Ampleforth called itself "an adaptive base-money" on their web pages. Some people think its a stablecoin, some think it is a crazy project, some love it, others trade it, few think it will change crypto forever.
Well, all of those people are right in one way or another. Ampleforth is definitely a nice piece of technology, a great idea of how to do things differently. So let's take a closer look at Ampleforth (AMPL).
Elastic supply
Ampleforth is a digital currency, that has elastic supply. This means you can have every day a different amount of AMPL tokens in your wallet! How it is possible?
AMPL price should be $ 1. Same as with the stablecoins DAI or USDT, when the price is below $ 1, arbitrary bots and people who want to earn some money, buying that. Because they know, that the price will come back to $ 1 one day or another.
But how AMPL is doing this to sustain $ 1? By the invisible hand of the market. When the price is below $ 1, people tend to buy AMPL, because they know it will come back over $ 1 one day, so they can "buy low, sell high". And when the price reaches a few dollars, they cash out. Simple as that. But...
There is one more thing in Ampleforth to make things more complicated. When the price is at 10 pm EST of that day, the rebase is happening - it can be positive or negative. When the price of AMPL is above $1,06, the total supply expands, so a positive rebase is happening. When the price is below $0,96, the total supply decrease, so the negative rebase occurs. Crazy, isn't it?
Elastic supply of AMPL, source: ampleforth.org
AMPL is non-dilutive
But don't worry, when you own 5% of the network, you will always own that 5% of the total Market Cap. So when you are losing coins every day because of negative rebase, keep in mind, that you still got some share of total MC. That is because AMPL is a non-dilutive asset. And if AMPL is revolutionary and the Market Cap will increase exponentially, keep in mind, that you still got that 5% of it (or 1%, or 0,0005%...)
No correlation to other assets
The biggest advantage of Ampleforth is that it is not correlating to other assets like Bitcoin or Ethereum. So you can spread the risk ratio to it and use it as a risk management tool.
Even Bitcoin is in one way or another correlated to the stock market, right now it seems that AMPL is not correlated to anything.
How to trade AMPL?
Now here comes the amazing part of this article which you probably are waiting for. As far as I am aware of the Ampleforth project, there are 3 possible trading scenarios, which you can play. I used the term "play" because it is in my eyes kind of a game, really.
1. HODL (hold for dear life)
Just buy and wait a few months or years and then take a look, how this experiment worked for you. If it is really a next BIG THING, as some says "THE NEXT BITCOIN", the Market Cap will increase hugely so you will end up with so many coins with a value of approx $ 1 per each. So your total value of this investment could be very positive. Or might not, if this experiment wouldn't find its sympathizers.
2. Buy low & sell high stragegy
Buy AMPL in the range between $0,6 - $0,8 and sell it in the range between $2 - $3. You can even improve this strategy to buy 50% at $0,8 and the rest 50% at $0,7 or you can come up with even different strategies. You can even play with time, so when you check that in the past the "AMPL bear market took one month, just wait 20-25 days when the price is below $1 and then buy. There is still the risk, that the price will remain below $1 for quite a long time and you will, due to the negative rebase, lose many AMPL coins.
The same is with taking profits. You can take them all in one, or partially, let's say at $2 taking half of your profits, or your initial investment, and then at higher levels the rest of it.
Graph source: CoinMarketCap
3. Trend reversing strategy
In this strategy, you can just wait for a trend reversing the situation. That means, you are out of the market when the price is oscillating around $0,6, but entry long position when the price gets to the $0,9-$1,1 range. There is a slight chance, that AMPL got another hype wave and will be over $1 for quite some time.
The same strategy you can apply for exiting your long position. If you see, that after let says 30 days, the price is now closer to $1,1, just exit your position, and due to the positive rebase happening for the past 30 days, you have enlarged the number of your AMPL coins.
2 TRADING TIPS: Just to give you two tips for the end. First is - don't get obsessed and fed up by the price, always watch the total Market Cap. And second - write down your initial investment in USD (or BTC), because after a few days of rebasing you can be confused.
Conclusion
Ampleforth is a very new cryptocurrency with a revolutionary concept. Such as Proof of Stake was revolutionary that day when only Proof of Work cryptos was on the market and staking looked so sexy, now AMPL is also taking peoples attached to this solution.
The elastic supply is so different from let's say traditional cryptocurrencies, it was unimaginable that you can actually get a cut off your coins! The rebase mechanism is such a new concept which needs to be subjected to testing. But if it will succeed, we might find a new paradigm, or better, we might be a part of it!
One more thing to mention, one of the advisors of Ampleforth is Brian Armstrong, CEO of Coinbase. So that could mean that AMPL is not here to scam you, this could mean that AMPL is here to stay for long and be used by many traders and hedge fund managers.
Always think twice before investing in anything. But without an open mind, you will be stuck in your present position and not grabbing chances that brings you this amazing crypto movement!
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a very interesting coin, and your explanation is very good Personally I would opt for HOLDL since m it seems safer to do it.
yes, it can easily turn in some big thing, I will watch it closely
I point to the BTC-DOW relationship a lot. First I hear of AMPL. Crypto needs this type project.
yes its an interesting one, I try to "play" with it a bit