of Avalanche, I have begun accumulating Pangolin, which is currently the predominant DEX on Avalanche. These tokens are currently trading at significant discounts. For instance, Raydium is currently trading at $0.35 and has an all-time high of approximately $17.
It wasn’t too long ago when RAY was trading below $0.20, which is an indication that it is responsive to the layer 1 effect, which is a good sign. In terms of Polkadot, it’s PDEX and a few others. I think Polkadot is going to surprise investors in this bull market. This is the basic plan and could see many revisions over time. However, I am fairly confident it will be a profitable venture. It’s all about constant accumulation, and maximizing the dips.
Final Thoughts
It’s not only about the diversification of assets but also the diversification of ideas. What happens if a particular narrative or idea fails to unfold, and you are holding heavy bags? This is why adding to your winners is a simple, yet important strategy, and shouldn’t be overlooked. Anyway, back to the charts… see you next time, and keep working towards your goals!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.