In the recent market, the weakness of altcoins has been criticized, and the strength of #meme has made everyone realize which is the real value coin. Altcoins are now jokingly called VC coins.
VC coins have several major features:
Low MC (market value)
High FDV (Fully Flowable Value)
Massive unlocking
Only smash the market, not pull it up
Is it true that only retail investors are buying VC coins, and do VCs make any money?
One coin, one analysis. As the popular star airdrop projects #LayerZero and #zkSync are about to issue their coins, the first article in this series will analyze the #空投大毛 project - Wormhole $W , which has been online for less than two months.
Only by learning from history and looking for the sword on the boat can we obtain the imperial sword (😂 random rhyme).
Today's guest appearance is the same epic big hairy project $ARB .
Briefly introduce the basic information of the two coins.
Wormhole
Wormhole is an interoperability platform for developers that provides a full suite of products that enable developers to build native multi-chains.
This includes:
- Messaging: secure cross-chain transmission of data or tokens
- Connectivity: Bridge integration within the app with only 3 LOC
- Query: Get any on-chain data quickly and cheaply
- NTT: Native multi-chain token framework
- Gateway: Connecting Wormhole to IBC/Cosmos
It is an industry-leading application ecosystem built on Wormhole’s proven interoperability infrastructure (e.g. applications using messaging or NTT or integrating Wormhole Connect for in-app bridging).
From the perspective of ordinary users, the most important function of Wormhole is cross-chain.
The total amount of W is 10 billion, and the current circulation is 1.8 billion. Based on the current price of $0.568, the circulation market value is $1.022 billion, and the FDV is $5.68 billion. The market share is 0.0408%.
Decision
$ARB Arbitrum is one of Ethereum's many expansion solutions. It is a Layer2 expansion solution developed and launched by Offchain Labs, which adopts the Optimistic Rollup expansion solution. It allows Dapps on the Ethereum chain to directly migrate smart contracts to the Arbitrum network, which is fully compatible with the Ethereum Virtual Machine (EVM).
As Rollup technology matures, more and more chains are built using solutions from well-known "big companies". OP Stack has been deployed on multiple chains, led by Coinbase's Base chain, while Arbitrum is clearly lacking in this regard.
In June of this year, Arbitrum development team Offchain Labs released the Arbitrum Orbit development tool, which aims to help developers develop more easily on the L3 blockchain Arbitrum Orbit and manage their own Arbitrum Rollup and AnyTrust chains.
The total amount of ARB is 10 billion, and the current circulation is 2.654 billion. Based on the current coin price of $0.11434, the circulation market value is $3.065 billion, and the FDV is $11.547 billion. The market share is 0.1222%.
Why use ARB to try to find a solution?
Both are epic airdrop projects, and their tolerance towards freeloaders and the value of the airdrop guarantee far exceed that of most projects.
The financing amount is huge. Wormhole's latest round of financing was US$225 million. Arbitrum completed a US$120 million Series B financing in 2021.
They are all TGE, which means they are listed on all mainstream first-tier exchanges, and their opening FDV exceeds US$10 billion.
When issuing coins, they are all leading projects in the same field. Wormhole is the leader in cross-chain interoperability protocols, and Arbitrum is the leader in Ethereum Layer2.
How to carve a boat?
I plan to conduct a comparative analysis from the following four dimensions to find out the rules of the market makers' manipulation of the market.
Circulating chips
Large amount unlocking time
Market maker wash cycle
ATH's circulating market value
⚠️This analysis is based on a premise: in order to protect their own interests, VCs and teams should try to raise the price of the currency as much as possible before and after the unlocking time.
ARB
The initial circulation of TGE is all community airdrops, accounting for 12.75% of the total.
From the unlocking records, it can be seen that the cliff unlocking will be in March 2024, and the unlocking amount is second only to the day of TGE. However, TGE issues coins to community users, and the main targets of the unlocking in March are private investors (VC) and team members.
Also in March, the average coin price reached an all-time high.
What is not optimistic is that after the huge amount of unlocking in March, there has been continuous VC round unlocking. Including the team unlocking, the monthly unlocking volume accounts for 0.926% of the total.
At present, 497.14k coins are unlocked linearly every day, accounting for 0.02% of the total.
The total unlocked amount in March was 1.14 billion, accounting for 11.4% of the total.
As can be seen in the figure below, when private investors (VC) and team members unlocked the tokens, the price of the coin began to fall from its highest point until November 22, 2023, when it began to rebound.
From the highest point to the rebound, the price is around $0.96.
Let us guess the market maker's trading ideas from the weekly K-line.
The real starting point is actually December 18, 2023. Before that, it fluctuated in a sideways range for 6 weeks (the bottom of the range was around $0.96).
Then we can infer that the cost price of the banker is between $0.76 and $0.96 in the previous oscillation range. In the range of $0.76-$0.96, the K-line completed a double bottom pattern, and this range lasted for about 9-10 weeks.
The actual rising phase lasted only four weeks.
Based on the above information, this round of weekly level pull-ups went through four steps: bottom accumulation - shock washing - violent pull-ups - unlocking shipments.
Comparing the trend of ETH in the same period, ARB has gone out of the independent market since the shock and wash stage. During the five consecutive weekly increases of ETH this year, ARB rose sideways (the dealer is preparing to unlock and ship a huge amount 😅). Looking further back, when ETH fell on a weekly basis, ARB directly accelerated its decline and shipment. It was not until the week of May 20 that ETH exploded due to the hype of the ETF's approval that ARB followed symbolically at around $0.96.
To summarize the key information, the dealer's operation this time is at the weekly level, and the cost price is lower than $0.96. After the short-selling of the Shanghai Stock Exchange ended, the dealer's operation process was a total of 4 steps: bottom accumulation - shock washing - pull-up - unlock shipment.
After analyzing ARB, let us speculate how W’s dealer will operate based on the existing information.
IN
The initial circulation of TGE is all community airdrops, accounting for 18.47% of the total.
At present, 1.73m coins are unlocked linearly every day, accounting for 0.1% of the total.
The cliff unlocking rules of ARB are very different. Before the first VC round unlocking (April 2025), there was another round of community unlocking (August 3 this year), with an unlocking amount of 600 million, accounting for 6% of the total. There are 4 rounds of VC rounds of cliff unlocking.
Because there will be no VC share in the next round of unlocking, it is really difficult to determine whether there will be any dealers who will participate in the market in advance.
Today is May 25th, and there are only 70 days left until August 3rd. Comparing ARB's VC round cliff unlocking, ATH and
The interval between cliff unlocking is 65 days. In terms of time interval, W is very close.
ARB is traded on a weekly basis, and soon after W was listed, there was another round of huge unlocking. It is certain that this round of W will not be traded on a weekly basis. Therefore, what we can really expect is the next round of VC unlocking, which has nearly 14% unlocking volume, and the time interval is sufficient.
Faced with such a huge community round unlocking selling pressure in August, how will the market makers or project parties respond?
Let us first look at W's K-line, because it is certain that it is not enough to trade on a weekly basis, so let's look at the daily level this time.
The daily fluctuation is gradually narrowing, oscillating near the bottom of the large range of 0.472-0.787. The current price of $0.556 corresponds to an MC of about US$1 billion and an FDV of US$5.56 billion.
BBK has several guesses:
The project needs to manage the market value, and the FDV should be kept within a reasonable range and not be ridiculously low. In the current market environment (BTC 69,000, ETH 3,700), an FDV of around $5 billion is acceptable.
There was a year between TGE and the first round of VC unlocking, and only 4 months between TGE and the latest round of community unlocking. Now it is halfway through, but the price of the coin has not improved. The dealer may not want to pull the market, but just absorb funds and shake the market within a reasonable FDV range, ready to meet the selling pressure of the latest round of community unlocking.
The recent round of selling pressure from the community will be absorbed within a reasonable FDV range. The reasonable FDV range is anchored to the prices of BTC and ETH. So if BTC and ETH collapse, W may choose to fall below the current range and continue to fluctuate in the next range.
There are 8 months between the second round of community unlocking and the third round of VC unlocking. During this period, the market makers will complete the same 4 steps as ARB: bottom accumulation - shock washing - violent pull-up - unlocking and shipping.
If the overall market environment is not good around August, the project owner may launch a staking activity to reduce the selling pressure of the community round unlocking.
If there are no other hot spots in the market before August and there is a demand for hype in the cross-chain protocol, the market makers may pull it to the upper boundary of the large range of 0.472-0.787, which is around 0.787.
The Fed's interest rate cut expectations have been delayed again and again, and the funds in the circle are limited. Now it has gradually evolved into a PVP mutual cutting model.
The market makers have insufficient motivation to pull the price. I remain pessimistic about the price of W this year.
When will W really pull up to ATH?
W's ATH may only be achieved before the third round of VC cliff unlocking. The cycle of bottom accumulation and shock washing is difficult to predict. It depends on the time of the dealer's position building and the cost of chips. If we follow the ARB's trading cycle,
The trading ideas are as follows:
After the community round is unlocked in August 2024, it will start to fall all the way. If the dealer needs to do FDV management, it may fall in a sideways manner.
Accumulate funds at the bottom in October 2024, pay attention to the bottom pattern at the weekly level, if a bottom signal appears, you can consider entering the spot market.
The market will experience a shock shakeout from January to March 2025, and it may be a wide range of fluctuations.
The official price increase will start in March 2025, and shipment will be unlocked in April.
