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WAX ON: Why are Alt Coins Popping on Calorie-Free Announcements?

Mar 31, 2020
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Video Transcript:

I’ve noticed a weird phenomenon with some alt coins recently. These alt coins make announcements about “partnerships” with brand name companies, and their token prices shoot up on the news. Now that, in itself, is not strange. But what IS WEIRD, is when you read the details of these partnership deals, there’s nothing material to them. I mean, there doesn’t seem to be a compelling reason why token holders would even care.

Let me give you a couple of RECENT ANNOUNCEMENTS that followed this pattern. A project called Ultra, focused on the blockchain video gaming sector, announced that it had secured a business development relationship with Ubisoft - Ubisoft being a GIANT video game publisher.

Over several days, including a few days before the announcement - which I assume means some people knew about it - Ultra’s token climbed 30%.

So I took a look at this deal. What I found was not a BIG DEAL. It was, in my opinion, kind of a SILLY deal.

Ultra hadn’t secured an important partnership with one of the world’s biggest video game companies. In fact, it was hard to figure out exactly what the deal even was. I tried to scrape together some of the details, but really, I can’t understand what all the fuss was about. If I have it right, a technology lab subsidiary, inside Ubisoft, is going to produce blocks, be a block producer, on Ultra’s TESTNET. Not a content licensing deal. Ubisoft isn’t adopting the Ultra chain for all future video games. Nope. Ubisoft is going to run a block producer server, on Ultra’s testnet. Yet on this news, Ultra’s price moves 30% higher.

Now, I might chalk this up to a one-off, overexcited response to an announcement. That happens. It even occasionally happens, on Wall street. Where a group of traders misinterpret the significance of an announcement, and push the buy button too fast.

But then, a few weeks later, it happens again. Curiously, with a company, that also happens to be in the blockchain video gaming space. ENJIN. A pretty well regarded Ethereum-based company, that makes software for integrating blockchain and video gaming.

ENJIN reported that it had done a deal with Azure. Azure being the enterprise cloud business unit, of Microsoft. How did the market react? ENJIN’s token shot up 70% on the news. Amazing. Must be a truly transformative deal, right? Nope, not so much. In fact, the deal was not even with Microsoft overall, even though that is how it got picked up in all the news coverage. The deal was with Azure, the enterprise cloud division of Microsoft, the European division.

What was the NATURE of the deal, you might ask, that caused the Enjin token to skyrocket 70%? Well, the European division of Azure, said it would be issuing, merit badges, NFT merit badges, to people who support the Azure community.

Ok, but who cares? This is not a deal that seems like it’s going to transform ENJIN’s business. Supplying Azure with some NFT’s that they can issue to some members of their software community? Why would the ENJIN price jump 70% on that news?

Now there are many reasons to like ENJIN. But the Azure deal, is not one of them.

So here is my advice. Look underneath the hood, of these brand name company partnership deals, before you rush out and buy the token. Apply some basic scrutiny to the deal terms, see if it furthers the business goals of the blockchain project doing the deal. Ask yourself, is this deal evidence that the blockchain project is getting traction?

That’s my PSA for this week. If you liked what you heard on this video, please hit subscribe, leave a comment, and I will talk to you next time.

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