Quantum Cats: An Overview and Mathematical Analysis
The Quantum Cats are a collection that I believe is severely undervalued. Let's approach this mathematically, explore its potential with projections.
It’s been a long time since I’ve been this excited about a NFT collection, perhaps similar to how excited I was back during BAYC mints and ArtBlocks mints. This collection is one of the most hyped collections within the Bitcoin ecosystem, perhaps even the most hyped across all NFTs right now. And despite 3 delays of the mint and the first attempt failing, my conviction in the project is unwavering. It’s not like this is some other copy-cat mint. This is not risk-free, however is one of the highest Risk:Reward high conviction plays I’ve had in a while.
Disclaimer: I obviously am so bullish it hurts and will hold cats, so I am biased for my own bag. None of this is not financial advice.
I will try to go over this systematically and provide you with a detailed breakdown of the key factors of this collection. In this study, I will cover a few key areas:
Collection Overview
Team
Funding
Comparative Analytics
Projections
Now let’s dive in…
Collection Overview
Cats, other than being created by the BTC-dominant TRW, also has plenty of innovations built into the NFT itself. It's not just a 'cat'. There are perhaps two unique features:
1. OP_CAT - a function originally part of the original Bitcoin scripting system built by Satoshi. There is a movement to bring this back as the function can enable more functionality, scalability, and security for Bitcoin transactions. The cats are a reference and celebration for this movement. More info can be found here.
“OP_CAT allows some powerful and unintended cryptographic tricks that can allow for safely bridging BTC across chains, building and improving L2 networks, and more.”
- Udi in an interview
2. Evolving Inscriptions - Basically imagine that aspects of the NFT are generated on-chain that from the moment it's minted, are set in its life time to take on certain forms. Each cat has its future artwork inscribed and encrypted onchain, to be progressively revealed as their story unfolds. Perhaps…the cats may transform...into a wizard??? EXCITING
Total supply of the collection is 3333, significantly lower than the standard ‘10k’ playbook that many collections like to use. Whilst lesser means that there generally will be a ‘smaller’ community, this also means that the collection is VERY easy to pump.
With the loyal base of TRW and die-hard community in BTC, I do not expect this collection to struggle whatsoever in finding a loyal community of holders.
The Team
The cats were created by the Taproot Wizards (TRW). They are basically the undisputed representatives and flag bearers of the BTC/Ordinals movement. This is the All-Star team of the BTC NFT ecosystem, comprised of GOATs like Udi Wertheimer, Eric Wall (Board Member StarkNet), etc.
Absolute powerhouses.
Something else to highlight about the Taproot Wizards is that this collection is NOT live. Despite massive demand, they have kept on teasing since early 2023. All this demand is flowing into the cats, as this is the only way people can gain exposure and bet on TRW. HYPE.
Funding
TRW raised $7.5 million in November from led by Standard Crypto, including other entities like StarkWare, Geometry, etc. These funds are intended to build a Ordinals L2 (yup, absolute chads)
From the cats mint, they've raised an additional $13 million where demand significantly outpaced supply. Approximately 2,600 cats were sold during the 5 hour whitelist period where minimal gas was required, and there was a fight for the remaining few hundred during the public sale, selling out in seconds!
This, in sum, provides the TRW a warchest of a whopping $20.5 million USD to build out their vision for the cats!
Comparative Analytics
When assessing the value of a company or project, it’s important to conduct competitive analysis. This is where I believe the Quantum Cats are most significantly undervalued and underestimated, perhaps due to a lack of understanding among the public (this is where I come in!). Let's start by taking a look at existing collections within the BTC ecosystem.
Before going any further, I think it is consensus that basically on ALL fronts, the cats significantly out-class all other BTC eco projects. It is not close, not only in regards to team quality, fundamentals, mindshare of the TRW, funding, meme-ability, etc. (no offense to other collections). It's like prime Mike Tyson stepping in the ring with middle schoolers.
Currently on BTC, there have been a few collections that have caught a bit of attention that are comparable:
Bitcoin Frogs
Bitcoin Puppets
NodeMonkes
Ordinal Maxi Biz
See the chart below on the current collections and their prices/valuations.
Now, as mentioned earlier, I believe the Quantum Cats to be in a completely different league than the 4 collections mentioned above. They will likely be at the top of the BTC ecosystem and a likely blue chip. So perhaps to compare apples to apples, let’s compare the likely blue chip of BTC to the existing blue chips on ETH…
BAYC
MAYC
Pudgy Penguins
CryptoPunks
I included the MAYC collection because one can make the case that the cats = MAYC and wizards = BAYC. However, this is largely disproved given the cats is the only collection by TRW. It would be a different valuation model for the cats if wizards were already live and trading.
Overall, I believe the best comparative collections in calibre, value, and prospect are the blue chips on Ethereum shown above.
Let’s dive in to determine what this translates for actionable trading/investing approaches…
Projections
I approach projections in 2 parts:
What is a good price to buy? i.e. minimum price of a collection
What are reasonable price expectations and take-profit prices? i.e. price targets
Note that both these calculations are based on frameworks and are approximate prices. I don’t expect to be able to predict it accurately and that the market prices efficiently (lol CT).
On Good Price Points to Buy
Given the cats are currently the only way you gain exposure to TRW, I believe that the cats should be valued at LEAST equivalent to the warchest of TRW. Their current warchest is $20.5 million USD based on their seed fund raising + cats mint proceeds.
This amounts to a ~0.14 BTC floor, a likely iron floor price for the cats. If the price drops to anywhere around this region, I expect large buys to come in (including myself).
Furthermore, I believe that we will not fall below in total collection valuation compared to the other Bitcoin projects. Comparative collection comparisons are below, but specifically this implicates a minimum floor of 0.21 BTC (Bitcoin Puppets).
Therefore, based on the points above, anything below 0.21 BTC is a strong buy, where anything below 0.14 BTC is a generational buy.
*Exception of course is if there are any catastrophic black swan problems that arise and dump floor price. Don’t expect this at all especially from the calibre of the TRW. Knock on wood.
Price Targets
With a high degree of confidence, I believe the Quantum Cats will be a leading blue chip in the BTC NFT. As such, I think reasonable price targets are the likes of MAYC and BAYC, given their prominence and they were one of the leaders in the ETH NFT rise.
This means that at the very least, a reasonable expectation is 1.3 BTC per cat.
However given the BTC NFT ecosystem is still significantly newer and in its infancy, we also have to discount the estimates with the main risks:
BTC / Ordinal Ecosystem are still new. How much growth is still possible?
Execution risk of the TRW, the L2, etc.
Without delving too deep into the maths, even if we apply a 50% discount to the estimates, that would put the collection at ~0.65 BTC or more.
That in itself is 6.5x from mint. And assuming you buy from the above mentioned value price points of 0.14-0.21 BTC, you’d at least be bagging a 3x+.
It cannot be understated that this is all just preliminary calculations for reasonable expectations.
IMPORTANT: Don’t forget that there are some key X factors that will exponentially boost the value of the cats that I have NOT included in the predictions. These factors could pump the collection very hard:
BTC / Ordinals ecosystem is still in its infancy. It will likely grow A LOT, and this will exponential grow the value of the cats as the mascot of the ecosystem
Quantum Cats have groundbreaking tech + the giants of TRW building them out. The reflexivity of this team and tech pushing the cats cannot be understated
Bitcoiners are the richest among crypto, and it’s not close (sorry ETH heads). They will likely want to show the ETH eco what real money can do to a well-reputed low supply NFT collection
Bitcoin is entering a phase of key fundamental catalysts with ETF flows + halving. All of these predictions are hinged upon current prices, however these prices are likely to appreciate. We have yet to see the correlation between BTC NFT prices and BTC price, however thus far it’s been encouraging with NFT prices and BTC price increasing simultaneously
FaZe Banks literally posted to his 2.7 million followers on Instagram that he minted a cat. Retail adoption has really hit on BTC NFTs, but I do expect them to arrive on scene at some point
All of these factors make it so that even though I currently believe the CryptoPunks are a far reach for this collection’s prospective value, it’s not out of reach. And yes, that means the cats one day could be worth almost 10 BTC each.
I will eagerly be following the progress of the cats and Taproot Wizards. See you guys on the other side and I hope to see you stack cats alongside me.
Meow.
alpha leak