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Examples Of Narrative Trading

Narrative Trading can be based on a host of different elements such as specific news & price movements.
Simple Narrative Trades
The most common Narrative trade is ‘The Flippening’ where people believe the price of Ethereum will outpace Bitcoin over a period of time. The resulting trade in this instance would be Long Ethereum and Short Bitcoin (ETH/BTC) .
You may even find that there is a lot of hype or talk around one token in particular for a variety of reasons for e.g. Solana being pitched to outpace Ethereum, therefore in this instance the trade you would make is to be Long Solana whilst Shorting Ethereum (SOL/ETH).
In the wake of FTX and the downfall of other exchanges another popular Narrative trade has been the expectation that Decentralised Exchanges will outperform Centralised Exchanges. In this instance you may choose to long a prominent DEX, such as DYDX and short BNB (Binance’s Token).
News Based Narrative Trades
Closely following news or the latest updates to listed tokens should give a general idea of the token’s direction during the upcoming days/months. For example an upgrade or incoming partnership may be bullish and a price rise is expected. Therefore leading up to the news you may want to position yourself Long on that token whilst shorting a benchmark such as Bitcoin or Ethereum to ‘protect’ yourself from any general market direction.
Short Term Narrative Trades
As is often the case within the crypto space you see news outlets report on different assets causing a spike or a dip in price whereas the rest of the market remains ‘steady’. For example, negative press around a Centralised Exchange may cause a sudden drop in price of their native token, allowing you to Long the asset should you expect it to recover stronger and shorting an asset that is relatively stable.
Recent Narratives
The Bitcoin ETF - Long BTC / Short ETH
LSDFi - Long LDO / Short BTC
Arbitrum Szn 1 - Long GMX / Short BTC
Memecoin ‘Mania’ - Long Pepe / Short ETH
EIP-4833 - Long OP / short ETC
Decentralised compute: Long RNDR / short ETH