Many of my followers know me from my extensive coverage of Ampleforth recently and, over the past couple of days, I have started to feel that this recent ‘AMPL Dump’ cannot be left uncommented - just for the sake of those that gained interest in AMPL through my articles.
AMPL Price - July 10 to Present
The chart above shows the price of AMPL from July 10th to the present. We can see that there was a first ‘mega dump’ on July 13th when the price AMPL fell from $4.00 to reach as low as $1.40 by July 14th.
AMPL rebounded front here and managed to recover over the following couple of weeks to reach as high as $3.00. Unfortunately, AMPL was unable to overcome $3.00 on the third attempt to break which caused it to roll over and head beneath $1.00 for the first time in weeks.
This drop beneath $1.00 caused panic in the market as AMPL holders started to realize that they would be getting negative rebases for the first time since they invested in the project.
A Small Window Where Investors Got Hurt
Let’s get real.
Typically, those that shout Ponzi-Scam-Coin already missed the opportunity and are on the sidelines hating.
To put this price drop into some real perspective, let us take examine what really would have happened to your holding each day if you had invested $1000 into AMPL on July 24th 2020;
24th July: $1000 - 499 AMPL
25th July: $1248 - 550 AMPL - 10.11% rebase = UP 24.86%
26th July: $1654 - 626 AMPL - 13.78% rebase = UP 65.4%
27th July: $2052 - 726 AMPL - 16.01% rebase = UP 105.28%
28th July: $1887 - 820 AMPL - 12.93% rebase = UP 88.78%
29th July: $1478 - 885 AMPL - 7.86% rebase = UP 47.82%
30th July: $1106 - 919 AMPL - 3.88% rebase = UP 10.66%
31st July: $604 - 900 AMPL - Negative 2.09% rebase = DOWN 39.6%
1st Aug: $879 - 884 AMPL - Negative 1.82% rebase = DOWN 12%
2nd Aug: $1242 - 903 AMPL - 2.14 rebase = UP 24.2%
3rd Aug: $1054.55 - 917 AMPL - 1.61% rebase = UP 7.36%
As you can see, investing on July 24th would have resulted in a 105% profit by the 27th of July. From there, the profit stated to go downhill slightly during the retracement. On July 31st, investors were down 40%, and the following day they were down 12%.
We have 3 painful days for investors but hey, this is the nature of investing. You can't hope for an asset to moon forever.
I used the following calculator to reach the results. Go ahead, you can go and see the results for yourself: https://amplcalc.app/
Why This DUMP was a Lie?
So, why am I specifically calling this ‘dump’ a lie?
First of all, I am pretty sure that 99% of cryptocurrency traders out there have no idea that AMPL has a second axis that derives the value for the project - the supply.
You see, every other coin that we know has a fixed supply. It pretty much never changes and, if it does, it occurs in a highly predictable and slow fashion. The only freely moving axis to derive the value of every cryptocurrency project in history is the price. Traders monitor the price to find patterns and place trades for profits.
However, Ampleforth has come with something that is totally new to the entire industry.
It has what is known as an elastic supply.
The supply changes daily depending on the current price of AMPL. If we above $1.06 then we will see a positive rebase and the total number of AMPL in everybody’s wallet increases. On the flip side, if the price is beneath $0.96 then we see a negative rebase, and the total number of AMPL in everybody’s wallet decreases.
Most traders fail to realize this second axis when conducting analysis and a drop of the price for AMPL back to the targeted $1 value would be seen as a dump to uninformed analysts.
AMPL is Designed to Hover Around $1
The mechanism behind Ampleforth is designed to keep the price close to the CPI-adjuted 2019 US Dollar.
It chose the CPI-adjusted 2019 US Dollar to take into account the USD dollar inflation rate. Typically, stablecoins are just pegged to the value of $1 today, and, for this reason, they lose around 2-3% to inflation. On the other side, Ampleforth using the 2019 CPI-adjusted Dollar will allow for the price for each AMPL token to increase in USD value according to the rate of inflation.
It works through a simple supply contraction and expansion mechanism in which if the oracle price is above $1.06 the supply will rebase positively and if the price is beneath $0.96 the supply will rebase negatively.
This is how the entire mechanism is designed to keep the price near $1 and it is what we have seen kick into action over the past few days. The price for AMPL was well above the $1.06 target during the last week of July which meant that AMPL holders were receiving positive rebases on a daily basis. This would cause the supply of AMPL to be quite excessive as traders started to unload their rebases - pushing the price beneath $1.00.
This is what is known as market discovery - an early phase of the AMPL lifecycle that we are currently in.
AMPL surging from being ranked in the 650th spot to be a Top 30 ranked coin in just 1 month is nothing short of EXCEPTIONAL. With impressive surges in just 1 month, it is necessary for the market to correct and head lower - it should not be a surprise to AMPL holders but it seems to be for AMPL detractors.
Ampleforth is what is known as a multivariable asset (MVA) as both the price and supply for AMPL are moving freely. For this reason, traders are able to buy high to sell low and still make a profit. To understand this in more detail, check out this in-depth article on Multi-Variable Assets.
Why I'm Still Hodling $AMPL?
As you could have guessed, I’m not shaken and will still be hodling my entire $AMPL stash.
Well, if you have been following my articles you might have stumbled across the following article in which I explained how I turned $373 into $7563 in just a few short weeks. Obviously, I benefited from being an early bird as I invested into AMPL pretty damn early relative to when they hype exploded.
Well, this might surprise you, but, despite these crazy ‘AMPL Dumps’ this is where my holdings stand today;
PS. I didn't buy HEX. I think it was airdropped.
As you can see, my holdings are pretty much exactly the same as they were on July 21st. It has dropped a couple of hundred bucks and it went as high as $12,000 at one point but it is still sitting pretty today.
You see, as a trader myself I am paying the most attention to the chart on the right side of the Ampleforth dashboard;
The chart on the right displays AMPLs total supply. We can see that despite a price drop it's still in demand.
This is the factor that still many ETH maxis miss and don't even try to understand as it's beyond their spectrum. I really hope that attitude changes over time.
In the near future, probably even by the end of 2020, I see AMPL reaching a $1 billion market cap value and.
Simply because ampls tokenomics which are yet to be discovered by the majority of traders. What we have experienced in recent weeks was just a small sample of what is yet to come. On a side note, Coinbase CEO Brian Armstrong is also deeply invested in $AMPL and he keeps holding. I'm pretty sure he would not put his face on a ponzi project.
Ok, let's go back to why I believe that supply chart is something we should be paying more attention to.
Ampleforth is on the right track to hit $1 billion. This is especially apparent when we look at how well the AMPL Uniswap pool is performing relative to others.
As you can see, the ETH-AMPL liquidity pool continues to absolutely DOMINATE over at Uniswap. It is by far the highest liquidity pool at the DEX. In fact, it is over 2.5 times bigger than the second biggest liquidity pool at Uniswap which is USDC-ETH.
On top of this, the Volume for ETH-AMPL is significantly higher than any other pool and it continues to generate more than double the fees of every other pool
This simple metric is a sure sign that people are still madly interested in further exploring this new type of Multi-Variable Asset class. I still see this as the VERY BEGINNING of a whole new journey in crypto and I am extremely excited to see where this thing ends up by the end of the year.