Aptos Overvalued - Short Position
Aptos, a Silicon Valley backed layer-1 blockchain is currently over-valued across nearly every measurable metric, presenting an asymmetric risk/reward opportunity for shorts.
By fully diluted valuation, it is currently the 5th largest cryptocurrency in the world, excluding stablecoins.
Aptos launched less than 4 months ago and only has $59M TVL.
Despite being the 3rd largest layer 1 smart contract network behind Ethereum and Binance Smart Chain, it ranks 19th in the number of active full time developers.
It has a low circulating supply (16%) which means there is a lot of token inflation and token unlocks coming down the line.
By the end of the year, the circulating token supply will be 50% higher than it is now. Meaning in 2023, $APT will have experienced a 50% inflation rate.
This “low float, high FDV” is a malicious strategy commonly practiced by VCs to inflate the price in the short-term so they sucker in retail investors and exit at artificially pumped prices.
This strategy was commonly employed by Alameda Research and FTX in the 2021 bull market.
We saw this strategy play out repeatedly with charts that ultimately looked like this:
It is unclear how long $APT can be manipulated upwards, and trying to time the top with a short can be risky, but it is clearly becoming over-extended and over-valued.
$APT has printed bearish divergence on its 4h chart:
Look for topping patterns in $APT such as a bearish ascending wedge or head and shoulders formation.
Expect resistance at $23.51 (2x long level) if $APT makes another push upwards.
Look to accumulate a short position on on low leverage, or otherwise short specific resistance levels such as $23.51.
Not financial advice. As always, the use of proper risk management is encouraged.