The DeFi Alpha Call is an exclusive weekly call for our premium subscribers where yyctrader and Diego talk about the market, the newest tutorials, and the hottest NFTs.

This is a free sample of our latest DeFi Alpha Call. We hope you enjoy it.

Hello Defiers! What do you guys think about the market? Is it a new bull? Is this a dead cat bounce? Are we going back to zero? What do you guys think? Let us know by leaving a comment in the YouTube video at the end of this newsletter.

Keep an eye on the #degen and #nft-discussion channels on Discord.

During the first week of the year, yyctrader and Diego shared a number of allowlists and free NFT drops. Those who took advantage of these opportunities were able to more than cover the cost of an annual The Defiant subscription.

ETH

The past week has been eventful, to say the least. I hope everyone was positioned correctly during the recent rally. If you missed out, don’t worry. There will be a retracement, you can bet on that. Nothing goes up in a straight line.

• “The rocket’s been lit” – quite a crazy run
• Textbook range breakout. When a market remains within a range for an extended period, the next move is usually powerful.
• The last time ETH had a nine-day winning streak was probably back in March 2022, when we had a pretty decent run.
• The next area of resistance would be anywhere between 1640 to 1740.

We can see that there was an accumulation phase before the rally began. We monitored it closely on these weekly calls, but there was little activity.

We have now fully recovered from the FTX drop, but the area around 1600 to 1700 is still strong resistance, and it’s unlikely that it will be easily overcome on the first attempt.

The January Effect is a commonly observed trend in traditional markets where there is a tendency to rally during the month of January. This is mainly due to factors like tax loss selling in December.

Bitcoin

• Already above the pre-FTX high
• Performed really strongly during this run

Top Gainers

It’s double-digit gains for everyone, pretty much, which is great to see.

• Decentraland, Aptos, Solana, Serum, Optimism, Arbitrum, CRV.

One to Watch

Frax Shares (FXS) – There has been a prolonged period of accumulation for this particular coin since June, with trading occurring within a range between $4 and $7. However, this range has recently been broken out. The next target for the coin would be $16 if overall market conditions remain supportive.

Layer 2 Narrative

Transactions have been on an upswing hitting all-time highs on Optimism, even though Arbitrum has dropped off a bit since the Odyssey got paused.

But still, the fact that there is so much activity happening on these layer 2s is validating the thesis that the bulk of activity that’s on Ethereum today will likely be on layer 2s in the years to come.

Diego: What other indicators do you use to confirm a market movement, if any?

yyctrader: I pay attention to funding rates, specifically when it remains low, even as the markets are rallying. Funding is a fee that is paid every hour when trading perpetuals, and it helps keep the price of the perpetual in line with the actual asset. When there is a high demand for longs, as we have recently seen, funding tends to increase because the perpetual is likely trading above the price of the actual asset.

I think we’re still a long way off from confirming an actual bullish trend. It’s just been two weeks after a whole year of bear, so let’s not get too excited.

There has been a fair amount of buying activity in this rally, both in the spot and derivatives markets. However, the rally has been going on for nine days straight and has become quite stretched. It is likely that there will be a pullback at some point, possibly down to the 8-day moving average, around $1500. If the market can hold at that level, it is a sign that the trend is still strong, and we can expect the market to continue to rise.

NFTs

• Volume is still pretty decent.
• Most collections are holding steady in $ value, but in ETH terms, they’ve gone down.

The Memes – still doing really well. Prices have just gone out of control. More and more people are joining in and trying to get on the allowlists for the weekly drops.

Pablo: When do you know when meme cards release?

yytrader: There’s a Twitter account, 6529 collections. They announce the snapshots for the upcoming Meme cards a day or two in advance. We only find out who the artist will be on the day of the drop.

Tutorials

NFTperp – Trade Floor Prices Of Popular NFTs Using nftperp on Arbitrum

Speculate on NFT floor prices. As its name suggests, nftperp is a perpetuals trading platform on Arbitrum that allows users to speculate on NFT floor prices, facilitating some interesting use cases:

• Smaller traders who are priced out of collections like CryptoPunks and Bored Apes can trade with as little as $5.
• NFT holders can hedge their jpegs if they expect volatility (around important announcements, for example)

You can take a long or short position on supported collections with up to 5x leverage. Currently, nftperp supports the Punks, BAYC, MAYC, Azuki and Milady collections. Learn more about it with our degen tutorial.

zk.money – How to Privately Seed a New Ethereum Wallet

One of the frontiers of DeFi yet to be fully realized is privacy. Private DeFi is only in its infancy, accessible through simpler use cases of sending and receiving payments on earlier blockchains like Monero and Zcash.

When it comes to the world of DeFi use cases, there are few nascent options: one being Secret Network built on Cosmos, with just over $6B TVL and a modest $7.3M in value relayed via IBC the last 30 days, which we will look to cover in future tutorials.

The second option is built on the Aztec Network, the first private ZK-rollup built on Ethereum. This groundbreaking tech enables decentralized applications to scale with privacy while inheriting the security of the Ethereum network. Learn more about it with our starter tutorial.

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