Sonic Boom or Bust? 💥 - Why I'm still long 🚀
For those who have been following me for a while it's no surprise that I'm this cycle a huge fan of Sonic (previously Fantom). Every cycle I tend to have an eco-system on which I focus 80% of my attention. In 2017 it was Ethereum, in 2020 it was Cardano and now it's Sonic.
When I wrote my good bye post on YouTube in November last year I mentioned I would stay long on Fantom and that - with the upcoming launch of Sonic - I still had my targets set to the range of $5-7.
Fast forward to December and we finally get the Sonic launch and... it was quite disappointing 😔. Over the years I became familiar with the marketing skills of the Fantom Foundation and although their tech is top-notch, their marketing skills aren't. Somehow I was hoping that they've learned from their mistakes in the last few years but I was reminded that people and organization don't learn that quickly. There was no count-down, no real build up. Just all of a sudden Sonic was there.
Delisting of Fantom 😳
Besides the silent launch at a time that alt coins where struggling anyway there also was the problem of the migration of Fantom to Sonic on centralized exchanges (CEX). You would assume that the Foundation would have been in close contact with the biggest CEXes and that the migration from FTM to S would go automatic and smoothly. Although the Foundation claimed that they've been in close contact with these exchanges it didn't go smooth to say the least. It started with Binance announcing that Fantom was going to be delisted without clearly indicating that FTM was going to be migrated to S. It was mentioned in a sentence somewhere at the bottom of the post but we all know that 90% of the 'investors' are retarded and don't read more than the title of the post and with luck the first two sentences. People got scared and started selling FTM. Other exchanges made a similar mistake. What was supposed to be a great moment for Sonic turned into a disaster.
As a result of the delisting all the future contracts also had to be closed. There was quite a lot of open-interest (total sum of outstanding contracts) and the market was generally long. Closing these positions led to more sell pressure and FTM/S was going down towards $0,31 all the way from being well above $1 a few months earlier. OUCH. You can imagine I had various people reaching out to me who were very concerned.
Cutting through the noise 🪓🪓
As I've mentioned many times in my YouTube videos or columns on Crypto Insiders - in order to be successful - you have to see through all the noise and smoke. This wasn't my first rodeo and the recipe to evaluate this is simple. Sit down, take a few deep breaths, meditate for 20 minutes and then look at the actual situation with a clear mind. I wasn't concerned but I was somewhat annoyed. Clear of distraction I was able to re-asses the situation. What is happening? Are there fundamental changes to my bullish thesis on Sonic or is it situational? Did I make a mistake and am I about to become a community member instead of an investor or is a hidden gem 💎 presenting itself?
My conclusion after careful consideration: the poor launch, the bad timing, the questionable procedures and communication between the foundation and CEXes for migrating FTM to S, the unwinding of futures. It's all situational and nothing is fundamental. Sonic is still the fastest chain ever made and being directed by arguably one of the brightest minds in de De-Fi space; Andre Cronje. Besides that; the Total-Value-Locked (TVL) on the ecosystem is growing rapidly and that's a very strong indication of the underlying value of the ecosystem.
Chart: TVL on Sonic as shown by DeFiLlama. TVL started growing rapidly in January whilst the price was going down.
So whilst the price of S was going down the underlying value was (and is still!) increasing. Some sort of fundamental bullish divergence was in the making hidden in plain sight! When people reached out to me questioning their life-decisions regarding Sonic I explained to them that I was actually doubling down on my thesis. The markets have not been easy to trade this last year but as I always say: it pays to be patient in fast moving markets. Plus I also recognize an opportunity when I see one. And this is a BIG opportunity.
Sonic is severely undervalued 😱
I have mentioned many times that my target for S is between $5-7 but these last few weeks I've been thinking that I may need to raise my targets. I'm not doing it yet but i'm keeping it in the back of my mind. 🧠 Why? Because the fundamentals are just that strong. In the next post I will dive into why I believe that the Sonic ecosystem may be outperforming most of the other coins but to give a small insight. The current TVL on Sonic is around $500 million and is now sitting on the 16th place on the TVL leaderboard on DeFiLlama. Sonic has been the only chain that posted strong double digit TVL growth numbers the last few weeks.
When comparing TVL to market cap it gets really interesting. For example: the TVL of Sonic surpassed that of Cardona (which sits around $380 million) last week. The market cap of Cardano is $27 billion (fully diluted at $34 billion) and the market cap of Sonic sits at $1.8 billion (fully diluted at $2 billion). The difference is enormous and with the same diluted market cap of Cardano the price of S would be around $9,75 at current valuations! These are solid moon prices! 🌑
I will make more comparisons with other chains in my next post to go deeper into this subject. Besides that I also see a shift from Solana - which has basically been a liquidity blackhole - towards Sonic but that is also for the next post.
Whilst alt coins have struggled the last few weeks, S and Sonic ecosystem tokens have performed very well and I expect this to continue. Yes, I'm still bullish, I doubled down and with a current price of $0,65 I think it's an outright steal.
It feels good to be back and I'm looking forward to expanding the great community that emerged on my YouTube channel on this platform. I'll see you at the next post! 🤝
What do you think about Sonic? Let me know in the comments!