Monthly Market Roundup: October 2024

Disclaimer: Author holds SOL, SUI, CLOUD and may have intra-day/week positions and/or airdrop allocations in other coins mentioned in the article. Views and opinions are that of the author alone and do not represent the views or opinions of Etherscan. None of this is financial advice. Always do your own research before aping.

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A New Dawn

The past month has been one of the more opportune periods in the markets for bulls since the ETF and halving catalysts earlier in the year. BTC printed both a higher low and higher high vs. August, hinting at a potential bullish shift in high timeframe market structure - this of course buoyed by the US Fed cutting rates (by 50bps) for the first time in 4 years while Token 2049 + Solana Breakpoint raged on in Singapore, followed by China’s PBOC announcing its biggest stimulus package since the pandemic - kindling hope for a seasonally bullish Q4.

As BTC continued its multi-month sideways chop in a 20% range, meta-leading alts like SUI (new gen L1) and TAO (AI) tripled from their September lows to erase 6 months of 70+% bleeds. Memes also had a renaissance with POPCAT gaining acceptance above $1bn marketcap while the big 3 of this cycle PEPE, WIF and BONK made 88%, 100%, 74% moves respectively.

In an uncertain year dominated by macro headlines about elections, inflation, tight monetary policy and geopolitical tensions, it’s been invigorating to see some justified hopefulness and sustained relief in the longer tail cryptoassets.

To honour this welcome change in conditions, we’re doing things a bit differently this edition, focusing on a couple example trade setups in a major meta (memecoins) using fundamental and technical analysis. Both setups will include a thesis and example entry, target(s) and invalidation triggers, providing a framework for capturing potential upside whilst managing risk appropriately. Note that these are not signals, calls etc. which you should follow, but rather examples to help you plan and execute your own trade ideas.

The Meme Renaissance

Before getting into trade setups, it’s worth exploring one of the driving forces behind the recent meme renaissance - Murad Mahmudov’s talk at 2049 - in which he highlighted the segment’s huge outperformance year-to-date and shared his thesis on why this is happening and will likely continue.

While well fleshed out, citing reasons both internal and external to the crypto industry, the thesis may be effectively summarised as:

• The token market being unable to sustain itself without retail flows, while retail’s motivation for participating in these markets are largely financial and recreational, rather than being supportive of the technology.
• The majority of altcoins not providing sufficient utility, generating sufficient revenue or profitable protocols not channeling sufficient value back to tokenholders to justify valuations.
• The lack of a level playing field for retail vs. private round investors and prevalence of low-float/high-FDV tokenomics resulting in large and rapid inflationary schedules.
• Majority of altcoins and memecoins are essentially just tables at the casino and memecoins are retail’s way to level the playing field and “gamble at their own tables”.

Although somewhat romanticised, and certainly unfair to apply as a blanket judgement on all tokens, there is an air of truth that seemed to resonate with a significant segment of the market given the reaction in the charts. I strongly suggest you give it a watch.

PEPE

Fundamental Thesis:

• PEPE is the largest ETH-based memecoin born this cycle with a market cap of $4.1bn, behind only SHIB ($10.4bn) and DOGE ($16bn) in the overall rankings. The Pepe Frog is by far the most meme’d of any character on crypto online forums, particularly X. With DOGE and SHIB reaching 95bn and 42bn marketcaps last cycle, there is precedent for much higher valuations for leading memes.

Technical Thesis:

• Trend indicator Hull Suite is green on the 1D indicating uptrend is intact.
• Break of multi-month diagonal resistance in September, currently consolidating above the 0.5 Fib retracement of September’s move, which also happens to be a weekly support/resistance level defined by the weekly close high from late August.

Potential Entry:

• This key level ~0.000092 can be taken as the bull/bear line of September’s range, and thus seems a viable point of entry. Bids could be layered in from 0.000094-0.0009 for example.

Target:

• First Take Profit (TP) level could be the next weekly resistance level above defined by June’s close low. Price has already rejected from this level once in October, providing further evidence of it’s significance.
• Second TP level could be September’s high of 0.00012.

Invalidation:

• The entry level being a key bull/bear line for September range also makes it a clean level for invalidation. I would take a 1D close below as a signal of invalidation, while a second consecutive daily close below would be confirmation to close.
• You could also practice tighter risk management by applying an arbitrary percentage e.g. 3 that you are willing to stop out at to fix risk on the trade. Doing so would provide a risk/reward ratio of 1/10 between this hard invalidation and second TP target - what most would agree creates a framework for a good asymmetric bet.

POPCAT

Fundamental Thesis:

• POPCAT has emerged as the leading Cat-themed memecoin and is the first to break through the $1bn market cap ceiling, currently sitting at ~$1.2bn.
• Catcoins are potentially undervalued vs. dogcoins for number of reasons outlined including relatively even pet ownership between the 2 animals globally as well as their higher prevalence in internet culture. We take their google trend images and youtube search stats to make this assumption.

Technical Thesis:

• Trend indicator Hull Suite is green on the 1D suggesting uptrend is intact.
• Break of multi-month diagonal resistance in September. It’s not uncommon for major resistance to support flip levels (in this case ~$1) to be retested after an impulsive break through before upward trend continuation.

Potential Entry:

• The 0.5 Fib retracement of September’s move ~ $0.97 is confluent with a weekly support level defined by the weekly close high from mid July, making it a clean bull/bear line in the range.
• There is also confluence between the absolute high from July (~ $1.05) and the highs of September’s consolidation range before the impulsive break.
• Accordingly, these two levels represent a logical entry range in which one could layer bids between for an ideal average entry ~$1 mark.

Target:

• There is little evidence of high timeframe resistance before current highs ~$1.5, making them the most obvious immediate upside target.
• It’s also possible to use fib extensions to identify targets for blue sky (no historical resistance levels) breakouts beyond $1.5, but we’ll save that for another time.

Invalidation:

• The lower end of the entry range ~$ 0.97 being a key bull/bear line for September range makes it a clean level for invalidation. I would take a 1D close below as a signal of invalidation, while a second consecutive daily close below would be confirmation to close.
• Like with the PEPE example, you could also use an arbitrary percentage for a hard stop to fix your risk on this trade.

Closing Thoughts

I hope you enjoyed a break from the dryer macro dominated content and learnt something about the process of identifying and executing trades. There is ample evidence in the news and charts that suggest tides are turning and opportunities abound. Uncertainty leading up to the US Presidential Election on November 5th will likely provide volatility, while a Trump victory probably sends us vertical. With Polymarket having Trump at 53%, it’s worth being at least partially allocated.

I bid you good luck, may your candles be green.