Lots of holders will explain you why you should buy the cryptos in which they have himself invested. Today, I will do the contrary by telling you why I am shorting some of these coins... Before starting, it should be noted that it is not a financial advice. The article below is only for educational purposes...
How to choose the coins to short?
The main use case of cryptos today is DeFi (Decentralized Finance), and the best way to measure the current success of a coin in DeFi is to look at the TVL associated to its blockchain. If you see that the coin is far away in TVL ranking but has still a relatively high market cap, it means it is overvalued.
What are the most overvalued coins?
One example of overvalued coin is Cardano (ADA), which is #8 in market cap... But only #26 in TVL, as per DefiLlama.
By comparison:
- Ethereum (ETH) is #2 in market cap and #1 in TVL
- Binance Coin (BNB) is #4 in market cap and #2 in TVL
- Solana (SOL) is #11 in market cap and #11 in TVL
You may say Bitcoin (BTC) is only #21 in TVL... However, Bitcoin is an exception, and WBTC (Wrapped BTC) has a high TVL spread over many blockchains.
What is the best time to short?
You need first to look at the 1 day charts (not lower) to understand the trend. Let's look at ADA 1 day chart:
You can see that the price has constantly increased since December 30th but that now it starts to slow down.
It is also quite useful to look at the chart of ADA3S, which is a Cardano 3 times short leverage ETF traded on exchanges like KuCoin:
You can see that ADA3S has reached the bottom that it had already reached in November, September and August...
Therefore, it could make sense to short ADA this week, for instance by buying a bit of ADA3S on KuCoin by using the tips you earned on Publish0x.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
