Dizzy me
I avoid price talk usually but I am sure last week has been one dizzying roller coaster so to confuse matters more...
Which way does the dip go?
The destination is unknown if we don't follow the memes - we went from super cycle to ESG concerns to china banning bitcoin for the millionth time in my crypto life to large transaction reporting in a space of a week. Lots of this can only happen in a nascent space that has no rules stipulating it. I guess this is why volatility lovers enjoy this world; the unpredictability is fuelled by the memes.
To top it off; the long ignored max pain concept of legacy finance has been showing its head for a few months (in BTC especially). This time it feels like an attempt to front-run the max pain meme. Max pain now is @ 52k for EOM May... are we gonna go back up or did we kill the golden goose?
How did it start (chronological order)?
Vitalik, sold silly dog meme coins that were sent to him because the developers who made them thought that he will never sell them (he doesn't need money apparently!). Whatever he failed to market sell due to liquidity; he gave away as a donation. I believe $1bn worth of meme coins went to India covid charity - lets see if they end up with $1bn cash once liquidated. He allegedly sent about $50m worth ETH to his Coinbase account and then market sold them. Market makers (MM) had to quickly adjust the bid/offer in order to not end up absorbing the whole lot onto their own books thus starting a race down.
Musk, I guess he didn't want to be outdone by Vitalik....with his tweets - not helpful - shows how sensitive market participants are to a narrative shift. A mature asset would not care much for such shenanigans. Personally, I feel he has split the community and large players don't care & who will probably push to ensure his fate is same as that of bitcoin jesus (aka Roger Ver) and/or CSW (Craig Wright aka fake satoshi)..i.e. shunted to the fringes. Finally, big shorts on BTC started appearing suddenly...
musings:
Last week when I saw the large shorts on ETH open, I was thinking this is preparing for a short squeeze; however, when a 10k BTC short got opened on Bitfinex things changed drastically...personally best thing done = changing to being delta neutral.
e.g. BTC puts @50k strike paying out 0.7+ BTC once liquidation cascades started due to MM being too scared to step in-front of the train (or ran
to exits themselves)
Liquidation cascade felt worse than March 2020 crash b/c it was less instantaneous this time around - there were gaps of breathing space followed by vertical drops that felt unending - biggest fear was having the orderbook wiped - what would this do to the futures position even if you had 20x collateral vis-à-vis the position.
Hearing real whales (aka not me!) stories - they felt similar fears as I so from fear factor this looks to be the bottom.
Is it the dog wagging the tail? Saw some market commentary saying that crypto made Nasdaq dip. Could this be because we don't have a real BTC ETF and we have too many structured products based on companies holding BTC on their treasuries, or, are the MMs trying to hedge BTC exposure via equities.....
Last point since I like to be bearish also to save my sanity!
Some stable coins (e.g. Steam Dollar) were trading above $10....this show there is too much insanity...why would something that is supposed to be pegged / stable act this way? Also, the so-called on-chain metrics are just games...last time in March 2020 after we bottomed they were saying go short.
I sense a Musk vs Saylor game of chicken
Interesting Reads / Listens:
Dave White
