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GM. This is Milk Road – when the market is having a menty b, we keep you unflinching & stress free!

(Mental breakdown.)

Here’s what we got for you today:

• ✍️ How to find winners (as markets tank)

• ✍️ The buy n’ burn era is about to start

• 🎙️ The Milk Road Show: WTF is Happening in Markets? Will Altcoins Ever Recover w/ Kyle Reidhead

• 🍪 Is the European Central Bank warming to crypto?

HOW TO FIND WINNERS (AS MARKETS TANK) 🥇

When there’s something that would be embarrassing to admit that I don’t understand, I have two tricks to get our Head Of Research, Kyle, to explain it to me.

1. I say our GM, Tyler, needs to know about it (which is code for: explain it to me like I’m 5)

2. I say “this would be great for the newsletter, can you give me a quick breakdown?”

I’ve been leaning on the former pretty hard of late, so when Kyle called Maker/Sky ($MKR) at $915 back on Feb 8th inside the Milk Road PRO Discord (before it ran up to ~$1630 today) – I went with option 2…

But because I chose option 2, that means I now need to share what I learned here (otherwise the jig is up).

So here’s the formula Kyle attributes to the success of the call:

Price down + fundamentals up + sellers done selling + positive news = winning call.

Which doesn’t mean much on its own – so here’s that formula broken up into three parts…

1/ Market downtrend = opportunity

Kyle saw that the market downtrend was pulling prices down across most tokens (both strong and weak) – which presented an opportunity…

If you can spot fundamentally strong tokens that are getting rekt, in part, because of a broader market downtrend – the chances of them rebounding ahead of the rest increases.

And between mid-late Jan and early Feb, the market had been in a downtrend – hell, it’s still in a downtrend! 

This is the total crypto market cap, excluding Bitcoin and Ethereum (year-to-date):

2/ Prices down + fundamentals up + sellers done selling = signal

While $MKR’s prices fell in line with the market, its fundamentals were booming! 

Between Jan 1 and Feb 8 (the day Kyle made the call) – the Sky Ecosystem (Maker’s rebranded platform) saw its stablecoin supply grow more than 3x, from $1.27B to $4.11B.

Sky’s $sUSDS is a cornerstone of the ecosystem – so if you don’t hold it, you can’t use the platform. 

(I.e. An increase in stablecoins indicates an increase in use 👇)

At the same time, technical analysis showed that $MKR was at the bottom of its multi-year range…

Indicating that most of the sellers were done selling, and that Maker had two options: break its multi-year trend (hard to do with a fundamentally strong token), or rebound…

$MKR chose the latter option:

3/ Price down + fundamentals up + sellers are done selling + positive news = winning call

This is the part where we answer the question:

“How did $MKR go up, while the rest of the market was tanking Monday/Tuesday?”

That was all thanks to some positive news surrounding $MKR. It wasn’t required to make this a killer trade – but more of a cherry on top.

On Monday morning, Maker announced they were turning on their buyback n’ burn mechanism (a feature that we’re going to dig into in the next article)...

As a result, while the broader market was nuking late Monday evening/Tuesday, $MKR pumped 30% (bottom to top):

So there it is! Your step-by-step process for sniffing out opportunities in the market:

Watch for falling prices, identify tokens with growing fundamentals, track the charts, watch to see when sellers are exhausted, and monitor for any future positive news catalysts.

Or, if you can’t be bothered dedicating most of your waking hours to doing that, just let Kyle and the PRO team do it for you, by doing the following:

1. Sign up for Milk Road PRO

2. Join the PRO-Only Discord

3. Turn on notifications for our pro-team-signals channel

4. Call your mom and tell her “Ma, I know you’ve been worried about all this crypto business I keep talking about – but I’m in good hands now. No, I’m not doing anything illegal…why would you listen to uncle Steve, what does he know about crypto, the man still uses cheques! Look I gotta go. I love you ok, there’s no need to worry…ok bye.”

Boom! Done.

CRYPTO’S BUY N’ BURN ERA IS ABOUT TO START 🔥

There’s a good chance you’re already familiar with token buybacks, ‘cause in many ways they ain’t new.

Traditional companies have been periodically buying back their stock for years, as a way to signal to the market:

1. We have a bunch of spare cash 💅

2. We believe that the best investment right now is an investment in our own stock 💪

3. If you hold our stock, your portfolio will benefit from our massive buying pressure 🫡

But you typically only see this from massively profitable companies that have already found product-market-fit (PMF if ya nasty), who can continue to spend on growth & innovation, while still having cash left over.

(Think: Apple, Microsoft, Google.)

It’s a not-so-subtle way of saying “We have so much money, we don’t know what to do with it”.

…and now crypto projects are starting to do a similar thing.

But they’re taking it to a whole other level!

Crypto ecosystems – like Maker ($MKR), Raydium ($RAY), and Jupiter ($JUP) – have begun buying back their tokens…and then burning them. 

(As in, destroying them – taking them off the market, permanently.)

Hell, Jupiter held a mini festival/conference called “Catstanbul”, where they burned $3B worth of their token, alongside a physical effigy of a cat. 👇

The added bonus here is: not only is buy pressure hitting the token at consistent intervals – but the circulating supply shrinks every time it happens.

(All while more people are incentivized to start holding the token.)

OK, but if it's so great – why don’t more projects do it?

First: many of the same un-spoken rules surrounding stock buybacks, apply to token buybacks and burns.

If you haven’t found PMF – you should be spending your money on innovation and growth. Not buybacks.

And right now, there are very few crypto projects that have found PMF, and can continue to fund innovation – all while buying and burning their tokens.

So when you see buyback n’ burn mechanisms hitting ecosystems, think: BULLISH!

Second: this guy. 👇

Until very recently, crypto projects have been super reluctant to initiate any ‘security-like behavior’ in fears that Gary Gensler’s SEC would hit them with an enforcement notice.

But as we covered yesterday, those days are quickly coming to an end. 

With the cases against Coinbase, Robinhood, OpenSea, and Uniswap now being closed – it sends a message to profitable projects that have found (or will soon find) PMF: 

You can now flip the buy n’ burn switch to ‘ON’.

So. Freakin’. Bullish.

ARE WE COOKED? 🍳

Our Head Of Research, Kyle Reidhead, just joined today’s episode of The Milk Road Show, to follow up on his Flash Update from last Thursday, to answer one simple question:

“Are we cooked?”

Here’s the TL;DR:

• Market corrections are normal: the current 20-22% dip for Bitcoin, while painful, is historically common and less severe than previous corrections.

• Long-term perspective is crucial: focusing on short-term price fluctuations leads to emotional decision-making and missed opportunities.

• Macro factors: market fear is partly being driven by uncertainty surrounding Trump's policies – however, China's stimulus efforts and the overall business cycle are still pointing to further economic growth. 

• Altcoin season is still possible: this altcoin season might be different, with a focus on token buybacks – but it’s still expected!

With all that said – there’s even more alpha and insights waiting for you in the full episode!

Check it out below! 👇

YouTube | Spotify | Apple Podcasts

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.