![DefiSquared's tweet photo. Despite the small setback last week, I entered this week positioned approximately $22 million net short, with a particular focus on eth and alts. [Long post on reasoning ahead]
To start, the P&L gain is approximately $1.65 million, with an undisclosed % covered already for strategic reasons (and using subaccounts this time instead of main, but friends can vouch for the positioning). This P&L fully covers last week's drawdown and more.
But more importantly, I wanted to share some of my reasoning on why I continued adding short after last week’s squeeze, and want to talk about when you should maintain conviction and when you should give it up. And of course, I'll be following up on Solana.
So to preface the discussion on conviction, there's an interesting phenomenon I've noticed with my trading. In particular, I would estimate that nearly 90% of the time that I’ve taken losses of 7 figures or more, I end up making the entire loss back within a week. Despite the common advice you’ll see from people to take a break and hit the gym following a drawdown, the data is clear for me that it’s better to keep trading. The reason for this is that I tend to specialize in trading high volatility / atypical market conditions- and the majority of the time I take a large loss, it means the market or coins I’m trading have performed an unexpected move resulting in extraordinary conditions.
This is an important preface as to why increasing my short exposure following last week’s squeeze was not chasing losses- it was maintaining conviction on a thesis I knew continued to be accurate. And frankly, if your risk management is properly followed, P&L should rarely be a factor in altering conviction if the thesis hasn't changed. So let’s get into why I wasn’t a believer in last week’s rally, despite some eye watering P&L drawdowns:
For one, let’s talk about flow of capital. Based on stablecoin flow and mints, it’s fairly safe to say there is still very little new money flowing into crypto right now. Squeezes like last week are likely still just the same PvP money rotating around, which means it's short term flow ready to bail as soon as the momentum slows. Getting new money inflow will continue to be tough given current interest rates / bond yields becoming so attractive. And recent crypto correlation with equities paints a grim picture- on days that markets look to be opening red, crypto sells off heavily, yet fails to maintain gains when equities rally.
This is all while 2023 still has a very large amount of supply distribution events among majors (Celsius, FTX, US gov btc, unprofitable miners being forced to sell, etc etc) as well as huge unlocks coming for many high FDV alts. In order to get real new capital inflow we most likely need a catalyst like a spot ETF being approved or perhaps the BTC halving.
Meanwhile, trades like short ETHBTC were practically a gift this week as the FTX hacker continued to sell hundreds of millions of dollars of ETH to BTC through THORChain. Ever had one of those days where you're so desperate to fill size in a hurry that you're DMing options market makers to list you blocks directly in the books? lmao
Then of course we have Solana. Oh, Solana... I don’t typically like to say things like this, but Sol’s out-performance last week was an anomaly, and quite frankly even nonsensical given the impending supply overhang. I’m usually cautious about fading strength like SOL showed last week, but contrary to the bullish nonsense people are shouting on Twitter, on-chain flow paints an entirely different picture: the entire time that SOL ranged above $23 and $24, whales were depositing tens of millions of dollars of SOL to exchanges and dumping on the retail frenzy- and FTX still hasn’t even started selling yet!
Some of these whales are known dumpers like this account that sold $9.5 million more SOL this week, and has been dumping tens of millions for many months:
Others were one-off sellers like this chad who bought 5 months ago and decided it was time to dump his entire $5 mil stack in just 2 market orders on binance as soon as the deposit cleared:
And then of course we had cases like the FTX hacker selling an additional 200,000 SOL this week too, among many others.
That is to say, my previous thesis on Solana is unchanged- the supply overhang here is abysmal without FTX even starting to sell yet, and whales are using retail buyers for exit liquidity at every step of the way. A temporary short squeeze doesn’t change this.
I'll wrap up today by clarifying that I'm not a perma-bear by any means. I would love to switch bullish when the time comes and have another generational wealth cycle like 2021- but for now I think this will be difficult until the distribution lightens up, macro improves, and we get a proper catalyst to turn capital flow around. So until then, the logical direction for alts as they continue to face inflation and distribution is chop or down, with BTC dominance continuing to outperform. Just my opinion, and NFA as always.
Cheers guys, and see you in the books.](https://pbs.twimg.com/media/F8C1z-mWgAAs0mk.jpg)
![DefiSquared's tweet photo. Despite the small setback last week, I entered this week positioned approximately $22 million net short, with a particular focus on eth and alts. [Long post on reasoning ahead]
To start, the P&L gain is approximately $1.65 million, with an undisclosed % covered already for strategic reasons (and using subaccounts this time instead of main, but friends can vouch for the positioning). This P&L fully covers last week's drawdown and more.
But more importantly, I wanted to share some of my reasoning on why I continued adding short after last week’s squeeze, and want to talk about when you should maintain conviction and when you should give it up. And of course, I'll be following up on Solana.
So to preface the discussion on conviction, there's an interesting phenomenon I've noticed with my trading. In particular, I would estimate that nearly 90% of the time that I’ve taken losses of 7 figures or more, I end up making the entire loss back within a week. Despite the common advice you’ll see from people to take a break and hit the gym following a drawdown, the data is clear for me that it’s better to keep trading. The reason for this is that I tend to specialize in trading high volatility / atypical market conditions- and the majority of the time I take a large loss, it means the market or coins I’m trading have performed an unexpected move resulting in extraordinary conditions.
This is an important preface as to why increasing my short exposure following last week’s squeeze was not chasing losses- it was maintaining conviction on a thesis I knew continued to be accurate. And frankly, if your risk management is properly followed, P&L should rarely be a factor in altering conviction if the thesis hasn't changed. So let’s get into why I wasn’t a believer in last week’s rally, despite some eye watering P&L drawdowns:
For one, let’s talk about flow of capital. Based on stablecoin flow and mints, it’s fairly safe to say there is still very little new money flowing into crypto right now. Squeezes like last week are likely still just the same PvP money rotating around, which means it's short term flow ready to bail as soon as the momentum slows. Getting new money inflow will continue to be tough given current interest rates / bond yields becoming so attractive. And recent crypto correlation with equities paints a grim picture- on days that markets look to be opening red, crypto sells off heavily, yet fails to maintain gains when equities rally.
This is all while 2023 still has a very large amount of supply distribution events among majors (Celsius, FTX, US gov btc, unprofitable miners being forced to sell, etc etc) as well as huge unlocks coming for many high FDV alts. In order to get real new capital inflow we most likely need a catalyst like a spot ETF being approved or perhaps the BTC halving.
Meanwhile, trades like short ETHBTC were practically a gift this week as the FTX hacker continued to sell hundreds of millions of dollars of ETH to BTC through THORChain. Ever had one of those days where you're so desperate to fill size in a hurry that you're DMing options market makers to list you blocks directly in the books? lmao
Then of course we have Solana. Oh, Solana... I don’t typically like to say things like this, but Sol’s out-performance last week was an anomaly, and quite frankly even nonsensical given the impending supply overhang. I’m usually cautious about fading strength like SOL showed last week, but contrary to the bullish nonsense people are shouting on Twitter, on-chain flow paints an entirely different picture: the entire time that SOL ranged above $23 and $24, whales were depositing tens of millions of dollars of SOL to exchanges and dumping on the retail frenzy- and FTX still hasn’t even started selling yet!
Some of these whales are known dumpers like this account that sold $9.5 million more SOL this week, and has been dumping tens of millions for many months:
Others were one-off sellers like this chad who bought 5 months ago and decided it was time to dump his entire $5 mil stack in just 2 market orders on binance as soon as the deposit cleared:
And then of course we had cases like the FTX hacker selling an additional 200,000 SOL this week too, among many others.
That is to say, my previous thesis on Solana is unchanged- the supply overhang here is abysmal without FTX even starting to sell yet, and whales are using retail buyers for exit liquidity at every step of the way. A temporary short squeeze doesn’t change this.
I'll wrap up today by clarifying that I'm not a perma-bear by any means. I would love to switch bullish when the time comes and have another generational wealth cycle like 2021- but for now I think this will be difficult until the distribution lightens up, macro improves, and we get a proper catalyst to turn capital flow around. So until then, the logical direction for alts as they continue to face inflation and distribution is chop or down, with BTC dominance continuing to outperform. Just my opinion, and NFA as always.
Cheers guys, and see you in the books.](https://pbs.twimg.com/media/F8CrnOrW4AAaW5d.jpg)
![DefiSquared's tweet photo. Despite the small setback last week, I entered this week positioned approximately $22 million net short, with a particular focus on eth and alts. [Long post on reasoning ahead]
To start, the P&L gain is approximately $1.65 million, with an undisclosed % covered already for strategic reasons (and using subaccounts this time instead of main, but friends can vouch for the positioning). This P&L fully covers last week's drawdown and more.
But more importantly, I wanted to share some of my reasoning on why I continued adding short after last week’s squeeze, and want to talk about when you should maintain conviction and when you should give it up. And of course, I'll be following up on Solana.
So to preface the discussion on conviction, there's an interesting phenomenon I've noticed with my trading. In particular, I would estimate that nearly 90% of the time that I’ve taken losses of 7 figures or more, I end up making the entire loss back within a week. Despite the common advice you’ll see from people to take a break and hit the gym following a drawdown, the data is clear for me that it’s better to keep trading. The reason for this is that I tend to specialize in trading high volatility / atypical market conditions- and the majority of the time I take a large loss, it means the market or coins I’m trading have performed an unexpected move resulting in extraordinary conditions.
This is an important preface as to why increasing my short exposure following last week’s squeeze was not chasing losses- it was maintaining conviction on a thesis I knew continued to be accurate. And frankly, if your risk management is properly followed, P&L should rarely be a factor in altering conviction if the thesis hasn't changed. So let’s get into why I wasn’t a believer in last week’s rally, despite some eye watering P&L drawdowns:
For one, let’s talk about flow of capital. Based on stablecoin flow and mints, it’s fairly safe to say there is still very little new money flowing into crypto right now. Squeezes like last week are likely still just the same PvP money rotating around, which means it's short term flow ready to bail as soon as the momentum slows. Getting new money inflow will continue to be tough given current interest rates / bond yields becoming so attractive. And recent crypto correlation with equities paints a grim picture- on days that markets look to be opening red, crypto sells off heavily, yet fails to maintain gains when equities rally.
This is all while 2023 still has a very large amount of supply distribution events among majors (Celsius, FTX, US gov btc, unprofitable miners being forced to sell, etc etc) as well as huge unlocks coming for many high FDV alts. In order to get real new capital inflow we most likely need a catalyst like a spot ETF being approved or perhaps the BTC halving.
Meanwhile, trades like short ETHBTC were practically a gift this week as the FTX hacker continued to sell hundreds of millions of dollars of ETH to BTC through THORChain. Ever had one of those days where you're so desperate to fill size in a hurry that you're DMing options market makers to list you blocks directly in the books? lmao
Then of course we have Solana. Oh, Solana... I don’t typically like to say things like this, but Sol’s out-performance last week was an anomaly, and quite frankly even nonsensical given the impending supply overhang. I’m usually cautious about fading strength like SOL showed last week, but contrary to the bullish nonsense people are shouting on Twitter, on-chain flow paints an entirely different picture: the entire time that SOL ranged above $23 and $24, whales were depositing tens of millions of dollars of SOL to exchanges and dumping on the retail frenzy- and FTX still hasn’t even started selling yet!
Some of these whales are known dumpers like this account that sold $9.5 million more SOL this week, and has been dumping tens of millions for many months:
Others were one-off sellers like this chad who bought 5 months ago and decided it was time to dump his entire $5 mil stack in just 2 market orders on binance as soon as the deposit cleared:
And then of course we had cases like the FTX hacker selling an additional 200,000 SOL this week too, among many others.
That is to say, my previous thesis on Solana is unchanged- the supply overhang here is abysmal without FTX even starting to sell yet, and whales are using retail buyers for exit liquidity at every step of the way. A temporary short squeeze doesn’t change this.
I'll wrap up today by clarifying that I'm not a perma-bear by any means. I would love to switch bullish when the time comes and have another generational wealth cycle like 2021- but for now I think this will be difficult until the distribution lightens up, macro improves, and we get a proper catalyst to turn capital flow around. So until then, the logical direction for alts as they continue to face inflation and distribution is chop or down, with BTC dominance continuing to outperform. Just my opinion, and NFA as always.
Cheers guys, and see you in the books.](https://pbs.twimg.com/media/F8Cl_kyXEAAkeQJ.jpg)
Olivia
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Things I've Learned After 15 Years Of Trading
Never underestimate the power of a momentum move. Up or Down. Once the freight train is in motion, it will keep going much further than most have anticipated.
Price is the only thing that matters. Adapt to it, don't fight it.
Don't under estimate the power of desperate money managers in the fourth quarter. They need to beat their bench marks or risk losing their jobs/clients.
Mental stops will ensure you an emotional trade. Don;t use mental stops. You are either in the trade or not. Mental stops invite emotions.
Mental stops is another way of saying : "I am not sure where to place my stop"
Adding to a losing position is one of the best ways to end your trading career.
The biggest winning trades normally have big volume driving them higher.
Trading triple ETFS will deplete the account over the long term.
"Too many eyes" on a key breakout point will most likely cause that pattern to fail first. AKA ; fuckery. Revisit the "NEW" setup after the fuckery has shaken out the majority.
Sentiment is always more negative on bottom retests than in the FIRST low. Watch out above if the retest is successful.
Most double bottoms come with strong MACD/RSI divergences. A powerful event if you see this.
Be aware of stocks that take "too long to go". early indication of demand drying up.
The best trade setups, work immediately after they trigger. They barely give you a chance of to jump on board.
The best traders are incredibly nimble. They can be bearish but still capable to taking longs without hesitation.
Perma bears and perma bulls eventually get washed out of the market. You have to respect a strong bull market and you have to respect a mean bear market.
More trades does NOT equal more profits. LESS IS MORE.
The best traders i know, keep their routine very simple.
Price charts and volume is all you need. Most indicators are noise the majority of the time.
Never confuse YOUR macro views with what is actually happening in the stock market.
Economy could be in recession but if the market is rallying, you need to listen to the market. It pays better.
Fighting the trend doesn't pay well. In general, trading with a trend, pays off much better.
Get aggressive when you make 2-3 good trades back to back.
Get VERY defensive when you make 2-3 bad trades. Often times traders will do the opposite. (Self destructive behavior).
Trading on margin is the surest way to emotional decision making and eventually will wash you out of the business.
Never underestimate the confidence building power of a tiny gain that is booked. Green on the screen helps build confidence for future trades.
Big winning streak start with tiny wins. (The snow ball effect).
Most losing streaks start because a "basic' rule was broken. Emotions taking over.
IN bulls markets, if you are to err, err on the long side. NOT SHORT. Short squeezes can be powerful and painful.
It's ok to be wrong but it's NEVER ok to "STAY WRONG".
Good fundamental analysis and proper technical trading is a killer combination. Think CANSLIM / IBD (investors Business Daily)
Too many bullish setups is NOT always a "good thing"/ A plethora of bullish setups normally precedes a big down day. Aka: Fuckery.
Trading stocks is a lot like a beauty contest. What looks best, wins.
THe best technical patterns is the BULL FLAGS. It comes in many varities. Learn to spot them.
Candle stick patterns don't mean anything WITHOUT follow thru. A Hammer or a DOJI means nothing unless it gets follow thru the next day.
Very hard to short a market when the financial stocks(XLF) are strong.
Trading with 'conviction' is great BUT trading with 'arrogance' is a sure way to the poor house.
You have to understand, you cannot impose your will on the market. The market is bigger and smarter than you and you need to adapt to it. Not the other way around.
Sentiment polls are worthless for the most part. Focus on price action.
More market bottoms take place in October than in any other month. A simple observation that i made over the years.
Always be aware when short interest on the NYSE starts to hit record highs. Normally means we are getting close to a major bottom.
In december, small caps and micro cap stocks(junk stocks) come alive. many will double or triple in a few days.
Keep your approach as simple and basic as possible. Can you explain it to a 10 year old?
The market is master at forecasting events well ahead of time. by the time, the actual news hits, the market has already discounted it.
never short a market in momentum mode.
Never short a market that is "quiet" or "choppy".
Trading in choppy market is one of the most difficult and frustrating things to do.
Shorting over the long run pays very poorly. Odds are heavily stacked against bears over the long run.
Many strong forces are constantly working against shorts: PPT, short sales bans, government intervention etc.
Every stock will go thru a period of accumulation, topping out, distribution and bottoming and a new cycle begins. Rinse, repeat.....
Big long candles on big volume are often the start of something bigger. Scan and track those stocks. Many will end up being big winners.
Trust your gut, if something doesn't 'feel' right, sell it. Analyze it from the sidelines (emotion free)
Chat rooms are the best learning tool but be aware of what is noise and what is quality actionable, tradeable information.
Be ware of trades that "fill easily". The best trades barely give you a 'good price'.
It takes a brave soul to admit a trade is not working and sell it at a loss. The 'easy' thing to do is carry the position and "hope" it turns.
Your 'hardest' work should be done while the market is closed. So that when the market opens, you will be prepared once your setups become active.
Surround yourself with POSITIVE people. haters are hating for a reason. They are LOSING. pure and simple. Positive people are winning or on the right path to winning.
Work HARD and work SMART. Both are equally important if you want to make a profession from your trades.
The character of the person will be tested when things are going horribly bad. Will you be the phoenix to rise from the ashes?
Don't brag, beat your chest when things are going well. Eventually mother market humbles us all.
The harder you force trades, the more likely to lose. Allow the natural process to happen...naturally.
Lucky breaks normally come when you are trading well. Unlucky breaks come when you are trading poorly.
Wining and losing streaks come in cycles. Be aware which cycle YOU are currently in. Be aggressive when winning and confidence is high.
TOPS are a long process, rarely a single day event.
Failed breakouts and deterioration of stocks under the surface are the first warning signs. Fewer and fewer stocks left holding up the indexes.
BOTTOMS are a process, rarely a single event. Many stocks start to bottom well ahead of the indexes.
Always be aware of what is going on in the "MARKET OF STOCKS", not just the "stock market". INdexes will always react to what is happening to stocks under the surface.
in bull markets, you buy dips and trade breakouts when momentum is clearly UP. In bear markets, you short weak low volume bounces and short breakdowns when momentum is clearly DOWN.
Don't be a bull, don;t be a bear: Be a predator. constantly lurking and stalking the "easy prey".
Perma bulls and perma bulls are dangerous, lazy and arrogant. Don't take their views too seriously if you care about YOUR account.
It's not about being 'bullish' or 'bearish'. It's about being RIGHT. Please understand this. It's vital to long term survival.
It's not about being 'bullish' or 'bearish'. It's about being RIGHT. Please understand this. It's vital to long term survival.
It's not about being 'bullish' or 'bearish'. It's about being RIGHT. Please understand this. It's vital to long term survival.
Catching falling knives will sooner or later land you into a mine field. Big difference between buying a dip and catching a falling knife.
Swing trading triple ETFs will give you insomnia. Is it really worth it?
Professional traders know strength begets more strengths. Weakness begets more weakness.
Anticipate "now" what you think will be 'popular' later.
Most traders are never "happy" with their trades. Understand that no trade will ever be "PERFECT".
When a stock breaks out on big volume. The first dip will normaly bought up very quickly.
If you have no solid plan(i.e. Setup, proper entry, stop loss, exit strategy, target), then why are you in the trade?
Often times, the best trades require you to buy high and sell higher.
Learn to be patient once in a winning position. Learn to be very impateint when in a losing or questionable position
Lowering a stop loss is the first sign of trouble. You are breaking the rules and emotions are starting to creep in. Careful when u see that.
Never ever, get into a position that is "too BIG" for the account size. All it takes is a bad trades to cripple you beyond repair.
It's ok to say " i am wrong and what do i need to do now?"
Always be aware of which stocks are exhibiting STRENGTH in a weak tape.
Always be aware of which stocks are exhibiting WEAKNESS in a strong tape.
Boredom trades costs add up and can hurt you. Be aware of when you are simply bored and looking to trade something "JUST TO TRADE"
You will never buy the exact bottom and you'll never exact sell the exact top: Don't beat yourself up if "you left money on the table"
EMOTIONS is what causes most traders to break their rules.
It's NOT the news that is most important, it's the REACTION to the news. Respect the price action.
Use YOUR gut. If it doesn't 'feel' right. Remove it. Reassess from the sidelines(emotion free).
Have a list of setups READY for the following day. Know the trigger prices ahead of time. Have plan: setup, position size, entry, exit, max loss and targets.
NO plan? NO TRADE!
10 times out of 10, Traders who carry BIG losses wishes they had respected their "ORIGINAL" stop. So, respect the ORIGINAL STOP LOSS, ALWAYS!
Over trading is the POISON for your trading. LESS IS MORE!
Never chase GAP UPS. Allow the first 45-60 minutes to pass by and then see what is setting up best intra-day.
You want to enter stocks that have the BEST bases on ALL TIME FRAMES. Weekly, daily, 60 min, 30 min, 10, 5 min. << the more time frames align, the higher the probability the trade.
Focus on finding "GOOD BASES" :: The longer a stock bases, the more meaningful the breakout.
Keep a balanced life. It's not all about the screens. Spend time with family, friends: They deserve more attention.
Stay humble, stay grounded, remember where you came from and where you want to go. What is here today, can easily be gone tomorrow. Respect what you have yet shoot to achieve more.
cheers and god bless.
Makes me a bit emotional to think of the last 5 years. Its been a whirlwind.
Always had things i worked on. Went from selling those lightroom presets on instagram, did the clothing business thing, had an online womens store, tried selling essential oils at the markets every weekend all the while working in a warehouse for $14 an hour.
Quit my warehouse job and initially started a photography/videography business.. i refused to work for someone else, I knew i had it in me to do something different.
Tldr version was.. then came crypto. Lost my networth a few times but here i am. Truly transformed my life. I wake up every day and say ‘thank you God’.
I’ve been asked if i remember the first time i felt i had ‘made’ it.. and yes it was when i had the freedom to do what i want whenever i want. But honestly the MOMENT was when i started going out for dinner and stopped checking the cost.
The journey continues, truly excited for the next 2 years. The new friends i’ll make in this space and the stories we can look back on.
Get ready, some of you are about to have their lives absolutely transformed.
cointelegraph intern rn
@CryptoEthan i feel the exact opposite
So many “takeaway” from markets reaction on the fake news tweets
Mfers the only takeaway is that we are in an industry run by clowns
wow amazing thread
Despite the small setback last week, I entered this week positioned approximately $22 million net short, with a particular focus on eth and alts. [Long post on reasoning ahead]
To start, the P&L gain is approximately $1.65 million, with an undisclosed % covered already for strategic reasons (and using subaccounts this time instead of main, but friends can vouch for the positioning). This P&L fully covers last week's drawdown and more.
But more importantly, I wanted to share some of my reasoning on why I continued adding short after last week’s squeeze, and want to talk about when you should maintain conviction and when you should give it up. And of course, I'll be following up on Solana.
So to preface the discussion on conviction, there's an interesting phenomenon I've noticed with my trading. In particular, I would estimate that nearly 90% of the time that I’ve taken losses of 7 figures or more, I end up making the entire loss back within a week. Despite the common advice you’ll see from people to take a break and hit the gym following a drawdown, the data is clear for me that it’s better to keep trading. The reason for this is that I tend to specialize in trading high volatility / atypical market conditions- and the majority of the time I take a large loss, it means the market or coins I’m trading have performed an unexpected move resulting in extraordinary conditions.
This is an important preface as to why increasing my short exposure following last week’s squeeze was not chasing losses- it was maintaining conviction on a thesis I knew continued to be accurate. And frankly, if your risk management is properly followed, P&L should rarely be a factor in altering conviction if the thesis hasn't changed. So let’s get into why I wasn’t a believer in last week’s rally, despite some eye watering P&L drawdowns:
For one, let’s talk about flow of capital. Based on stablecoin flow and mints, it’s fairly safe to say there is still very little new money flowing into crypto right now. Squeezes like last week are likely still just the same PvP money rotating around, which means it's short term flow ready to bail as soon as the momentum slows. Getting new money inflow will continue to be tough given current interest rates / bond yields becoming so attractive. And recent crypto correlation with equities paints a grim picture- on days that markets look to be opening red, crypto sells off heavily, yet fails to maintain gains when equities rally.
This is all while 2023 still has a very large amount of supply distribution events among majors (Celsius, FTX, US gov btc, unprofitable miners being forced to sell, etc etc) as well as huge unlocks coming for many high FDV alts. In order to get real new capital inflow we most likely need a catalyst like a spot ETF being approved or perhaps the BTC halving.
Meanwhile, trades like short ETHBTC were practically a gift this week as the FTX hacker continued to sell hundreds of millions of dollars of ETH to BTC through THORChain. Ever had one of those days where you're so desperate to fill size in a hurry that you're DMing options market makers to list you blocks directly in the books? lmao
Then of course we have Solana. Oh, Solana... I don’t typically like to say things like this, but Sol’s out-performance last week was an anomaly, and quite frankly even nonsensical given the impending supply overhang. I’m usually cautious about fading strength like SOL showed last week, but contrary to the bullish nonsense people are shouting on Twitter, on-chain flow paints an entirely different picture: the entire time that SOL ranged above $23 and $24, whales were depositing tens of millions of dollars of SOL to exchanges and dumping on the retail frenzy- and FTX still hasn’t even started selling yet!
Some of these whales are known dumpers like this account that sold $9.5 million more SOL this week, and has been dumping tens of millions for many months:
Others were one-off sellers like this chad who bought 5 months ago and decided it was time to dump his entire $5 mil stack in just 2 market orders on binance as soon as the deposit cleared:
And then of course we had cases like the FTX hacker selling an additional 200,000 SOL this week too, among many others.
That is to say, my previous thesis on Solana is unchanged- the supply overhang here is abysmal without FTX even starting to sell yet, and whales are using retail buyers for exit liquidity at every step of the way. A temporary short squeeze doesn’t change this.
I'll wrap up today by clarifying that I'm not a perma-bear by any means. I would love to switch bullish when the time comes and have another generational wealth cycle like 2021- but for now I think this will be difficult until the distribution lightens up, macro improves, and we get a proper catalyst to turn capital flow around. So until then, the logical direction for alts as they continue to face inflation and distribution is chop or down, with BTC dominance continuing to outperform. Just my opinion, and NFA as always.
Cheers guys, and see you in the books.
![DefiSquared's tweet photo. Despite the small setback last week, I entered this week positioned approximately $22 million net short, with a particular focus on eth and alts. [Long post on reasoning ahead]
To start, the P&L gain is approximately $1.65 million, with an undisclosed % covered already for strategic reasons (and using subaccounts this time instead of main, but friends can vouch for the positioning). This P&L fully covers last week's drawdown and more.
But more importantly, I wanted to share some of my reasoning on why I continued adding short after last week’s squeeze, and want to talk about when you should maintain conviction and when you should give it up. And of course, I'll be following up on Solana.
So to preface the discussion on conviction, there's an interesting phenomenon I've noticed with my trading. In particular, I would estimate that nearly 90% of the time that I’ve taken losses of 7 figures or more, I end up making the entire loss back within a week. Despite the common advice you’ll see from people to take a break and hit the gym following a drawdown, the data is clear for me that it’s better to keep trading. The reason for this is that I tend to specialize in trading high volatility / atypical market conditions- and the majority of the time I take a large loss, it means the market or coins I’m trading have performed an unexpected move resulting in extraordinary conditions.
This is an important preface as to why increasing my short exposure following last week’s squeeze was not chasing losses- it was maintaining conviction on a thesis I knew continued to be accurate. And frankly, if your risk management is properly followed, P&L should rarely be a factor in altering conviction if the thesis hasn't changed. So let’s get into why I wasn’t a believer in last week’s rally, despite some eye watering P&L drawdowns:
For one, let’s talk about flow of capital. Based on stablecoin flow and mints, it’s fairly safe to say there is still very little new money flowing into crypto right now. Squeezes like last week are likely still just the same PvP money rotating around, which means it's short term flow ready to bail as soon as the momentum slows. Getting new money inflow will continue to be tough given current interest rates / bond yields becoming so attractive. And recent crypto correlation with equities paints a grim picture- on days that markets look to be opening red, crypto sells off heavily, yet fails to maintain gains when equities rally.
This is all while 2023 still has a very large amount of supply distribution events among majors (Celsius, FTX, US gov btc, unprofitable miners being forced to sell, etc etc) as well as huge unlocks coming for many high FDV alts. In order to get real new capital inflow we most likely need a catalyst like a spot ETF being approved or perhaps the BTC halving.
Meanwhile, trades like short ETHBTC were practically a gift this week as the FTX hacker continued to sell hundreds of millions of dollars of ETH to BTC through THORChain. Ever had one of those days where you're so desperate to fill size in a hurry that you're DMing options market makers to list you blocks directly in the books? lmao
Then of course we have Solana. Oh, Solana... I don’t typically like to say things like this, but Sol’s out-performance last week was an anomaly, and quite frankly even nonsensical given the impending supply overhang. I’m usually cautious about fading strength like SOL showed last week, but contrary to the bullish nonsense people are shouting on Twitter, on-chain flow paints an entirely different picture: the entire time that SOL ranged above $23 and $24, whales were depositing tens of millions of dollars of SOL to exchanges and dumping on the retail frenzy- and FTX still hasn’t even started selling yet!
Some of these whales are known dumpers like this account that sold $9.5 million more SOL this week, and has been dumping tens of millions for many months:
Others were one-off sellers like this chad who bought 5 months ago and decided it was time to dump his entire $5 mil stack in just 2 market orders on binance as soon as the deposit cleared:
And then of course we had cases like the FTX hacker selling an additional 200,000 SOL this week too, among many others.
That is to say, my previous thesis on Solana is unchanged- the supply overhang here is abysmal without FTX even starting to sell yet, and whales are using retail buyers for exit liquidity at every step of the way. A temporary short squeeze doesn’t change this.
I'll wrap up today by clarifying that I'm not a perma-bear by any means. I would love to switch bullish when the time comes and have another generational wealth cycle like 2021- but for now I think this will be difficult until the distribution lightens up, macro improves, and we get a proper catalyst to turn capital flow around. So until then, the logical direction for alts as they continue to face inflation and distribution is chop or down, with BTC dominance continuing to outperform. Just my opinion, and NFA as always.
Cheers guys, and see you in the books.](https://pbs.twimg.com/media/F8C1z-mW8AEIxJk.jpg)
@Sahibtrade calling my quants for this
Allow me to excuse myself from dinner - I have a cryptocurrency derivatives position I need to manage.
At #Binance, combating market manipulation is a top priority.
Our Market Surveillance Team closely monitors market activity using advanced technology, which counteracts market manipulation to ensure fair prices for everyone.
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@PC_Larp pc ma man welcome back
Here is proof Trader SZ is larp who relies on shilling garbage.
SZ received AIOZ for his allocation which was immediately dumped for $180k
SZ then made a video mapping out his trigger entries with targets.
Why would you post a trade plan if you had already sold your tokens?
@BlankBrainTrade boss it is dream….
@pikachu_crypto ldo it is
A single wallet minting $TUSD which goes directly to Binance has been holding up the entire market
no one is short + lot of people on my tl bullish = _ _ _ _ _ _
@Imperator_XBT you accidentaly reverted chart ?
@comfyhodler @PC_PR1NCIPAL you feel “pain” when you exercise ? not pain for me, i am enjoying it. WEAK mentality
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