Hey everyone. It’s time for update #8.
This week gave us everything we’ve come to love about the crypto markets. The FOMC meeting was pretty much what we expected, the Fed raised interest rates by 75bs and Jerome Powell implied that they will keep a hawkish stance for as long as they need to. If this breaks the economy, well, they’ll just print more money and balance things out.
How did crypto react to that?
It didn’t. Or at least that’s what it seemed like.There was no significant price movement after the meeting and everyone, including myself, thought that everything had been priced in. But nope.
A few hours later, the market started to dip slowly but steadily. Almost all the gains that we celebrated last week were gone as my portfolio value went close to the starting $1k.
But remember: this is no regular market. This is crypto. What we’ve seen in the bear market in the last few months is not typical crypto behaviour. Crypto is about volatility, chaos, and excitement. And we needed a reminder of that.
Out of nowhere, the market started pumping like crazy. And I mean bull market type of crazy. This two day rally was the biggest one we’ve seen since the start of the challenge and we’re now sitting at +16%, the most gains we’ve ever had. I f-cking love this space.
But what does that mean going forward?
To be honest, I’m not sure. Let’s look at the market and try to find out.
No big news since last week. With the Fed announcing that they will keep raising interest rates and are not concerned about breaking the economy (because if they do they can just print more), you could argue that things look even more bearish than before.
But that’s the global economy.
Web3 itself had some MASSIVE announcements.
- First of all, Instagram is going all-in on NFTs. Users will soon be able to create, mint, buy and sell NFTs directly from the Instagram app. They’re essentially becoming an NFT marketplace. This is HUGE for mainstream adoption. Not that great for other NFT marketplaces but we’ll get into that later. NFTs will be on Polygon and images will be stored using Arweave. Both tokens have gone parabolic since the announcement.
- Also, Elon Musk bought Twitter and Binance apparently has a $500M stake in it. Could see some crypto features on Twitter soon.
- And finally, a few major banks (including JP Morgan) completed their first DeFi transactions in order to experiment with a form of tokenized Japanese Yen and Singaporean Dollars.
Overall, it was a strong week in terms of business adoption and the fact that crypto pumped on somewhat bearish macro news makes the decoupling narrative stronger and stronger.
However, let’s not get carried away. The CPI report is coming out this Thursday, and if inflation is hotter than expected, we could very well see extreme fear again and the market dumping to September levels.
To be honest with you, I don’t expect the rally to continue. In order for that to happen, in my opinion, we would need to see a significant drop in inflation and that’s not likely to be the case this month (unless the numbers get cooked for political reasons).
So I’m going to use the same strategy that I used last week: Use perpetual futures to short hot coins on margin. This way I can protect myself from short-term downside while remaining long overall.
Last week, I initially choose Optimism but then changed my mind and went with Polygon instead. It was a success. Despite rallying to $1.20, MATIC fell to $0.84 first. If you recall, I entered my short position at $0.93. I took half of the profits at $0.88 and the rest at $0.857. Overall a +$26.8 gain.
A day after that MATIC went parabolic and is now at $1.20. Before I talk about what I’m going to do next, let’s first see the rest of the portfolio.
As you can almost everything pumped this week. Most of my coins are now in the green, with my best performers being the Ethereum Layer-2s (Polygon, Optimism). As I said in my most recent post, L2 tokens are going to eat up all the “Ethereum killers” in the future. Holding strongly.
Ethereum, BNB, and Cosmos (high-conviction picks) started to go up as well. Holding of course.
Premia and Thorchain, our low-caps, did good this week but haven’t been that impressive overall. Still holding for their potential.
X2Y2 dumped hard this week. There were 2 reasons for that:
- Biggest X2Y2 whale sold all of their holdings. Liquidity on X2Y2 is not that great in general so that tanked the price even further
- Instagram is now a competitor on the NFT Marketplace sector although not directly because they are on Polygon
However, this is a yield play. I’m not planning to sell and as long as we don’t see any further dumps, it still has the potential to be a profitable long-term
XMON dumped as well because of the Instagram NFT marketplace narrative. Remember, XMON is directly correlated to the Sudoswap marketplace, as XMON holders will be eligible for the SUDO airdrop in the near future.
Right now, I’m not going to be touching the market until things cool off.
Once that happens, I’m going on short on either Polygon or Optimism as a hedge. Both went parabolic these days (and rightfully so) but if the general market takes a hit, I don’t expect them to stay intact. So, just like last week, I’m basically hedging against a general market drop, which in my opinion is very possible.
I’ll open my positions probably in the next two days. I’ll post the play on Twitter so if you want to see exactly what I’ll do and when connect with me there.
I’m also going to be hunting for more airdrops, the easiest way to make money in crypto (especially in the bear market). I’ve already tried completed all the necessary tasks for projects like LayerZero, Sui, and Sei. I expect to find even more opportunities, especially inside the Arbitrum, Cosmos, and Optimism ecosystems.