Given the recent madness in the crypto markets, I’d like to detail some of the decisions I made in the past few months, beginning from the Do Kwon pump and ending with the break of 20k. While I won’t be shedding light on my exact methodology, I hope to provide at least a few reasons for every decision I made. This will be Part one in this series, and given feedback I will continue to expand on this series
“There is no danger of the public ever finding any key to the secret of winning. The crazy gambling urge and speculative hysteria that overcomes most players at the track makes that fact a certainty. But, if the public play ever did get wise to the facts of life, the principle of ever-changing cycles of results would move the form away from the public immediately.” — Secrets of Professional Turf Betting
We begin in mid March. Let us first set the stage. Over the prior two months, we bottomed at 33k, ran up to 46k, bottomed at a higher low at 34.3k (Putin Invasion), short squeezed to 45.2k, and came back to settle between 37–40k.
During this time period, the following occurred:
- 33K bottom psychologically frontrunning the 28k double bottom level everyone was clamoring for
- 34.3k higher low with the Putin invasion, despite the extreme negativity, suggesting that there were really not many discretionary traders left to squeeze, and that buyers would defend and frontrun 33k
- Consistent spot premium over derivatives resulting in negative funding rates — combination spot demand and derivatives traders aggressively shorting
- A series of higher lows which were progressively getting bought up (see chart below)
In addition to these factors, we had a lot of the market darlings, particularly Solana printing fresh lows in March, even relative to January, suggesting that while froth was coming out of the market in shitcoins, the bid beneath Bitcoin was strong
So….given that derivatives traders were betting on downside, given price seemingly showing resilience, given shitcoin froth was being purged from the market, and given the fourth factor — Do Kwon publicly signalling a 1 billion dollar purchase incoming, it seemed logical to bet that the market was not prepared to absorb such a purchase at depressed valuations. For these reasons, amongst a few others, I was extremely bullish and long sub 40k
My initial criteria for cutting my long was to see froth come back into the market, or for a proper short squeeze. As prices began to climb, Kwon continued to deploy 125m daily, and shorts continued to fight these purchases with smaller and smaller pullbacks. In some sense it was Kwon + sidelined investors buying back their exposure versus derivatives shorters. My criteria for cutting my long fully was simple — if the market squeezed the shorts, and popped above the 45.8k high doing so, I would get out of my position. As this happened, I exited the trade and booked an almost $10k swing on that position.
Once we got to these levels, I had no intention of shorting, given Kwon was still actively signalling purchases, but I also had no intention of adding margin back on. As the price action in this range began to develop I noticed several factors:
- Dips were being bought aggressively, and most new positions were being opened at elevated valuations (i.e. near 47k)
- Do Kwon was purchasing $125M a day but unable to break price out
- Shorts were flushed from the market and would no longer provide further upside liquidity for us to hunt
- Volumes began to get weaker and weaker at range highs the further we sat at depressed levels
- One by one various shitcoins began popping up, finally ending with DOGE
As a result I decided to sit out on margin longs. My strategy became the following: Once I had seen sufficient flushing out of longs (ideally sub 40k), and some semblance of volatility suppression via aggressive shorting, I would reenter the market.
Part two will detail the 37–40k month long range and the following Luna implosion
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