Welcome everybody to the May edition of Crypto Trend Investor!

Some of you have just recently joined us, while others have been around for a couple of months. Whether or not you joined in March, April, or May doesn’t matter too much; you all are well ahead of the bull market to come.

By now you should have had a chance to catch up to the current state of the Crypto Trend Investor portfolio, but if you haven’t please take a look at this page. It isn’t too late to get in on any of these assets; they are all still in my “buy” target range.

So far in the first few editions of this service, we’ve purchased five different cryptocurrencies. We’ve bought Bitcoin (BTC), which no cryptocurrency portfolio is complete without. Bitcoin is the blue chip of crypto and the safest, most conservative cryptocurrency in the entire market.

We also purchased Stacks (STX), a layer-2 protocol operating on the Bitcoin blockchain. Stacks protocol is a decentralized computing network and development platform that enables smart contracts and decentralized applications (dApps) to be built on Bitcoin.

By connecting Bitcoin’s security and stability with smart contract functionality, Stacks allows developers to create new decentralized applications and assets. It leverages the security and immutability of the Bitcoin network. This unique approach extends Bitcoin’s utility beyond a store of value. It unlocks possibilities for decentralized finance, digital ownership, and more.

We also bought Polygon (MATIC), another layer-2 protocol. Polygon, formerly known as Matic Network, aims to solve Ethereum’s scalability issues by providing a framework for building and connecting decentralized applications. It offers faster and cheaper transactions while retaining Ethereum’s security. Polygon enhances the Ethereum ecosystem, making it more efficient and accessible for developers and users alike.

We’ve also added two artificial intelligence (AI)-related cryptocurrencies: Akash Network (AKT) and Filecoin (FIL). Both projects are AI adjacent and are set to benefit from the growth in crypto AI that I along with many other analysts predict will happen over the next few years. If you’d like to read up on my investment thesis on these two projects, please refer to last month’s issue.

Today we will add two new blue chips to our portfolio before the market rallies out of this lull.

State of The Market

According to the four-year cycles theory, we are currently in the midst of the transition from the neutral year to the first of two years of a bull market. This transition will result in short-term volatility and price instability before we see a slow and steady recovery. I expect that recovery to begin later this summer, with prices potentially exploding higher right around the end of Q3 or early Q4 2024.

However, between now and then, we need to be prepared for the market to continue to chop up and down. Wednesday’s rally has increased the odds that the May 1 dip in the price of BTC was the likely local low. There is still a small chance that BTC could head to lower levels and the market continue to trend sideways. However, with the recent strength from Bitcoin, it appears as if the worst of this correction is behind us.

Prices won’t begin to rally to new highs right away, but that works in our favor because we still have yet to deploy all of our funds. This summer is likely to be the first test of our patience. I’ve seen this play out a few times in the crypto market. Prices cool off heading into the summer and it seems as if the market has lost all momentum, only for prices to take off with seemingly no warning as we approach the fall.

We don’t want to get caught off guard, so we will make moves to properly position ourselves to be ready for that moment. The market is showing us enough signs that the lows are either behind us or not much lower than recent levels. Therefore we are ready to add some new positions to our portfolio.

Our First Trade Of The Month

Let’s start by adding a new position on Aave (AAVE) , a Decentralized Finance (DeFi) protocol. Below, I will go over what Aave is and how to use it. However, if you want to skim the report, here is what to do:

Buy Aave (AAVE) at market price, using 5% of the money set aside for your portfolio.

Aave is currently trading around the $85 mark, and has been range-bound between $80 and $95 for the last month or so. It is currently trading at a 44% discount to the yearly high it set in mid-March. It’s also trading for well under its all-time high of $670. Aave has found support near this level and I expect it to turn things around in the months to come. It is a DeFi blue chip and here to stay. It stands to benefit greatly when the first true altcoin season hits this bull market.

Aave faces better days ahead, despite being ignored by investors lately. Aave is one of the most useful cryptocurrency projects in my opinion and it’s one that I still use all the time.

Introduction to Aave

Aave is a DeFi protocol built on the Ethereum blockchain. It enables users to lend and borrow a variety of cryptocurrencies without the need for traditional intermediaries like banks.

Aave operates through smart contracts, allowing users to interact with the protocol directly from their Ethereum wallets. Aave also incorporates features such as flash loans, which are uncollateralized loans that must be repaid within the same transaction, making it possible for users to execute complex financial transactions without requiring traditional intermediaries.

How Aave Works

Aave operates on the principle of peer-to-peer lending and borrowing. Users can deposit their cryptocurrency assets into the Aave protocol, where they are pooled together into liquidity pools. These funds are then made available for borrowers to borrow against by providing collateral.

One of the unique features of Aave is its utilization of variable and stable interest rates. Variable interest rates fluctuate based on supply and demand dynamics within the protocol, while stable interest rates are predetermined and provide users with certainty over borrowing costs.

Lending and Borrowing on Aave

1. Lending: Users who wish to earn passive income on their cryptocurrency holdings can deposit their assets into Aave’s liquidity pools as a lender. By doing so, they contribute to the liquidity available for borrowers and earn interest on their deposits. The interest rates earned by lenders are determined by the utilization rate of the liquidity pools and may vary over time.
2. Borrowing: Borrowers can use their cryptocurrency holdings as collateral to borrow other assets from the Aave protocol. To initiate a borrowing transaction, users must first deposit collateral assets into the protocol. Based on the value of the collateral, borrowers can then borrow a percentage of the collateral’s value in another cryptocurrency. Borrowers must maintain a minimum collateralization ratio to ensure the safety of the protocol and prevent liquidation of their collateral.

How to Use Aave

1. Prepare Your Cryptocurrency:

Ensure you have cryptocurrency assets in a hard wallet or exchange wallet that you wish to use for lending or borrowing on Aave.

Transfer your cryptocurrency assets to your Ethereum wallet compatible with the Aave protocol.

2. Connect to Aave:

Visit the Aave website or access the protocol through a decentralized application (DApp) browser extension like MetaMask.

Connect your Ethereum wallet to the Aave protocol to access its features and interact with smart contracts.

3. Select Action:

Once connected, choose whether you want to lend or borrow cryptocurrency assets on Aave.

If you choose to lend, select the cryptocurrency you want to deposit into the protocol and approve the transaction.

If you choose to borrow, select the cryptocurrency you want to borrow and the amount you wish to receive. Ensure you have sufficient collateral to support your borrowing.

4. Confirm Transaction:

Review the transaction details and confirm the action from your Ethereum wallet.

Pay attention to gas fees associated with Ethereum transactions, which can vary based on network congestion.

5. Monitor Your Position:

Keep track of your lending or borrowing positions on Aave through your Ethereum wallet or the Aave interface.

Manage your positions as needed, including withdrawing deposited assets, repaying borrowed funds, or adjusting collateralization ratios.

Aave provides users with a decentralized platform for lending and borrowing cryptocurrency assets, offering opportunities for passive income generation and access to liquidity. By following the outlined steps, users can easily participate in Aave’s ecosystem and leverage its innovative features to maximize their crypto holdings.

Second Trade Of The Month

We won’t stop at just picking up Aave this month. We’re also buying a second asset, one that you actually need to use the Aave protocol.

You’ve probably already guessed what it is. To be honest I’m a bit surprised I was able to wait so long before recommending this cryptocurrency to you. However, the timing is right, and I finally feel good adding this position to our portfolio.

Buy Ethereum (ETH) at market price, using 10% of the money set aside for your portfolio.

That’s right, we’re buying Ethereum, the second largest cryptocurrency by market cap. Ethereum is currently trading for just under $3,000, but is showing signs that it is nearing the end of this recent correction.

You probably already know a lot about Ethereum if you’ve been reading my free cryptocurrency articles on InvestingDaily.com. However, I’ll still give you a brief explanation of what Ethereum is all about.

What Is Ethereum All About?

Ethereum is a decentralized platform that enables developers to build and deploy smart contracts and decentralized applications (DApps). Unlike Bitcoin, which primarily serves as digital money, Ethereum aims to be a “world computer” that allows anyone to create and execute code on a global scale.

At its core, Ethereum is a blockchain-based platform that uses a distributed network of computers to run and maintain its operations. This network is made up of thousands of nodes, each of which stores a copy of the Ethereum blockchain and participates in the consensus process to validate and record transactions.

One of the key features of Ethereum is its support for smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. Smart contracts allow for the automation of complex processes, such as financial transactions, without the need for intermediaries.

Ethereum also enables the creation of decentralized applications (DApps), which are applications that run on the blockchain and are not controlled by any single entity. These DApps can be used for a wide range of purposes, including DeFi, gaming, social networking, and more.

In the DeFi space, Ethereum has emerged as the leading platform for decentralized finance applications like Aave. These DApps allow users to access a wide range of financial services without relying on traditional banks or financial institutions. These services include lending and borrowing, decentralized exchanges, yield farming, and more.

Beyond DeFi, Ethereum also is being used to power a wide range of other applications. For example, it is being used to create non-fungible tokens (NFTs), which are digital assets that represent ownership of unique items such as artwork, collectibles, and virtual real estate. Ethereum is also being used for supply chain management, identity verification, and voting systems, among other things.

Looking ahead, Ethereum has the potential to become a foundational layer of the Web3 economy, which is a vision of the Internet that is decentralized, censorship-resistant, and user-controlled.

As more applications and services are built on Ethereum, its network effects will strengthen, driving increased adoption and utility. Throw in the potential for the approval of spot Ethereum ETFs and Wall Street adoption, and there are plenty of reasons to be excited about Ethereum’s future in the short-, medium-, and long term.

Conclusion

There are early signs that the worst of this recent market correction is behind us. Look no further than the recent strength of Bitcoin over this past week for evidence. However, I’m not saying that cryptocurrencies will rally right away and break new all-time highs. Believe me, I wish that were the case.

Like all good things in life, investing requires patience.

You were likely attracted to the cryptocurrency market because of all the excitement and eye-popping rallies. Most people are. Those are the qualities that make this such a fun market. But the trick is to not go out in search of those crazy gains. You need to let the market come to you.

We may be in store for another few weeks, perhaps even a couple of months, of volatility. However, when the market turns, there will be plenty of opportunities. You just need to remain well positioned and ready to act.

So for now, make sure to match up your portfolio with our current positions. Then remain patient, because the action is coming to those willing to wait.

Best,

Alex