Market Talk with @Fungibles #2
This is a BitsTODAY opinion editorial issue written and edited by @fungibles
Hey @BitsTODAY fam,
@Fungibles here. Increasingly, I’ve been using crypto trading as a framework to think about trading creator coins.
In crypto, all assets tend to follow BTC. It is the crypto asset with the largest market cap by far (north of $600B as of this writing). When it falls, ETH falls. When ETH falls, so do other tokens built on or around the Ethereum blockchain. When BTC and ETH both fall, most other tokens in the entire crypto ecosystem fall, too. The price of many of these tokens isn’t pegged to ETH or BTC. I.e. their prices don’t change mathematically because BTC or ETH falls. But when the markets get hit, people sell or swap most crypto assets, either to reduce risk entirely or to buy back into larger assets like BTC and ETH. Now that blockchain.com has supported $clout trading for weeks (if you can call it that), $clout’s price is affected by overall crypto markets just like other cryptocurrencies.
If you invest in creator coins on BitClout however, then there’s a whole second and tertiary layer of factors affecting your investment, too, even as the coins are denominated in $clout. For one, there’s a steep bonding curve to contend with. The more expensive your coin gets, the harder it becomes to increase your coin’s value with investments alone. If you were trying to affect the price of a coin like say, @dharmesh with a $clout investment, it would take quite a bit of new money flowing in. @dharmesh invested close to a million dollars to realize the recent appreciation in his coin price.
Alternatively, swift moves in the price of $clout alone can raise all boats. Regardless of their market cap denominated in $clout, all coins share equally (on a % basis) in price increases or decreases in $clout. I think many of us don’t appreciate the potential upside in our coin from $clout price increases. $clout going up by $20 could be far more impactful than a new 🐋 🦍’ing into your coin.
Similarly, there’s profound psychological factors at play here too. We’ve all gotten used to perceived price “floors,” i.e. where we think our coin price should be. For many people, the ‘floor’ they think their coin price should be at may actually be their coin’s high watermark. Anyone who has crossed the $1,000 coin price threshold will know what I’m talking about. As $clout has fallen back to $100, it’s no fun to see your coin price sink back into triple digits (or double digits for many).
What’s my point in all of this? The most important financial metric isn’t the price of your creator coin, per se. It’s the price of $clout. I know many investors who are only holding $clout and not investing in creator coins. Lots of institutional money views creator coins as too new of an asset class to have a real strategy for investing yet. Someday that will ideally change, but for now the best proxy for BitClout’s success is far and away the price of $clout. And since most of creators’ BitClout wealth is in their own coin and in investments in other creators, increases in the price of $clout are a more sure-fire path to increasing wealth for many than individual whale’s investments or playing FR games are.
The more we create, the more we are rewarded, not necessarily in our own coin prices, but in terms of the network effects of the whole ecosystem and the price of $clout. The more people want in, the higher the price of $clout goes, the faster your coin increases, even without new investors.
Finally, it’s worth noting that $clout is already incredibly scarce compared to other cryptos with real utility. Besides the fact that NFTs will burn lots of $clout, with each transaction, a certain amount of $clout is spent by creators and burned, making $clout as a currency even more deflationary.
Nor does this include the amount of $clout that will be lost in accounts where the owners unfortunately lose their seed phrase or become inactive and forget about BitClout altogether.
Whether you are an investor holding $clout, holding creator coins, or a mix of both, the most important financial metric is $clout. The most important factor for the long-term sustainability of the BitClout network? It’s still you.
