Excuse Me Is Everybody Smoking Hopium

Everybody’s bullish and greedy again. But for every price direction (up, down) there is a corresponding argument.

Down Argument

We’ve seen this before. It’s formed a left shoulder, a head, and now it’s going to form a right shoulder and plunge down.

Before 2017, BTCUSD was going sideways for a few years at 600USD. In 2017, it made ATH after ATH, all the way up to 3000, 4000, 7000, then finally 20000 in December 2017!

Now what are the odds of that happening again? Seriously, we just doubled our previous ATH at 20000, surely there will be a cooldown period longer than a few months at least. Not to mention, DOGE and SHIB pumped.

Other bearish signs: mainstream media reporting about crypto, and the fact that everyone else is so bullish. When everyone else is bullish, be very careful. Look for the contrarian opinion.

Even SecretsOfCrypto said shitcoins pump at the end of a season, and to be honest, these guys are OGs and might have a point.

Up Argument

BTCUSD 1D logarithmic with previous bullruns highlighted and halving events marked.

Every time Bitcoin’s block reward halves (and it did last month), the price soars. The graph above is logarithmic – each tiny tick up is a lot, and if you look at it that way, 100000 is a fair goal. It usually takes a few months for the supply shock to impact the price. (Ethereum also has such a supply shock incoming – thanks to EIP1559, the supply of ETH is actually decreasing)

Glassnode also has some pretty convincing bullish metrics.

I’m torn. On one side, you can make a lot of money by going against what everybody else is thinking. On the other hand, you can see how there is a good argument for the price continuing to go up – and in the world of crypto, if enough people believe something, it shall be so.

Emotional Management

Personally, doing the opposite of what everyone says has always been profitable. Listen to your gut (I initially started this post being bearish).

Set things up so that no matter what happens, it’ll benefit me.

That means I’ll sell a small portion (like, less than 10%) of my Bitcoin. If it dumps, that’s fine, I get to pick more BTC up. If it continues to go up, that’s fine too.

I’m still heavily weighted into crypto though so if it all goes down 99% of my net worth goes down with it.

I’ve also managed to get myself out of some bad trades that I got into last bullrun with minimal losses.

In Case Bullrun: Dip A Toe Into “The Obvious Bets”

There were some “obvious bets” that I never really went into, because I was looking for the “unobvious bets” which were going to be 10x hitters. Well, turns out many of them can be losers too, so why not look at the more obvious bets?

Since the obvious bets have mostly already pumped, I will go into them with small sizes and increase my position as I see fit. For this little experiment I will classify them into 3 categories: scary (won’t put money into them), meh (0.02 BTC), ok (0.03 BTC).

But ser why are these coins obvious bets?

Traction. FTX looks like the next Binance. Polkadot is inserting itself into some DeFi spaces, and the parachain auction seemed hotly contested. Fantom is an Ethereum sidechain out of nowhere. Sushiswap is much more than a Uniswap V2 clone these days. Chainlink is the oracle solution when your smart contract needs data about the outside world. Polygon/MATIC – nothing to say there. The Graph – truly useful, I’ve used it myself. Decentraland MANA: really is a fun virtual world where it seems things are happening.

FTTBTC: scary, just pumped. FTX could be the next challenger to Binance, and FTT is their token. What’s not to like, as long as you keep the entry size small?
DOTBTC: scary, just pumped.
FTMBTC: scary, just pumped. You’ve heard me mention Fantom before.
SUSHIBTC: meh
LINKBTC: meh, I know I’m not getting a good deal
MATICBTC: meh
GRTBTC: ok, good deal. The Graph is very useful to developers after all.
MANABTC: ok. To be honest, I’m not excited about the entry, which is still near ATH levels. But I do think Decentraland is doing very well as an online metaverse. And I’m keeping my entry small, 0.03 BTC. Not even enough to buy the cheapest plot of virtual land, ngmi.

Time will tell.

Leave a Reply

Your email address will not be published. Required fields are marked *