Newsletter #25 Crypto Stabilizing or Capitulation?
Model's call to exit ALL positions and get into CASH more than a month ago continues to pay off. Sitting on CASH during such times not only helps your P&L but also your peace of mind during such times.
Model continues to sit on 100% cash.
While sitting on cash is there nothing we can do? Not really. If you are a nimble trader then there are opportunities even in these markets. Periodically on Twitter, I give out trade ideas for those who are interested.
These calls are from the model which is designed to pick up big moves as it did with Fan tokens in Aug.
While CHZ and ATOM have been flat, QNT has gone on a tear and is up over 100% in the last 3 weeks. Also, QNT is not small, the market cap was over $ 1 billion even model picked it up.
To be clear I am NOT claiming any victory over QNT as I had not published it here in the newsletter model trades as I did with Fan-token trades. When the Model goes long on any coin, I will publish them unambiguously along with when the model exits it. There are enough toxic influencers in the crypto space already who thrive on the ambiguity and naivety of the crowd. I aspire to set the bar high in terms of transparency and hopefully in terms of performance too.
As I mentioned in the tweet, the model is optimized for managing risk first, and sometimes it's the price to pay and you miss out on such opportunities, and that's OKAY. When the cycle turns, we will have lots of opportunities to capture 10x-50x.
Today I tweeted about the ENS trade idea. A few weeks ago I published when the model went long and exited too. If and when the model goes long again I will publish it.
In the last letter, I wrote the below
It could get really brutal for Risk assets such as Stocks & Crypto in the next 3 weeks. There's a heightened risk of a major capitulation event.
One week has passed. Could we see the capitulation in the next 2 weeks or is it asking for too much?
Both S&P500 and Nasdaq100 continue to grind lower. Crypto is managing to stay flat but none of them is able to build any positive momentum even on lower time-frames. Move along, Nothing to see here.
Crypto participants who have PTSD from 2018 are conscious of the climax breakdown scenario playing out again. Crypto basically stayed flat from Feb-Oct 2018 and fell 50% in Nov.
While it COULD happen, it doesn't NEED to happen. There's a world where it could just bide time till the whole macro mess sorts out and take off from there like it happened in 2015.
I believe that crypto doesn't even need a great macro environment to perform well, all it needs is, Macro to go from Worse to BAD to OK'ish.
When will that happen you ask? I don't know. What I do know is whenever that happens, the footprints will be all over the place and will show in USD and Interest rates.
Speaking of macro
Model continues to be Bullish on DXY (US Dollar), US10Y (Interest Rates), and VIX (Volatility Index).
But there are signs of fatigue. Seems like the bulk of the move is over barring any volatile spikes. But like always its best to wait for confirmation.
Below are the Models signals on BTC, ETH, and Solana from 2020 to date. I have been publishing this every week since I went live in May and will continue to do so.
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