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GM. This is Milk Road. The newsletter that balances your daily dose of hopium, with a measure of caution.

Here’s what we got for you today:

• ✍️ These memecoins = leveraged bets. But be careful 👇

• ✍️ Memecoin risk can rek a portfolio

• 🎙️ The Milk Road Show: Stars Aligning for a Crypto Pump This Weekend w/ Farokh 

• 🍪 18 US states are suing Gary Gensler

THESE MEMECOINS = LEVERAGED BETS ON MAJOR TOKENS 📊

How do you take on leverage…without actually taking on levera—

Shoot, we’re coming in way too hot. 

First things first: what the hell is leverage?

Simple. Leverage = taking out a loan to buy more crypto. 

Say you put 10% down to take out a $1k loan – that means $100 is yours, and $900 belongs to your lender (you’ve now taken out 10x leverage on your $100).

If you put that money into the market and the asset goes down 10%, you lose your $100, the asset is sold, and the remaining $900 is returned to your lender.

(On the flip side, if the asset goes up 10%, you double your money – yeeew!).

But what if you could make a levered bet, without taking a loan – so there’s no price point at which you’re forced to sell and repay your lender?

There are a handful of ‘flagship’ memecoins that essentially double as levered bets on the underlying ecosystem token (no loans needed).

The idea being that, if the Layer 1 (L1) token goes up 10%, the flagship memecoin of that blockchain will outperform it – going up, say, 20% or even more.

Sounds confusing! And it is at first – but we’re going to walk you through the concept with enough helpful examples, that at the end of this article you’ll go “oooh, I get it.”

Ready? Let’s go!

1/ Dog Wif Hat ($WIF) = a levered bet on Solana ($SOL)

$WIF is a memecoin that lives on the Solana blockchain.

Solana is up 4% over the last 7 days.

Meanwhile, $WIF is up 53.2%...

That’s a ~13x difference in percentage gains.

2/ Pepe ($PEPE) = a levered bet on Ethereum ($ETH)

$PEPE lives on the Ethereum blockchain. Ethereum is up 4.2% over the last 7 days.

Meanwhile, $PEPE is up 92.3%...

That’s a ~22x difference in percentage gains.

3/ Dogecoin ($DOGE) = a levered bet on Bitcoin ($BTC)

$DOGE doesn’t live on the Bitcoin blockchain, but it’s largely a copy/paste of the same underlying open source code.

Bitcoin is up 17.8% over the last 7 days.

Meanwhile, $DOGE is up 83.8%...

That’s a ~4.7x difference in percentage gains.

4/ Brett ($BRETT) = a levered bet on Base

Base doesn’t have its own token, it uses Ether as its currency, so we’ll be comparing $BRETT to $ETH.

Ethereum is up 4.2% over the last 7 days.

Meanwhile, $BRETT is up 76%...

That’s a ~18x difference in percentage gains.

See what we’re getting at? 

These flagship memecoins are outperforming the native tokens of the L1’s they are built on. No loans needed.

And sure, ALL memecoins have a chance of outperforming their underlying L1 token when markets rise… 

The reason we’re focusing on the flagship memecoins is because they’re somewhat proven. 

They’ve survived for months/years, when many memecoins will have a day or two in the sun, before being overshadowed by the 40,000+ (!!!) new memecoins being farted out each day.

Now, flagship or not – there’s still massive risk involved. When the L1 tokens drop, these memecoins REALLY drop!

Need an example to highlight the potential risks?

Scroll down to our next article for a lesson in humility, from our General Manager, Tyler (aka Old Man River)....

AN EXAMPLE OF HOW MEMECOIN RISK CAN REK A PORTFOLIO 📉

Hey, Tyler here.

I originally pitched this story in our daily news meeting and, in a poorly veiled attempt to lower his workload and take a midday nap, Chevy suggested I write it myself.

So lemme grab the mic real quick and hit you with a cautionary tale about a memecoin ($DEGEN) I aped into about seven months ago…

$DEGEN is one of the fastest movers over the last 2 months. 

It went from $0.003823 on Oct 1st to $0.0259 today. That's a 6.7x in two and a half months.

And guess who holds Degen? ME.

Then why am I so miserable?

Because I bought it on April 14th, when it was at $0.028 👇

Which means I saw none of those gains, and as of this writing, am still at a 10% loss.

Now, here’s the lesson:

So often people see these fast moving memecoins and think “damn I wish I bought that”, but holding the coin is only half the battle. 

You also have to time it. 

And I thought I was doing exactly that. I bought after it dropped almost 50% from its high of $0.056. 

But guess who was wrong?

Before I knew it, this thing was down 90% and it took a 6.7x just to get me back to -10%. 

(Luckily this was about 1% of my portfolio, so no sleep lost).

Moral of the story is that playing this memecoin game is extremely hard, and for most people out there, you’ll likely never win at it. 

So my advice to you:

KISS (keep it simple, stupid).

And if you want to capitalize on memecoins without actually buying memecoins – we wrote a PRO report on exactly that, right here. 

ARE THE STARS ALIGNING FOR A CRYPTO PUMP THIS WEEKEND?

Find us a better headline for a Friday afternoon.

We’ll wait.

On today’s episode of The Milk Road Show, we pepper Farokh (of Rug Radio and FOMO HOUR fame) with all sorts of questions surrounding the current market! 

Including but not limited to:

• Is retail mania about to return? 

• Will we see an altcoin season?

• What is your current portfolio strategy? 

• What are your predictions on Solana and Ethereum?

• Are we about to see more memecoins listed on CEXs? 

• Are memecoins going to be the major narrative of this cycle? 

It’s a doozy of an episode! Don’t miss it! 👇

YouTube | Spotify | Apple Podcasts

BITE-SIZED COOKIES FOR THE ROAD 🍪

The Block is hosting its first-ever conference, Emergence, this December in Prague. Extravagant, eh? We love a new conference vibe, so here’s a treat: use code “Emergence20” to get 20% off your ticket!*

Fed Chair Powell says “no hurry to lower rates”. After this comment, the chance of a rate cut in December dropped from 82% to 58%. These numbers tend to fluctuate so not a worrying sign. With 33 days till the next FED meeting, we’ll keep an eye on this for you guys.

18 US states are suing Gary Gensler. Why? Because they believe that Gary and his SEC team overstepped their boundaries with enforcement actions against crypto companies. Looks like we’re not the only ones giving Gary the side-eye, huh?

Solana ($SOL) is approaching its all-time-high set back on November 6, 2021. Milk Road’s Solana Price page keeps you up-to-date on Solana ($SOL) with real-time pricing, and is a page you may want to bookmark.

*this is partner content

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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.