Letter 86: What tokens have performed well during this market turmoil?

Finding invidual strength during broader market weakness, a look at 8 tokens

It’s been a month since the largest liquidation event in crypto history. The market has been weak, Bitcoin has struggled, and almost everything else has been bleeding out.

But there are always opportunities. One thing I like to do is look at what coins have performed well in the face of a wider market downturn, and ask myself why.

What can we learn from them? Are they good to buy and hold now?

Usually it indicates a lot of strength if a token outperforms the market when the market is bleeding.

The goal in crypto investing and trading, if you’re going to do anything other than buy and hold BTC, is to outperform BTC. If you can’t do that, then you’re better off being a buy-and-hold investor (and, spoiler alert, most of you reading this would be better off that way).

But what’s the fun in that?

Bitcoin is down 3.59% over the last month (ETH and SOL are both down about the same). While outperforming these tokens on a monthly timeline is not hard, and nothing to write home about — I think looking at the tokens that did outperform and trying to understand why might be worthwhile.

So let’s take a look at some of the top performers over the last 30 days, and see what we might be able to learn from them.

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1. ZCASH

What is it?
Zcash launched all the way back in 2016 as a way to “fix” some of the privacy-related concerns of Bitcoin. Contrary to popular belief, Bitcoin transactions are not private — everything is viewable on the public blockchain. Zcash uses zk-SNARK technology to allow users to transact onchain without revealing the details of their transactions to anyone. Kinda revolutionary!

Why is it doing well?
If the token has been around since 2016, why the recent pump? Historically, Zcash has always had a rally during bull markets (unfortunately it has also tended to be towards the end of the cycle 😭). The fundamentals of what the token and chain does hasn’t significantly changed, but since it also runs on a 4-year halving cycle like Bitcoin, the tokenomics have gotten a lot better as emissions have drastically come down. Also, the narrative of privacy has come back to the forefront in the world — and in crypto. This coupled with the Zashi wallet and improved UX defaulting to privacy-first transactions has caused the recent rally.

Is it a good buy now, at current prices?
I’ve been struggling with this myself. I missed the initial run up, and only first started paying attention when it was sitting at around $250. Obviously that would have been a good buy, and we’ve gone up over 2x from there still. It’s tough to justify buying any token that is up 20x in two months, but if there is one token that I might bet on that has had this sort of price action, it’s ZEC. The philosophy and narrative of it being the “new and improved Bitcoin” is a strong one, and this is not some random memecoin that came out of nowhere.

I might look to buy a bag if I can get it in the $300-$500 range, DCAing in, with a price target of $1.5k to $3k.

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2. VIRTUAL

What is it?