RSR Analysis Sunday — Edition 21
The Humbling
Happy Sunday Rangers! Well, at least if you’re reading this, it can probably only get better from here. The past month has been a trying time, and this past week probably the most testing of them all. But for anyone who has been in crypto long enough, it isn’t unexpected. We have retraced fully back to prices not seen for nearly 10 months. It hurts.
Fundamentals Are Intact
In hindsight, this shouldn’t have been unexpected, though I certainly missed it. The system was over-levered. Too many novices got involved, buying things they didn’t understand, using leverage with money they didn’t have.
The next time I have to write about Meme Phenomena, Hyperscaling Mathcoins, and Ghostly Apparitions, it’s fair to say we probably hit a top.
The charts are battered, beaten, bruised. Leverage has been flushed from the system. The Fudstorms were fierce. Bitcoin was hammered, and pulled the whole market with it. We dropped to levels I don’t think anyone could have imagined in March or April.
But nothing has changed. In fact, for many, your wishes have been granted. Your favorite coins are on sale. The best teams in the space continue to build. Reserve has intelligently held off on announcements despite making significant progress in finding product/market fit and scaling the app in target markets, building the team, and developing the ecosystem for its ultimate use case. Our best days are ahead of us. The brutal reality of crypto is that these are the events that separate the real projects from the fake ones, and the purge happens fast. It’s a good thing Reserve is building a real product.
Structurally, markets are still intact. It looks a lot like 2013, where bitcoin dropped from $260 to $60, only to rally to $1000 at the top. This is the only mid-halving bull run drop below the 21 weekly EMA where we went on to make new highs in the coming months.
And yet during last week’s lows, we dropped 35x the 2013 highs, only 60%, instead of 80%. Structurally things look bad, but if we can quickly move back into the $40k — $50k region, we should continue higher.
What we guess might happen is usually the less likely outcome. But certainly, bitcoin and other fundamentally strong projects have seen their tokens move from weak hands to strong over the last several weeks.
Reserve is a much smaller project, and took an ugly beating. It is hard to be down 80%. But if you have conviction, you double down. We have more ahead of us. Valuations of projects like Reserve — which has a real team, real users, and a real use case — are looking tempting for anyone on the sidelines. For those already in, with strong conviction, it’s a great buying opportunity.
Lastly, it might be worth revisiting some of the analysis done a couple months ago on Reserve valuation. Most of the large comparisons haven’t changed at all. Network Value has dropped along with market cap, but against its comps Reserve still looks great. It has just been dragged down through the mud with every other crypto project:
We know more now about Tether reserves, and with other stablecoins can begin constructing more of a “bottoms-up” valuation model to triangulate on a “fair value” for Reserve. Since TA has been broken, this could be another tool in our arsenal to better understand where RSR is relative to its intrinsic value. More to come here in the coming weeks. Until then, stay in good health and spirits. Crypto will rebound from this, just as it always has.
Technical Analysis — week of May 23rd
Weekly Timeframe — USDT Pair
No two ways about it. This looks awful. We dropped all the way to $0.025 resistance, last seen in the August run. We’ve also broken down from the long-term weekly channel, which will need some reconstruction and revisiting. I believe end of year targets are still in play, but we need to see how the coming weeks develop. The markets will need time to heal after this week’s bloodbath. This was the largest drawdown since March of 2020–75% over the past two weeks. If you had bought the bottom 15 months ago, you would still be up 20x now.
Daily Timeframe — USDT Pair
No way to cut it. If you read what I wrote last week. You’d see. I was so. Incredibly. Wrong.
Not just a little wrong, like. Really wrong. I mean we dropped another 50% from here:
Seriously.
So wrong.
OK — if you’re still reading — please understand. I was very, very, very wrong.
Now, I will say (at the risk of being wrong yet again) that we do appear extremely oversold. These are the moments you hope for as a smart money investor. The opportunity to double down on your high-conviction plays. To be brave and get in before everyone buys the asset back to where it was a few weeks ago.
Note the RSI oversold on the daily below. But I’m not really sure where to start here. It should be a hard bounce higher over the next week or two, but the general structure needs time to heal.
Daily Timeframe — BTC Pair
No way to sugarcoat this one either — we dropped precipitously against bitcoin in this one. Just massive casualties. No chance for triage. December lows were tested. Brutal.
It is testament to how savage the market can be. When you are investing in altcoins, you are buying a venture-style early-stage equity that is marked to market 24/7, controlled by algos. Just like in the world of startups, there are highs, and there are lows. And the highs feel amazing and the lows feel like they can’t get much lower. The volatility is HUGE. So big, it is incredible that leverage can be employed (somehow it can, and it exacerbates these issues).
I think we will have folks that recognize the value here start buying in quickly, but it will take time for RSR to recover, just like it will against the USDT pair.
So, in summary friends, stay strong, stay healthy, take (another) walk if you need to. Remember that crypto isn’t going away. Everything that was there a few weeks ago is still here, it’s just been temporarily repriced to a level you would have loved to have seen then. So if you still love it, if you still feel convicted, if you still have dry powder…maybe it’s not a bad place to dip your toes back in.
Monday is only eight days away. We will be back at $0.094 soon.
Previous Editions of RSR Analysis Sunday
Edition 20 — May 16th, 2021
Monday is Confirmed
Edition 19 — May 9th, 2021
Reserve is Building Real Products, Used by Real People
Edition 18 — May 2nd, 2021
The Future is DAO
Edition 17 — April 25th, 2021
The Age of Crypto
Edition 16 — April 18th, 2021
What the FUD? | Thoughts on RSV
Edition 15 — April 11th, 2021
Reserve & Network Valuations
Edition 14 — April 4th, 2021
Reserve, Bitcoin, & Time Scarcity
Edición Especial de Abril — April 1st, 2021
FruityChain Implementation
Edition 13 — March 28th, 2021
Successes from Marzo (App Rollout)
Edition 12 — March 21st, 2021
Scaling The Team & The Importance of User Experience
Edition 11 — March 14th, 2021
Reserve Adoption — It’s Happening
Edition 10 — March 7th, 2021
Welcome to Medium
February 2021
All Reports from February (originally shared in Telegram)
January 2021
All Reports from January (originally shared in Telegram)
DISCLAIMER: “RSR Analysis Sunday” is for entertainment and informational purposes only and is not meant to be construed as financial advice of any kind. All investments carry risks.
“RSR Analysis Sunday” is not endorsed or supported by the Reserve Team, or any of its affiliates.
