I Missed LUNA’s Post-Collapse Pump…Now What?

A second look at TITAN relative to LUNC’s valuation

After the Terra Luna (LUNA) collapse, I waited patiently for an indication that LUNA minting would pause so I could ape-in. Memories of last summer’s Iron Titanium (TITAN) fall, and subsequent 80x return filled my dreams. When it finally happened, it came at lightning speed, coupled with network issues and transaction errors, which prevented me from filling orders. Next thing I knew, I was watching LUNA’s return from the all-time low tick higher: 10,000%…11,000%…15,000%. Rather than chase the price, I threw in the towel, and accepted the fact that I missed the boat. So, what now? Wait for LUNA’s price to fall?

I decided to dust off the bags of TITAN I have been holding in my portfolio and revisit the story to see if there were any price action parallels which may be useful in predicting what LUNA could do next. Instead, I found a new opportunity with an old friend. Here are my thoughts on TITAN, in this current bear market, after the LUNA collapse.

A Much-Needed Value Reset

LUNA (now Luna Classic LUNC) provides some much-needed price-discovery information on what a fair value for TITAN should be in the current macroeconomic environment. Crypto trading volumes have been low for a sustained period. As a micro-cap cryptocurrency, TITAN volumes are even lower than the average coin. As a result, the quoted price is probably not a fair representation of what it may cost to enter a position of a somewhat material size, or sell out of an existing position, since even a relatively small transaction could have a significant impact on the price.

Now that LUNC has separated from the Terra 2.0 program, we can assume that current investors’ vision of future price is based on their view of the value and strength of the LUNC community. Therefore, we can use the current value investors are assigning to LUNC to offer some insight of whether TITAN is over or under valued on a relative basis.

There are obviously some similarities and differences between the tokens. LUNC is much larger than TITAN and is experiencing more media coverage than ever before. So, what information can LUNC provide for TITAN, to arrive at a relative valuation under normal volumes and the current macroeconomic environment?

LUNC is larger than TITAN so we would have to normalize the size somehow if we wanted to make a valuation comparison. One way to do this is to divide each token’s market cap by the number of wallets to get a ratio of “value-per-wallet”. This value comparison is based on a theory that without a specific project or technology at play, the remaining value is based on the network of holders. Obviously, this has some limitations, however, this should give us a fair “back of the envelope” comparison as a starting point. You may then choose to adjust the resulting value up or down based on what you see as advantages or disadvantages of the two tokens, or residual value of parts of the project which may be salvaged.

As of June 2nd, LUNC is trading at $0.000097. With max supply of 6.907 trillion, the tokens are trading at a fully diluted market cap of approximately $670 million. If we divide the market cap by the approximate number of LUNC wallets, 4.1 million, we can conclude that traders are currently paying about $163 per wallet (Sources: CoinMarketCap, and Terra Station).

We can perform a similar calculation for TITAN trading at $0.00000008 with a total supply 34.9 trillion, resulting in a market cap of $2.8 million. Divide this by TITAN’s 137,500 wallets and we see traders are currently paying just $20 per wallet (Sources: CoinMarketCap, and Polyscan).

Now you can apply adjustments to each value however you see fit. In my opinion I would say it is fair that LUNC should trade at a significantly higher “per wallet” value given the attention it is receiving and the depth of its network, but a premium of 8x relative to TITAN seems excessive to me.

Besides using a normalized approach to valuation, I also like to think about the absolute value of the entire project. When I do, I try to picture what the entire project is worth and compare that cost to other known values as a reasonableness check.

We can use the market cap as a basic total cost of each project. This is probably an oversimplification because it would not be possible to buy all the tokens outstanding. Even if you could, you would destroy the decentralized nature of the project rendering it worthless, not to mention the price impact of such a purchase would be significant. But if you could, would you pay $670 million to acquire LUNC? Does this seem reasonable? Perhaps. There are some interesting things you could do with such a well-established network of users. If you compare it to the current market caps of top meme coins such as DOGE at $11.5 billion, and SHIB $6.5 billion, a $670 million valuation may seem somewhat reasonable. Particularly if you were able to keep your investment private until the next crypto bull market and re-release it again at a much higher valuation (I understand this is conceptually divorced from the realm of possibility, but just thinking in theoretical terms here).

Still when we come back to earth and think in terms of a decision we can actually make, which is whether or not to purchase some LUNC tokens at a $670 million valuation. If you are extremely optimistic you may think there is a possibility of the total Terra Project (Meaning Classic and 2.0) getting back toward the peak project valuation pre-collapse of $40 billion (which is coincidentally near the approximate peak for SHIB). Even in the best-case scenario, and assuming half the overall Terra value is applied to LUNC (which is a huge assumption), this extremely unlikely event would only represent a return of approximately 30x your investment.

On the flipside, TITAN can be acquired at a total valuation of just below $3 million. What valuation do you think it could reach? On June 16, 2021, the day TITAN collapsed, the supply exploded quickly causing a rapid decline in price. When the price was still near $40 the supply was approximately 5 million tokens which would have been a market cap of approximately $200 million. So, I guess the question becomes whether you think TITAN as a meme coin is worth more or less than TITAN as a DeFi project. There are certainly plenty of examples of meme coins which have achieved far greater valuations.

Historical results for memes could provide some information on whether TITAN could achieve a market cap of approximately $200 million again. Memes typically enjoy a period of excitement, followed by decline (cool-off phase), a few bumps in value that do not exceed the initial-excitement phase (I think of these as price “aftershocks”). Then, if they are lucky enough to survive, they reach their first post-initial excitement price increase which is about 2x their “initial-excitement price.” You can see this clearly with DOGE which took a few years to make it there.

DOGE is really the only significant example of a meme coin with history across multiple market cycles. There are plenty of other meme coin examples which launched during the latest bull run. Time will tell if they make it through the next cycle. SHIB was a standout last year as it was lucky enough to reach the initial-excitement and first post-initial excitement price increase in the same crypto bull market.

So, if TITAN survives to its next phase in the cycle, where could it go from here? During the last bull market, on July 7, 2021 TITAN achieved a price peak of $0.00000259, and a market cap of just over $90 million, which looked even more impressive at the intraday high. If you think of TITAN the meme coin coming into existence after the collapse of TITAN the DeFi project, this would have been the “initial-excitement phase”. TITAN has had a few “aftershock” price increases (very similar to what DOGE experienced in its infancy). If TITAN survives to its first post-excitement phase increase, and experiences a similar result to other meme coins of 2x the initial phase, that would represent a price of $0.00000518 and a market cap of approximately $180 million, which coincidently is relatively close to the peak market cap of TITAN prior to the collapse.

Of course, the probability of TITAN achieving this result is something less than 100%, and to decide whether to purchase TITAN you would have to weigh your forecast of all the potential outcomes (including the lower bound of zero), against your assessed probability of each occurrence to determine an expected return. Still, assessing what may be a best-case scenario of $180 million market cap and 62x return for TITAN versus a $20 billion valuation and 30x return for LUNC, I would take TITAN at this point.

So Long Story Short, Choose TITAN Over LUNC?

The two are not mutually exclusive, but the short answer for my portfolio is yes at the current market valuations. Of course, I am not recommending TITAN or LUNC to anyone, just sharing my thoughts. I understand why someone would want to stay clear of both tokens (or all cryptocurrencies for that matter). I also understand why someone would want to invest in LUNC after the collapse. As assets go, cryptocurrencies are different in their cult-like followings. When people find a coin they identify with, for whatever reason, they tend to stick with it. People love to root for a comeback story, which plays well with wrecked coins. Investors are also drawn to the concept of creating something beautiful from a horrible event. This idea is engrained in our culture: a phoenix rising from the ashes. In the future we may see wrecked coins emerge as a category of their own. Perhaps even a wrecked index.

Some of history’s greatest returns in developed markets have come from distressed assets. Why should crypto be any different? Many forget (or were too young to remember) Apple Inc, now one of the world’s most valuable companies, was all but bankrupt in 1997. Had you invested at the low on December 22, 1997, your investment would have increased by more than 148,000% including splits and dividends.

Frankly after a crypto project is destroyed, whether it be from an unfortunate circumstance or bad actors, there is most likely a lower probability of it happening again, so it may be a good bet at the right valuation. In fact, if LUNC fell to a reasonable value where I thought the expected return prospect was favorable relative to the downside risk, I would buy some. But at this point I am sticking with TITAN.

Are You Waiting for LUNC to Fall?

There are probably others who think in a similar way, watching LUNC for the price to fall before buying. Well guess what? No need to wait. TITAN has been waiting for you. It has taken nearly a year, and a crypto bear market to get here, but you can now invest in TITAN at a price of $0.00000008 which is relatively close to the all-time low. In fact, this price was first seen on June 19, 2021, less than 48 hours after the collapse, and given the difficulty in trading TITAN at that time, paired with the low volume at the lowest price point on June 24th, it is unlikely that you could have timed the purchase perfectly or made a transaction much lower than this price last year. Keep in mind, June 19th was the day the “Titan is Our DOGE” Telegram channel began, just after the famous Mark Cuban TITAN tweet on the night of June 16th, before the CNBC and Bloomberg articles covering the collapse were published, and before MEXC announced it would list TITAN on June 30th. As second chances go, the current price of TITAN seems like a good one.

Assuming TITAN Survives, When Will the Next Price Increase Come?

This is impossible to answer with any level of certainty. There are a few developments that I think have made it more likely. First off, TITAN tokens are far more distributed than they were during the initial excitement period. At one-point last summer there was a single whale who controlled approximately 20 percent of the total TITAN supply. As the price increased rapidly, that individual had to sell given that TITAN probably made up a large portion of his or her total assets.

Now that the number of wallets has grown significantly, the risk of holding as price increases will be more distributed across a larger pool of investors. This makes the risk of holding for any single individual far lower than during the initial-excitement phase last summer. I believe this is why we typically see a cooling-off period in cryptocurrencies after the initial excitement phase. This coupled with the higher initial cost basis of the wider holder pool typically allows for greater price appreciation before individual holders are compelled to sell, assuming they are not forced to do so during a bear market, which has likely caused some of the downward pressure on TITAN over the last few months.

I also think TITAN must get past the one-year mark (one-year after the collapse) before interest will begin to increase again. The reason is very simple: Most crypto research websites provide charts in three-month, one-year, and all-time increments. Currently when you look at a one-year chart of TITAN you see the initial spike of the DeFi project followed by a flatline.

Looking at the current one-year chart, it is easy to conclude that TITAN is a dead token and move on; However, after you get past the anniversary of the DeFi project collapse and re-emergence as a community meme token, the one-year chart will show a token which is anything but dead. In fact, you will be able to clearly see the initial price increase, and aftershocks very similar to the historic price pattern for DOGE and other memes.

The last piece of the puzzle that I believe will be required for TITAN to reach its next peak is a favorable macroeconomic environment. There are some scary narratives out there which would imply this could be a long way out, but I believe we are closer than many may think.

Let’s revisit historical results for DOGE as a proxy for how meme coins act under different macro conditions. After the financial crisis in 2008 the market was plagued with low growth, low inflation, low interest rates from about the beginning of 2009 through the end of 2015. This environment paved the way for DOGE to experience years of relatively flat valuation. From a macroeconomic standpoint there was not much to worry about, but also not much to get excited about. Stock returns and other risk assets also remained relatively muted through this period. This was due in large part to the market waiting for the U.S. Federal Reserve to begin normalizing interest rates which remained low for years. The Fed finally began to increase interest rates in late 2015, although the rate hiking cycle did not begin to pick up until 2017.

About mid-way through the Fed’s 2015 to 2018 interest rate hiking cycle, risk assets including crypto, finally got past the rate hiking fear, and began to have positive returns. DOGE experienced its first major price increase after the initial-excitement phase during this time, which was the summer of 2017 (mid-way through the Fed’s hiking cycle, not at the end).

So, when does the impact of the current Fed’s interest rate hiking cycle begin to lift? The market is a discounting mechanism meaning that it discounts future expectations of macroeconomic conditions. Most believe this discounting mechanism works to discount 6 to 18 months forward of market expectations. To put this in context, the market has currently priced in multiple interest rate increases even though the Fed has only just begun to raise rates.

Given that the Fed’s focus is currently on reducing inflation, and the inflation data for May will be compared against the May 2021 data which was the first post-COVID reading with a significant spike (to be released in June), coupled with the forward nature of the market’s projections, we may be closer to the midpoint of the rate hiking cycle than many think (the “past the inflation peak” argument). And given that DOGE started to increase midway through the last increasing rate period, I believe the macroeconomic conditions which will allow TITAN to reach its next price peak will be upon us relatively soon.

Is My View Biased? Absolutely.

Yes, I own TITAN, so of course my opinions are biased. In regard to the other tokens I have discussed in this article, I do not own LUNA, LUNC, DOGE, or SHIB, and do not expect to purchase these in the near-term, but may purchase them at some point in the future. Regarding my TITAN position, I intend to increase my holdings, particularly if the price falls from here. If the price increases substantially, I will likely sell some.

Upcoming One-Year Anniversary of the TITAN Collapse and Rebirth

Overall, I am excited about TITAN. The circumstances of the collapse do not bother me. At a total market cap below $3 million, any bad actors who may or may not have participated in the collapse of the DeFi project have likely long since left this token for dead. The only remaining investors are probably meme coin portfolio holders and true believers. It is the latter group that I would like to join and engage.

This month marks the anniversary of the collapse of TITAN as a DeFi project, and rebirth as a community meme token. I propose to the TITAN community a global celebration to mark the event. This year can represent the first-annual TITAN Day (T-Day) celebration, a decentralized party in which community members from across the globe are encouraged to setup local events, and activities they design to best capture what TITAN means to them.

For some, the event may be a support group to discuss how the collapse impacted them and lessons learned. Others may focus on what TITAN could become in the future. I invite the current TITAN community, as well as prospective community members, to join me on the TITAN Discord channel to discuss the details of how to best mark the occasion.

Where Could TITAN Go From Here? To Titan!

Here is where things get interesting, and I should preface this as my thoughts about what could come next. To my knowledge no one from the TITAN community is currently working on any projects around these ideas.

In June of 2027, NASA will launch Project Dragonfly, the first mission to land a drone on Titan (Saturn’s largest moon). There are so many awesome crypto possibilities around this event. For example, imagine universities from around the world competing in a contest to study Project Dragonfly’s specs, and develop a way to deliver a TITAN token to Titan without adversely impacting the mission. Given the growing popularity in crypto, this could be a public relations goldmine for NASA (wink-wink Dr. Lori Glaze). Not to mention an opportunity for TITAN to give back to the community in the form of promoting STEM education. Best of all, the launch is schedule for June, which means there is a possibility that it will coincide with the annual T-Day celebration in 2027! Not sure what the other TITAN holders are planning for their tokens, but I know I’ll be kicking myself if I don’t hang on to at least some of my TITAN for when the Dragonfly rocket launches.

Perhaps even more intriguing is the fact that the United Launch Alliance (Boeing-Lockheed Martin Joint Venture) currently has the rocket contract for Project Dragonfly. Not only is the ULA a competitor of SpaceX, but the company’s CEO Tony Bruno has been caught up in Twitter spats with Elon Musk. We know that the Dogefather will launch a satellite to the moon paid for with Dogecoin. Image if Bruno and the ULA could put a TITAN on Titan? Perhaps some friendly competition could arise, or a “We Don’t Talk About Bruno” remix.

And what about exchanges? I live in the U.S. and have been using MEXC to purchase TITAN for almost a year. I have been pleased with their platform, but many other U.S. investors are apprehensive about using exchanges domiciled elsewhere. There is one exchange in San Francisco perfect for TITAN. It comes down to what makes Titan (the moon) so incredibly special. It is filled with promise as the only other object in space with clear evidence of stable bodies of surface oceans. And what is the name of the largest ocean on Titan? Kraken Mare. Further if you look to the ideals of the exchange Kraken.com, they center around freedom and inclusion, concepts at the heart of the TITAN community. It is as if fate wants Kraken.com to be the first U.S. exchange for TITAN. Now given that TITAN is a community token with no budget for exchange fees, the community would have to come up with a plan for raising the funds, and of course TITAN trading volume and user base would have to increase to make it worthwhile for the exchange, but it is possible with just a bit of traction.

There is also the fact that when astronomer Christiaan Huygens discovered Titan in 1655 he originally named it “Luna Saturni”. Perhaps foretelling that the collapse of LUNA would be the event to get us excited about TITAN again.

What makes me love this story more than anything is the authenticity. No one planned to have TITAN emerge as a community meme token, it happened organically. And all these cool conditions and possibilities for what TITAN’s future could hold were not manufactured artificially. It is all a beautiful, chaotic set of coincidences. Of course, we do not know what will become of TITAN, another worthless token, or something incredible. The uncertainty of the possibilities, the hope, and wonder are what makes the story so compelling. The bear market has taken its toll on TITAN, but I believe there is value hibernating below the surface of this small and growing community. That is why I will keep riding the TITAN roller coaster “To Titan!”