Let me be clear; everything in this entire cryptocurrency space is pretty much just an experiment.
Some experiments work and become new pieces of technology that we use in our day-to-day lives, while others fail and simply fade into the background. Most of the experiments that do work don’t tend to succeed in their first attempt.
A great example of this would be Thomas Edison creating the light bulb. He didn’t make it on his first attempt. Nor his second. In fact, it took Edison well over 1000 tries before he finally created the lightbulb that we use in our everyday lives - changing the way the entire world works.
This ethos is mirrored in Bitcoin.
Throughout its decade-long reign, Bitcoin has been touted to have ‘died’ on numerous occasions. Every time the cryptocurrency dropped slightly, publications would instantly jump on-board the obituary bandwagon (for clicks) and create another eulogy for the digital asset.
Yet, Bitcoin is still here.
Over that time, people would analyze the market to try and predict the most likely outcome based on technical charts and fundamental data. The analysts that the kept faith in the vision had realized that, with its finite supply and ever-increasing network growth, Bitcoin would eventually be in the 5-figure region.
Fast forward to today, and you will see that those analysts were handsomely rewarded.
This is precisely what we need to do with altcoins that offer a slight edge and can eventually provide utility at some point in the future.
One of the altcoins with a ‘slight edge’ is Ampleforth.
$AMPL Won't Have a Regular Type of Chart
For the first time, many investors who buy into AMPL don’t realize that AMPL won’t ever have a regular chart that traditional cryptocurrencies experience.
It is simply because it has a price target of the CPI-adjusted 2019 US Dollar value with a median price of $1.02 since its creation.
Form this, it means that an AMPL price of $10 should never really be on your radar as it is designed to fluctuate around the $1.02 level over a more extended period of time. It achieves this through the unique rebasing mechanism implemented into its code.
In a nutshell, if the price for AMPL is above $1.06, the supply for the token (and the number of AMPL in everybody’s wallets) increases. On the other side, if the price is beneath $0.96, the token supply decreases. If in between, then its supply doesn't change.
This rebasing mechanism is designed to incentivize market participants to buy/sell AMPL, depending on the rebase direction, to slowly bring the price to the CPI-adjusted 2019 $1 level.
Instead of hoping for AMPL to continuously rise higher over time, you should be anticipating large swings up and down that occur in a very short period of time every now and then;
- Swing Up: An ideal example of a large swing-up occurred shortly after the Ampleforth team announced their first liquidity mining incentive program, called the Ampleforth Geyser. It was announced on June 23rd, 2020, and within 18-days, AMPL went on to surge by 300%. This was because the Geyser caused a vast inflow of investors that were ready and willing to capitalize on large daily rebase returns that were reaching beyond 20% at that time.
red arrow; price $1, green arrow; surge up to a $3 per $AMPL
red arrow; rebase of 0%, green arrow; rally up to a 25% daily rebase
- Swing Down: In March 2020, when the Covid-19 pandemic news hit the floor, AMPL entered a death spiral of selloffs as it dropped from above $1.59 to break beneath $1.00 and continue lower to reach $0.49 in the space of 10-days. This was because nobody felt like holding a token that reduces the number of coins you hold by 5% each and every day, right? The compound interest works both ways.
red arrows represent price action amid covid crisis in march with $AMPL falling from $1.59 to $0.49
negative rebase reached below 5% during that time
What does $AMPL Have in Common With $DOGE?
If you have been following the recent DOGE price as of late, you might have noticed something that AMPL and DOGE have in common…
This is only on the surface level, but still, Dogecoin periodically experiences a large pump - just like AMPL;
On the chart above, you can see AMPL in green and DOGE in brown.
It clearly shows that there are extended periods of simple sideways movement mixed in with incredible swings up and down every now and then. After the surge, it retraces slightly and starts moving sideways again.
The latest DOGE pump occurred this week, and it had some serious strength behind it as it was primarily helped by the BTC price increase as well.
AMPL can easily mimic these huge swings higher similar to what DOGE seems to witness every now and then.
However, after these swings, you must always remember that the rebasing mechanism isn’t designed to print money forever. It is designed to ensure that AMPL will always return to the CPI-adjusted 2019 US Dollar, which currently sits around $1.02.
Along the way, you will see large swings up and down, which will gradually become smaller in magnitude over time;
The chart in the Tweet above perfectly illustrates what you can expect to see with AMPL. It won’t gradually move upward slowly like the majority of ERC-20 assets such as LINK or SNX. Instead, it is designed to high-five with the $1 peg every now and then to tighten its equilibrium. The swings higher and lower will gradually get smaller in the loooong run.
Although DOGE and AMPL are very different, they do have one thing in common - price action. Both of these cryptocurrencies experience large swings up and down, with long sideways periods in between. However, honestly, that comparison was just the bait to help you better understand $AMPL mechanics and what to expect as a trader and investor.
The key takeaway is that big news will most likely make $AMPL suddenly skyrocket on the price chart rather than do it in a gradual fashion. The same rule applies to bad news.