The Daily Data - 5/12/21 - Navigating a Bear Market
Different ways to help your account to trend towards the green
It’s no secret that Top Shot is right in the thick of a bear market right now. I did a couple of Twitter threads yesterday trying to provide some additional perspective on how to view the recent -EV Throwdowns pack drop. I think in general these were not very well received, as its hard to carry a positive mindset towards TS in the short-term right now.
I thought it was interesting that a few commenters responded saying that as an “influencer” I was surely in the green right now so I had trouble connecting to the common user experience since February. Couldn’t be farther from the truth! I received my first pack on January 28th (Cool Cats 1) and by every account valuation website available, I am definitely in the red with my current collection.
Before I dive into some of the different bullet points today, I just wanted to make it clear that I am very much so in the trenches with the rest of the Top Shot community right now who are fighting to get back into the green. Potentially one of the main ways that I differ (or like to think that I do), is that I come from the world of fantasy sports vs. the world of cryptocurrency. Whether it’s season-long with friends, Best Ball leagues, or Daily Fantasy contests…I am very much so comfortable trying to find an edge in an otherwise -EV environment. So while the Top Shot market right now is not an automatic money printing machine, I am still optimistic and excited about attacking this challenge head on.
Gain a Comfort Level with tracking the Overall Market
Admittedly so, my Google Sheet tools do not really have any large scale total market metrics right now. Most of the reasoning for this, is I think there are plenty of free resources available who provide this information much better than I. One of the first things I do everyday is check out Rookshot Market which is run by @SteefCrypto. Here is an example of some of the metrics that his site provides:
You can quickly see how the overall Base Sets and Rookie Sets are trending for Series 1 & 2, and you can get a quick glance at the current gap between buyers & sellers. Another great resource is @topshotanalytix’s week over week update (or updoot as he often refers to it). This is another great macro tool to see how the Lowest Ask Market Cap (LAMC) is trending and digs in a bit deeper to individual set movement.
Finally, I use the charts from @economist which peel back the onion one layer deeper to try and identify how the Ask vs. Sales Delta is trending in relation to the overall market cap. Important information to follow, since I have tirelessly touched on why sales information is much more useful tan lowest ask.
Purely following the market trends and swings isn’t going to make you any money, but I would argue that having an understanding of what these mean and how they help signal future moves is incredibly foundational in your Top Shot experience.
Don’t just keep Blindly “Buying the Dip”
I have heard a lot of people who are bullish on Top Shot become increasingly frustrated that they keep trying to buy the theoretical dip, and then the market just keeps dipping! If you have plenty of discretionary funds, then maybe this is a fine approach, however if you are like me and can’t just keep shelling out money it’s important to track this dip a little more closely.
Last week, I outlined quite a few ways to use the tools in my Google Sheet to help make smarter buying decisions, so make sure to read through that for a very detailed process. In general, having a process is the most important thing. We can’t predict the future, but we can help eliminate bad decisions based on known information. Before you buy a moment, if you find yourself checking the circulation count, reviewing trending sales data, comparing to a players other moments, and reviewing other players within a similar tier, then I think you have the makings of a sound process. If you leave a few of these things out of your process, then I would challenge you to try and look at some additional data points.
Once you think you have identified a good moment, should you just pull the trigger immediately? Likely not. One of the tools I have been using recently is the Moment Ranks Price Alerts. Here is an example of how in-depth you can get with these alerts, and it is incredibly useful to help track certain characteristics about a moment you have narrowed in on.
Through the MR website, you can set up to get email & soon text message alerts on when moments get listed that match your criteria. As soon as you get a ping, should you buy it? Once again, likely not. If you set an incredibly low threshold then maybe the answer is yes, however for the most part I like to track the price action for a few days. What you will often find, is when a moment gets priced below a certain threshold that can also reorganize a few of the other lowest ask listings. If you see this trend continue, then maybe the moments is still on the way downwards. On the other hand if your moment search isn’t getting any pings maybe that means it is on the upswing or your parameters are too tight. All good things to experiment with before buying the dip!
Being a Passive Investor is a Wise Option
After the announcement this morning of the third straight weekly guaranteed pre-registration pack, it looks like this model is here to stay. Even if you are frustrated with the -EV offering during the Throwdowns pack release, it’s hard to deny the fact that these base set packs are decisively +EV. Taking last Friday’s Release 33 as an example, and using this morning’s Lowest Ask data that $9 pack had a Lowest Ask Expected Value of $16. Signing up for these packs every week and locking in a 75% expected ROI is still a very smart thing to do.
A lot of people get EV mixed up with actual outcome. While there are plenty of scenarios where your pack won’t be worth $16, there are plenty of others where it will be worth way more. With the floor moments still being worth $3 you are essentially getting a free ticket at a valuable moment during these pack openings. That’s about the most passive way you can engage with Top Shot right now!
Being passive, doesn’t mean just holding all of your moments until they can each return a positive ROI.
Weighing Opportunity Cost into your Hold Decisions
A few months ago, during the height of the Seeing Stars challenge hysteria I documented an opportunity cost decision I made to sell my SS set and buy up some Series 1 Top Shot debut moments. It’s is extremely critical to understand opportunity cost when you make your hold/buy decisions. I’ll give a quick example of a situation that I am currently in.
As the Cool Cats Master Challenge enters its fifth month of existence, I am sitting on quite a few of the rewards that I purchased at the conclusion of each challenge. I currently hold 2 Jokics, 1 Westbrook, 1 VanVleet, and 1 Lavine that I purchased for a combined $660. Using today’s Lowest Ask data, these moments are now worth a combined $325. One option is that I keep holding the Cool Cat rewards and hope they run back up to my $660 entry point so I can not show a loss on my balance sheet. Another option would be to sell off and consolidate this $325 into a more stable moment.
It just so happens that the Lebron /15k No-Look 3 Pointer is currently within range at $370. The last time LeBron came back from injury (4/30) this moment spiked from $470 to $600 almost immediately. He has played 27 minutes since then but is nearing a full-time return to the Lakers. A strong Lakers playoff run seems like a much safer ROI bet than wishing on a hope and a dream that these Cool Cats all rise up within the next few weeks/months/years (could be 2023 before we see the Master Challenge).
Attacking Highly Volatile Situations
I have already talked about some of these at length, but the Top Shot market has become very predictable in a few different aspects. Here are some links to my previous posts about where we can still engage in the short-term to try and build a profit into your bankroll.
I know this is a tough time in the Top Shot world. The market is crashing downwards and we just witnessed the first -EV pack since probably Series 1. However, there are still plenty of ways to attack the market in a smart way, and I hope today’s article helped provide you with a different lens to view the current landscape through!
I also come from the fantasy space. I appreciate the opportunity cost advice and it makes a lot of sense. Ended up making very similar Cool Cat to Lebron no look 3 moves.
I look forward to the thought-provoking nuggets with every newsletter. Btw, I also come from DFS world and love the knowledge it brings for making investment decisions! Thanks for all your hard work to bring these to us!