RSR TA Sunday — Edition 15
Happy Sunday Rangers! This week we begin to play with RSR valuations as well as TA. Have a look and drop some feedback! Just getting started — we will continue adding more assumptions, data points, and aim to improve over time.
With another week in the books, and some healthy consolidation between $0.070 and $0.090. Ranging at $0.080 can certainly be a bit boring…but fundamentally speaking this is incredibly healthy. We want to see consistent upward price movement, not massive rips and retraces. Even on the back of a successful launch in Venezuela, and strong initial growth in the ecosystem, price has remained stable and still up 30% from a month ago, despite considerable volatility.
I think once we see more strength in bitcoin (and crypto in general after languishing for the last several weeks) as well as some impressive numbers from the team, we can expect considerable upward movement. One or two sprints should be all that is needed to fix some of the growth challenges that the team faced, at which point we’ll resume our growth in app usage through the invite system.
I wrote about this in January, and it’s worth bringing back into the conversation. Something to watch out for is the strong network effects that will take hold with the payment network that Reserve is building. It’s still very early, but we can see the green shoots beginning to sprout already.
So, I thought it would be a fun exercise to do a comparison between existing networks, the known market capitalizations of them, and the known (estimated) number of users. From those figures, we can extrapolate the potential value of the Reserve network. We already know they have 100K+ downloads.
Based on the 100K user number, we can derive a “network value per user” or NVU as shown below. Included are comparisons — please reach out if you’d like to help validate these data or want to add more networks to compare.
We can see that crypto networks are more valuable than joint-stock corporation networks (legacy networks) likely because: 1) value accrues to owners of the network in crypto, not shareholders and 2) there is generally more enthusiasm for emerging technologies vs. the older companies.
Again, it would be useful to add more data points, but the initial list has a median NVU of $8,200 and an average NVU of $20,000 per user (skewed by bitcoin/ethereum). Let’s use the median to control for outliers.
The team has called “success” a figure of 10M+ users in their initial target markets. So let’s focus on a reasonable range of 10M — 100M users. Much smaller than the other networks we’ll assess, but still very realistic.
From these assumptions — we can produce three scenarios at different levels of growth within the Reserve ecosystem.
- A Bull Scenario — where the current Reserve NVU is maintained.
- A Base Case — we use the relatively conservative median NVU figure.
- A Bear Case — we take the Paypal estimated NVU to extrapolate valuations.
Even at 10M users, even our Bear Case still looks attractive! It would mean a roughly 10x from here. If we maintained current NVU (which we can update when the team releases official figures, hopefully later this month or next) then the valuation would be $114B! This would make it a top project in the space, and among the most successful payment networks in the world.
Now you need to ask yourself a few things:
- Is 1M RSV users realistic? What about 10M RSV users?
- Do I believe in Metcalfe’s Law, and how network effects apply to human systems?
- Has the Reserve team been executing well on their planned rollout of the app so far? Is 100K+ downloads in one month an impressive figure that might continue going up as they scale?
If you’ve answered yes to the three questions above, then congratulations — you’re incredibly lucky and early to be reading this note. You might be one of the first to understand that not only could RSR be dramatically undervalued relative to its potential, but also that if it can scale to 10x or 100x of its current base, it could quickly become a network worth tens or hundreds of billions. And for the first time, crypto not only allows early adopters to participate in this growth, but also for the value to accrue primarily to the network participants.
As the team expands to Mexico and Spain, we will see more and more of the network effects building until mainnet this year. I do expect along with this we will see considerable growth of RSV in our favorite DeFi applications as a new stablecoin of choice — compare to USDT or USDC as the current favorites. The Reserve team is hiring a role specifically to focus on driving crypto strategy. Staking, yield generation, partnerships with exchanges, and just generally making tons of money for RSR holders are all things on the horizon.
Technical Analysis — week of April 11th
Weekly Timeframe — USDT Pair
Looking great on the weekly — if we can breach and close above the $0.096 mark we’ll effectively be breaking out against the topside resistance. Likewise, intraweek this point is a good one for inflection to propel us up and over the $0.10 hurdle we’ve been battling. Another potential outcome is another week of ranging between $0.075 and $0.095 before consolidating into a resolution in late April.
Daily Timeframe — USDT Pair
There are three key points I’ll be watching this week on the daily timeframe.
- First, looking at the consolidation we have been tracking, there is a small but not strong breakout and retest of the daily. Looks good at the $0.085 level and I would expect a bounce higher from here.
- Second, if we repeat the price action from December/January, then we can potentially (though arguably unlikely) reach the upper bound of our long-term channel, at the $0.20 — $0.24 mark
- Third, I expect a MACD crossover below with some positive price movement for the first time in a while, which should serve to prove out the retest of first point above.
If these three come together, I would anticipate a break higher to the $0.10 — $0.13 mark in the next week or two, as indicated by the green line on April 24th. It is likely in the short term we continue to fight the $0.090 mark and of course historical resistance at $0.10, but an upcoming catalyst to note is the Coinbase IPO on April 14th, which may serve to push markets much higher.
Daily Timeframe — BTC Pair
We broke down from “Channel 2” and are now ranging in the 130–160 channel range. I would expect us to continue in this pattern a bit longer, however I do see a bullish MACD crossover as indicated, and if we were to move higher into the 160+ range I think it’s reasonable to assume we can follow “Channel 3” higher into the 185 range. Another one to continue watching in the back half of April.
DISCLAIMER: “TA 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.
“TA Sunday” is not endorsed or supported by the Reserve Team, or any of its affiliates.
