If you read my articles, you may know I had already shorted The Sandbox (SAND). Fortunately, I closed my short position a while ago because in the meantime SAND token price decreased as expected but then rebounded with a significant +20% last night.
What does it mean to short a crypto?
Shorting a crypto refers to the act of selling it with the expectation that its price will decrease, so that you can buy it back at a lower price and make a profit. It is a way to bet against the market, and can be seen as a form of market speculation. To short a crypto, you can borrow it on a lending platform and swap it to a stablecoin like USDC, with the hope of buying it back at a lower price and returning it to the original owner while keeping the difference as profit. However, it assumes that you can borrow this crypto easily, which is not the case of SAND. Therefore, another way to make it is through decentralized exchanges like KuCoin, where you can buy a leveraged short version of the crypto like SAND3S. Please note that it is a risky speculation.
Why do I short The Sandbox (SAND)?
At first, you need to understand why the SAND token price has pumped by 20%. This sudden price increase would most be due to... Saudi Arabia, since Sebastien Borget, Sandbox co-founder and COO, recently wrote the following news on LinkedIn:
It was a true honor to sign our [memorandum of understanding] partnership … between The Sandbox and the Saudi Arabia Digital Government Authority
When The Block (reference below) asked him for more details, he responded by email that he could not reveal anything further regarding this deal, but details would be provided in the “coming weeks.” As we all know, traders are very impatient. If these details come too late, the price will likely dump.
Furthermore, releasing this kind of news can also be a way to pump the price just before the next token unlock, which is planned... In less than 6 days:
As this cliff unlock will suddenly release 12% of total supply, we can assume that a significant portion of these 372 million SAND tokens will be sold, particularly if the price is a bit high compared with a few weeks ago. On top of that, there is an unfortunate coincidence since some new figures regarding the CPI (Consumer Price Index) will be released on the same date, what might create some troubles for all cryptos including SAND.
According to the trading desk QCP Capital:
Post Powell, all eyes will quickly move to CPI on 14 Feb, barring any unforeseen outliers in this Friday’s inflation expectations number. Will we see a Valentine’s Day massacre or a redemption off another weak print?
What are the next steps?
I started my short today after SAND pumped by 20% in a few hours. SAND token price may remain at this level for a few days or even pump a bit further. I will stay patient till February 14. Then there will be two options:
- If SAND starts to dump as expected, then SAND3S will start to pump and I will wait for the best time to sell it;
- If SAND price does not dump as expected, I will buy more SAND3S because SAND will dump sooner or later.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
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