Transcription
This cryptocurrency is fundamentally improving, but its price is not following. This is precisely why it could be a good performer when liquidity returns. We will talk about liquidity again today. We will talk about stablecoin printing. We will talk about bullish potential without bullshit, without fluff, without selling dreams. But factually, why do I find the AAV cryptocurrency interesting, and what investment plan could we create for this crypto? Just before we start, I remind you that you have the possibility to access our algorithms for free. You have all the results of the algos in the performing rooms. You also have the weekly results which are posted every week. 26 TP for the LIM algorithms last week and the SPT algorithms which are for the moment at +11 R almost this month. This means that with a capital of 1000 dollars risking 5 dollars per trade, it could have potentially generated 54 dollars in profit. I repeat once again, past performance is not indicative of future performance. Here, these are the factual performances of last week. Obviously, the results of next week can be different, sometimes there are weeks that are bad. Obviously, we are totally transparent. We make the algorithms available to you for free. To access them, it's the first link in the pinned comment. It will take you to this page. You just have to register on Bitgate, our partner link at the moment. Bitgate is offering you 10% cashback on your first deposit. If you make a deposit of 2000 dollars, you get 200 dollars bonus. Again, you must go through this link, the first link, otherwise it won't work. You create your account and once that's done, you just have to look at the second link right here. Algo trading, mentorship, VIP, Alcoin and crypto. It's a short 10-minute video in which I explain absolutely everything from A to Z, how to get all this content for free. You choose what you want, you have access to the mentorship, it's my most complete training right here. Price action, practice, mindset, additional content and also, you will have access to the Alcoin VIP in the crypto VIP on Discord. This is where I will share the best opportunities from my point of view. For example, this is where I could provide updates on AAV in these rooms reserved for VIP members.
So, to come back to AAV, firstly, we are not going to talk about the price, we are going to look at the metrics and see that they are improving. So, in green, you have the price of AAV. We see that in 2021, we went up to around 600 dollars. We see that on this cycle in 2024, we stopped around 370-400 dollars. So already, we see a divergence. Then, in blue, here, we can see the TVL, the fees, the revenues generated. For me, these are three very important metrics. So the TVL here, obviously, is this blockchain being used or not? Yes, it is. We literally see that AAV's TVL has exploded. it is much higher than what we had in 2021 or even 2022. So this is also a, let's say, a fundamental divergence. In terms of fees as well, we see that we are at quite high fees, around 3 million per day, let's say, with peaks that have already reached 5 million. In 2022, we already had similar data, but it was just a peak. Whereas now, it's quite sustained. We can see that it's a significant average. And obviously, all the revenue, we can see that currently, on a daily basis, we are around 400,000 dollars in revenue on average, between 350 and 450. Back in 2021-2022, we were barely at 150,000 on average. So already all these metrics are better than what we had in 2021-2022. Yet the price has performed less well on this rise. Why? Because I repeat once again, there are extremely important factors to observe, which is Global Net Liquidity. Global Liquidity is worldwide liquidity. When we are in a QE period, there is free money, literally, liquidity explodes. And so, that's what caused this mega bull run on AAV in 2020-2021 on most cryptocurrencies. We were also in a QE period. A QE period, what does that mean? It simply means that we print money and make money available to the markets. Well, not for the altcoin market, obviously. It's more to boost the economy and traditional financial markets and US stocks. And global stocks, it's really about stimulating the economy. That's why companies have higher revenues, etc. But obviously, this liquidity eventually trickles down into the riskiest assets, including altcoins. And that's what creates these big bubbles that are not sustainable, since it's often at the end of a cycle that we have. I'm not talking about the end of the crypto cycle, I'm talking about the end of the monetary cycle. It's at the end of QE that we had the altcoin explosion, and since then we've been in a QT period, there's much less liquidity available. And that's why, in my opinion, AAV has performed much less well than in 2021. Yet with stronger fundamentals because there was less liquidity. So the thing is to realize that in the next QE, there will probably be much more liquidity than now. Perhaps not as much as in 2021, but solid assets like this should theoretically find institutional investors, etc., etc. So that's why I think AAV can be interesting in the long term. Now, we must not forget that monetary policy is not glorious right now. Perhaps liquidity will arrive later if we were to rely on the Fed's statements, and I'm not talking about disguised QE because there's a lot of talk right now. Yes, but they will do a QE, but it won't necessarily be a QE. It's disguised QE for their debt and for this and for that and for interbank liquidity. If we rely on the Fed's words, a real QE wouldn't even happen before 2027 if we listen carefully to the Fed, because I remind you that the Fed projects interest rates around 3% by the end of 2026 and around 2% in 2027, something like that. Jerome Powell said that the Fed will not restart QE until interest rates are close to zero or at zero, which is completely normal. In fact, to do QE, it must be justified. So to justify it, it's an economy that is not doing well. The economy is always doing well. Of course, unemployment is increasing slightly, the labor market is slowing down, but we still have a GDP above 3%. There's no reason to do QE now. However, creating liquidity, making liquidity available, yes, that would be possible. Reverse repos are starting to be empty, interbank liquidity is starting to dry up. Japan is likely to raise its interest rates, so financing in Japan to buy US stocks is becoming increasingly expensive. So all this can lead us to a sort of disguised QE but not a real QE when the Fed's monetary policy completely switches, etc., etc. So we will have to wait and see, and all this to say that we could be in a huge accumulation phase here to possibly prepare for the next cycle on AAV. So please don't look at the dates here because I'm drawing this freehand, obviously, but roughly here, we have a huge accumulation, a breakout, we come back to test the base of this breakout, which was around here, we can see it, hop, around there. So anything that comes back to these price levels is very interesting on AAV, but we have to realize that it could range like this for a long time until at some point, we have the real breakout and an acceleration. So now, patience will be important, and I invite you to find assets like this. If you have any, don't hesitate to tell me in the comments. Assets that fundamentally perform better than in 2021 but are not reflected in the price. So that's interesting. Fundamental divergence, price. Now, when I talk about fundamentals, please don't talk to me about tokens that make technical sense fundamentally. For me, everything that is fundamental is everything that relates to TVL, fees, revenues, loans that generate interest, etc., etc. Everything that relates to real finance. For example, a project that has improved, I could do 18 transactions per second in 2021, I can do 70 now. I don't care, it doesn't interest me at all. Talk to me about numbers, revenues, TVL, generated fees, number of users, etc., etc. These are real fundamental values. For example, if AAV were to be valued on the stock market, AAV should be valued higher than it was in 2021. This was probably not the case due to liquidity problems. Perhaps it's a project that will fail, that will never recover. That's a possibility we're investing in. But in any case, fundamentally, when I see a TVL of 45 billion compared to 15-20 billion in 2021, these are already big numbers and that proves that there is a divergence between the price and the fundamentals, whether it's in terms of revenues generated, etc., etc.
Now, from a technical point of view, well, from a technical point of view, we can see that we had a huge accumulation phase. Here I can show you a volume profile that will show us where the bulk of the volume was executed. So we had a huge accumulation phase between 100 dollars and around 60 dollars. So this is a good zone to position yourself for the long term. This is roughly where the accumulation took place. And so anything that comes back to these price levels in the long term is interesting. Now, let's try to look a bit more at the short term what the price is doing and what zones we could visit. First of all, well, we had the wick, a big liquidity problem on the entire market which caused a huge crash. We came back to recover the previous stops. You should know that when there are huge crashes like this, with big slippages, big predatory moves, there are market maker algorithms that shut down and buy back where there is really big, big volume being executed, and that's often below these lows. So that's from here that they started to buy back massively. Again, the market maker is not there to accumulate your altcoins, to resell them to you at a higher price, etc. There are many types of market making. Those who will make money on spreads, those who will make money on funding, those who will make money on many metrics, arbitrage between different exchanges, between many things. In fact, there are really tons and tons of market maker roles, algorithms, and market makers. The market maker is not there to buy your AAV at 3 dollars and try to resell them to you at 1000 dollars. That's not the reality. Of course, there are probably market makers who will perhaps trade against certain clients to try to generate added value, but that's not legal. That's not the market maker's objective at the base. Anyway, parenthesis closed because we always see the evil market maker who wants to buy your tokens cheap, but he's just there to ensure that the liquidity is there. He can make a little money with the spreads, etc., but normally that's all he does. He's not there to steal your coins, obviously. Now, from a technical point of view, interesting price zones. Well, we've already talked about these wicks, I was talking about them a few weeks ago that these wicks would probably be retested and that in fact people hadn't had time to panic here, it was too fast. So we were probably going to return to the discount zones of the wick. So in fact, you take a fib here from the low to the high of the wick. So it stops at the candle body simply. And you put a fib, and within this fib, the following levels are 0.25, 0.5, 0.75. The discount zone is between 0.5 and 0.75. So there's a chance we'll retest this price zone. That doesn't mean we'll go back there, but if we do, we're in discount zones, so more interesting prices. This would be between 150 and 115 dollars approximately. Given the price dynamic we're starting to see on AAV, which is still a bearish dynamic, I remind you that we're making lower highs and lower lows. We could even see a small descending channel here like this. Hop, I can draw it. Hop! If I clone it to make it parallel, it would look something like this, perfectly. Hop! So we see that we are in this small bearish channel. Well, when it comes back to the bottom of the channel, it's more interesting to buy. After, I think it's more interesting at the bottom of the channel, in the discount zone. So it could happen perhaps in 4-5 days that we return to the discount zone while being at the bottom of the channel. Potentially, I'll delete this channel, I don't like having a cluttered chart, but theoretically, this is the zone that would be interesting, knowing that the stops have already been recovered here. Now, if eventually, in a scenario, it goes lower, you have to understand that it can be a huge range. That is to say, roughly, you take your low here, I have the impression that it's taking this shape. Anyway, it's not taking this shape, it took this shape with the retest with this wick and the retest we're doing here. So I'm putting a range template, and roughly, everything in the bottom of the range is very interesting. Everything in the top of the range, we secure, we take profits. Mid-range, it can be bought if the price holds well. We see that we broke the mid-range. So in my opinion, we will return to the bottom of the range. In any case, we will approach it. So everything in the bottom of the range here, between 120 and 45 dollars in the long term, is very interesting. And this is where we should prioritize investments. This is where we will have the most interesting investment zones.
So why do I think that at the next QE or when we have a more accommodating monetary policy, we will reach a new ATH? That's what I explained at the beginning of the video. The metrics are better. Fundamentally, it's better than in 2021. In terms of numbers, it deserves. Well, not deserves, but in terms of numbers, it can be valued higher. Now, we're going to do something applied in the stock market, P/E, which is price to earnings. What would be a real capitalization for AAV? In 2021, it was clearly overvalued relative to what it generated. Okay, now we're going to look at the revenues here. Also, there might be other types of revenues that will be generated, I forgot to mention it. AAV has launched a buyback program with a portion of the revenues it generates. It buys back AAV, which absorbs supply and creates demand in the long term. So that's very positive. Now, to get back to this, we'll take an average, I'll tell you roughly here, let's say 400,000. Let's say it's the average that returns, around 400,000 dollars in daily revenue. 400,000 daily revenue, that makes on average, per year, around 146 million dollars. 146 million dollars, we can value that approximately, I'm saying approximately, in terms of what it can be worth in terms of valuation. Now, you should know that the average P/E in the stock market is very high. I think we're approaching 20 currently for a lot of companies. So, in fact, we would have to multiply the price by 20, well, the annual revenues generated. Here, that gives us around 2.9 billion. So we are currently at a valuation which is, I'll go on Coin Market Cap, we are above that, but you have to understand that in crypto, we have huge P/Es because it's a market that is not very liquid, etc., etc., but currently, we have a market cap of around 2.6 billion, FDV 2.7, market cap 2.6. So 2.6 market cap, TVL of 32 billion, which is huge. And so, well, we are in those ranges, we are almost fairly priced. If we were to apply a P/E in the stock market that is around 20, we are fairly priced. Now, the closer we get to the bottom of the range, the more theoretically we will be at lower P/Es, and therefore it will mean that we will be valued very correctly. Now, in crypto, there are often bubbles, there are often excesses, and that's what we trade, that's what we invest in. When I invest, I don't want to invest and sell at the basic P/E we have in the stock market. You should know that in crypto, when bubbles form, they can reach a P/E of 100 or 200,000. This means that it can reach 1000 times what it will generate in 1 year. For example, if in 1 year it generates around 146 million, as is currently the case. So here I have my calculator but you don't see it. We do 146 million times, for example, 500, that will give a market cap of 73 billion. These are the bubbles, these are the excesses that we trade. It's on these excesses that we sell because in fact, they often form bubbles. I made a video for you on how cyclicity works and how it works thanks to liquidity. And when we enter a QE phase, there is often an excess in altcoins because they are the riskiest assets on which we speculate when there is a QE. And that's what causes huge bubbles and that's what allows us to reach completely absurd valuations. For example, reaching 10 billion valuation on AAV in current market conditions would be a P/E that would be too high. It doesn't mean we can't do it, it just means that in a QT period, liquidity is scarce, we focus on artificial intelligence, etc. It's very unlikely to reach a new ATH now. That doesn't mean there won't be one. We can literally have one, but if we factually look at what is generated, we are at real values currently at basic P/Es that we have in the stock market, and we see that we haven't strayed too far from this P/E. So this is completely normal. I know these terms can be complicated, but roughly, P/E is simply annual revenue, market cap, and you look at the multiplier. For example, a company that generates 1 billion per year in revenue and has a market cap of 10 billion, the ratio is 10. If it's valued at 100 billion, the ratio is 200. The higher this ratio, the more we estimate that the company might be overvalued. In crypto in 2021, we should have had a P/E of 5000. So in fact, these are bubble-like capitalizations. It doesn't make sense to have these capitalizations at that time given what it generates. Especially since it generated even less back then. So that proves it's a huge bubble. But again, in crypto, we trade bubbles. That's why, for me, it's not long-term investment. It's positioning myself when nobody wants it anymore, and once a new bubble forms, I sell because bubbles are not sustainable. If there's a next bubble one day, what will happen? AAV won't go up in the long term like Apple. Why? Because Apple generates cash, cash, cash constantly. Amazon, Google, Microsoft, same, we are at much smaller P/Es than in crypto. So valuations that are much more realistic. The day it makes a bubble, it's a bubble that will burst again. That's what you need to understand. So if you invest for the long term and never sell, you miss a big part of the performance because the bulk of the performance happens when it's bubbly, and then when the bubble bursts, it loses 90% of its value because we reach unsustainable price-to-earnings ratios in the long term. So this is where I'll stop for today's explanations.
Now, regarding objectives, personally, I think we will revisit at least the 2024 high. So, if we buy at the bottom of the range, we already have a small x 3.6 that can be offered. If we buy now, for example, if we estimate that the bottom is now, it's already 140%, which is not too bad. In any case, I think this will be revisited very probably. We also have this wick here that will be revisited. After, the idea is still to surpass the 2021 ATH because fundamentally, it's doing better and at the next QE, we risk launching a new bubble which, at that time, generally, when we make ATHs on altcoins, we look for extensions of 1.618 to 200% at a minimum. That's often what is achieved. And here, that could give us AAV between 1050 and 1280 dollars. So if we buy at the bottom of the range around 100 dollars, it's potentially for the long term. We won't make x 10 to x 12, because that would mean selling everything here. That's not at all what I recommend. What I recommend when investing is to set many sell limits like this. Tac tac tac tac tac tac tac tac tac. We can even program it up to 2000 bucks. So if a bubble forms, you just keep selling as it goes up. And if your last orders are not hit, at least you have sold massively. The objective is to place the biggest orders as high as possible. That way, if out of 100 orders, 80 are executed, the biggest ones are there. Your average selling price is not the average of all these orders. Your average selling price will be much higher, and that's how you make more money. But the more it goes up, the more you sell. You recover cash, you de-risk. Remember, risk here is risk, here is time. The objective is to bring risk towards zero over time, or even go below zero, meaning to risk nothing anymore, to only risk gaining something. So here, it's a risk below zero. Basically, even if tomorrow, for example, I bought here, sold everything, and set a stop loss there, if it comes back here, then my risk is no longer zero. My risk is only to gain money, and that's less than zero risk.
Anyway, I'll stop here for today. I hope you enjoyed it. If you want me to do this with other altcoins, don't hesitate to tell me in the comments. If you have a similar fundamental analysis with a similar fundamental and price divergence, don't hesitate to put the coins in the comments that correspond to that as well. It interests me enormously. I could do an analysis. Don't hesitate to bombard the blue thumbs up, to subscribe, to leave a small comment. Thank you very much to those who play along. See you very soon.