April was a bad month for the market. The average narrative token is down 30% and most tokens gave back their entire 2024 gains.
Almost all narratives are down. Excluding Friend Tech, and one or two tokens that did well because of some announcement or a catalysts. Like Vitalik supporting the privacy project Railgun, which pushed RAIL and the privacy narrative to perform well, but these are anecdotal, so we can ignore them.
To see how significant an average drop of 30% is, we can see on my History of Narratives query (Link) that the worst month we’ve had in the last 12 months was August last year where we just had a -13% drop.
Now If we sort the table by the worst performing months and look at the worst 3 months, what do we see? Surprise surprise! May 2021 and May 2022.
May is coming and the saying is “Sell in May and Go Away”. Is that accurate?
Data on narrative tokens confirms that May is the 2nd worst month of the year.
The stock market also had a bad month in April. And looking at macro and inflation which is not coming down, given btc correlation to traditional market is again going high, it doesn’t seem we will get a strong recovery in May and I could easily see an ABC correction on SP500 bringing us to the outlined support.
Moreover, the 5 to 8 months following the halving is historically a consolidation regime with low volatility. See my deeper analysis here.
At the same time my alt buy signal is at the lowest values it has been and it’s currently sitting in the Sell the house region.
As usual, we have contradictory signals based on where we look.
In this context, what should you do?
Koryo insights
I think it’s important to not lose sight of where we are in the cycle. Post halving PA can’t be like a bear market. The worst is clearly behind us. And although I can see a consolidation period of few months where many people will time-capitulate, I don’t see anything that would cause a price-capitulation.
It seems even fudding a new war in the middle east couldn’t bring us below $60k. That issue seems resolved. So what could cause a massive price capitulation below $50k? CZ got sentenced for 4 months. Market not moving. Eigenlayer and Renzo rugging their users. Market not moving. And all the big bad actors have already been washed out and there is not possible CEX insolvency or USDT depeg risk in 24.
My conclusion is that there isn’t too much downside left in terms of price.
If I had to guess, going with a classical bearish Q2/Q3 24 and a strong bounce in Q4, my worst case scenario would be something like this:
Now does that all mean you should just quit now and come back in October?
Not if you are a narrative trader! Now let’s get into my favorite part. What are the opportunities in Q2/Q3?
Remember. It’s when most people leave that you find the best opportunities/entries!
Upcoming opportunities and Narratives
Let’s start by what I believe you should fade:
1/ ‘points’ meta
I believe the ‘points’ meta starts to be exhausted. Eigenlayer and Renzo airdrop announcements this week made a lot of people unhappy. It seems the days of easy airdrops are gone. Protocols ask you to lock funds (opportunity cost), give you points for it, then airdrop you something months after, which they don’t let you sell.
That’s ok if you are Justin Sun or GCR and can deposit few days before it’s needed and withdraw immediately after the snapshot is taken, but for most retail users, that’s not an attractive bet anymore. At least not from now on.
2/ Bitcoin Runes
Runes’ first wave had a short life. Congrats if you managed to make money as I shared it before the launch when there were still room to be early and profit.
But right now, there are few problems:
1/ The number of Rune txs are not going up
2/ There are already 70k Rune collection. It’s so easy to etch (deploy) that the abundance of rune collection create a supply/demand problem
3/ Most “bluechip” runes are not performing well.
I don’t see this as the end of Runes. But probably the end of its Wave 1. There will certainly be a wave 2. When Rune ecosystem gets more mature and market conditions are better. Similar to what happened for Ordinals, BRC-20, Friend Tech, Unibot, and anything else that was relatively new. Study them.
More stats on my dedicated Rune dash:
Now let’s talk about the opportunities and things I’m bullish on for Q2.