BRF #15 Last 48hrs
Unpacking The Last 48hrs
Wow is all I can say about the last 48hrs…
There is a lot to unpack here and a lot I want to cover, actually a video would probably be the best idea here but I like that writing this out will force me to be shorter with my words. First off, if you did get wiped out yesterday (I know of 8 people who got completely wiped, and overall 775,000 traders got liquidated yesterday losing a total of $8.6B) feel free to reach out to me via email or find me on discord, this isn’t a time to go dark and attempt to hide feelings, its a time to let it out so you can move on.
I have stated so many times now 2021 is the year of mental toughness, and I think we are just getting started unfortunately. Next if you think making money is easy, or watching from the sidelines talking sht like “ya I would’ve sold the top if I was in this market, it was so obvious to see” let me assure you that you 100% would NOT have sold the top and just bought the dip back perfectly. This is a fallacy, simple as that.
I was geared up to send out an email yesterday and then the last leg down happened so I took time to watch the market reaction, see what everyone else was saying/doing and what happened overall before I would weigh in. Sometimes better to let the dust settle and then do post mordum or AAR (after action report). I watched a lot of really good analysts get it wrong yesterday, and I watched a lot of people lose a lot of money as well. I watched people who had nailed this entire year, get completely lost in this last move. In case you were wondering, yes I sustained heavy losses yesterday not just in overall portfolio value (everything going down in price) but also from open positions I had, if people told you they nailed it and didn’t lose anything yesterday they are full of sht and lying.
I made it out a whole lot better than some, see most exchanges went down yesterday and therefore wouldn’t allow traders to exit positions (Binance did this and shut down both api and active exchange for a long period of time). This speaks to importance of using stops, which brings me to the next thing that happened to about a dozen people I know which is that they used stops and they didn’t trigger at all, which also led to liquidations (aka losing your whole account). Me personally, I layer in and out of positions so stops are layered, my stops all fired except for a few and then before FTX went down (they only went down for about 3-5 mins compared to Coinbase/Binance went down for hours) I was able to close out the tiny positions that were left. I did however have multiple stink bids that were set on perpetuals and didn’t have stops that I forgot about that did cost me a lot as they hit right when FTX went down and I couldn’t close nor cancel from both Quantower (api) or front end site for several minutes.
From this I will be putting in more fail safes myself but a lot of takeaways from just an exchange standpoint, I think FTX solidified itself as the best exchange in the world with how they held up yesterday, Binance was down for hours, spotty service, API issues and then Binance also doesn’t publish liquidations on days like today, which were probably insanely high- all proving that even though over a billion traders supposedly trade on Binance its utter garbage.
Also too this is an indirect proof of why API tools like Quantower are so good, because front end sites are the first to go down or slow down in high volatility times.
This wasn’t just a crypto wide sell off event, stocks also had a bad day, gold however had a great day and is continuing to breakout of a larger pattern.
Hunting For Narratives
Lets take a step back here and look at narratives.
Now that we have talked about what happened, lets attempt to take a step back and look at what caused all this and why. First off, you will never ever get the “reason why” off a bloomberg or CNBC article, so don’t bother. Its interesting because when you start to get price moves like the first leg down, immediately lots of traders will start hunting for narratives (china fud, elon fud etc) and they will also start hunting for people who got it right and attempt to cancel those who got it wrong. Lots of that was going on the last few days as traders attempted to blame others for the decisions they made based on a twitter post or email they liked and trusted. When it comes to investing, it should NEVER EVER be 100% based off someone elses analysis, and you should always take 100%
So lets cover the two prevailing and most interesting narratives that stuck out. First off the “china banned crypto” misinterpretation used for the 100th time was not it. Understand that by the time they coordinate the china fud to hit the US news cycle they have already exited their positions, looking at wallets on chain is a much better way to spot this.
Narrative #1 Wyckoff Distribution
This started to bubble up as a video from mid-April from a regular guy started to go viral covering how the daily chart started to look really similar to a standard Wyckoff Distribution pattern that is used to explain how The Composite Man (aka institutions) will run up the price of assets only to cash out themselves, then short, then tank a market and buy up everyone’s supply that panic sold. This narrative went pretty red hot as it seemed to be getting shared everywhere.
Here is a visual for reference, the standard pattern and that overlaid till the first drop in bitcoin (missing the last larger leg down)
Looks pretty similar doesn’t it? We could argue semantics all day long but its close enough to remind you of a few things (hopefully).
Institutions are already here, that was what Q4 of 2020 was all about
The elite, composite man (whatever you want to call it/them) will always take their pound of flesh with 0 regard to you and your bank account
Keep in mind that while the sell off was happening, large amounts of bitcoin were being bought up and moved off exchanges, proving the basic theory of the composite man.
Chinese Hedge Fund Trap
After the first day and the next leg down started there was a new narrative that popped up from a 4chan post where an anon chinese hedge fund guy claimed that a coordinated sell off was about to happen to take out another big player just 12hrs before it actually happened.
From my experience with the chan boards, I can tell you that you will get some wild and whacky sht posted there, but you will also get some really insane alpha that leads to making a lot of money, its just really hard to sift through it all and know what’s what.
The anon has responded again stating that now they are shorting and aiming for $25k BTC, because they still haven’t flushed out this bigger player yet. He said to be on the lookout around 7am UTC for fireworks.
Common Sense & Putting It All Together
Looking at the above plus the dozens of other narratives I am sure you have heard already, was it really that hard to see this coming? This is the trouble with trading, is that it is so incredibly hard to keep perspective when you are actively in the markets trading.
I mean we saw Elon pump doge, pump btc, dozens of dog meme coins make people rich, doge coin millionaire forced at gun point to impregnate women, Bitcoin trending on twitter daily, everyone from Mr. best to the Paul brothers, to KSI talking crypto more then their regular content.
The question is was this THE top or just a micro top and I think that is where many would agree that this is the pico top with much more to come. With this recent move down it also means we could see another cool down of majors during the summer while alts take over and run. I mean it would make sense with the new eco/green angle being brought up so much now.
Here is some data from Google searches to help back that up.
Common Questions At This Point
Is this the bottom?
Personally I think no, if you look at alt order books and futures order books its a ghost town, retail was wiped out good and proper, why whales have once again been buying. I consider this a very weak V recovery so far, especially compared to previous actual bottoms, this one has been slower and weak. I say ranging at the least but probably more down.How can I better prepare in the future?
This is a long answer, one which I will cover more into in tomorrows email but here are some basics. Always take profits on the way up, uP&L doesn’t mean anything until you cash out. At the very least keep an eye on larger time frames like weekly/monthly levels and pay attention to how price behaves in its ranges each month/year. Proper risk management and never try to live out of your accounts/pnl.
Tomorrow I will get back into some charts…
P.S. I haven’t announced winner yet for this weeks PrimeXBT giveaway as I haven’t gotten approval yet, once I do will announce the winner. We have also added a 50% first-time deposit bonus which means you get 50% more on your first deposit to the site.
Below are links and resources that hopefully help you with your trading while supporting us.
PrimeXBT
This is a crypto & stable coin in/out platform that allows you to leverage trade crypto, major indices and currencies worldwide as well as follow successful trade ideas from other traders. So if you live in Asia, you can trade major S&P stocks and vise versa, alongside major crypto pairs. Get an additional 50% first deposit bonus with code “Empire 50”
Binance Exchange
By far still the largest exchange, if you want to trade majors and a huge selection of alts and defi, not to mention the Binance Smart Chain projects!
FTX Exchange
For non-US residents who want to trade leverage on bitcoin, alts and trade futures contracts on crypto and stocks.
QuanTower
A tool like this is valuable because its a lightweight desktop software that connects via api so even when the front end site goes down during volatility, you can still trade. This happens the most with sites like Binance and FTX. They integrate with tons of exchanges in crypto, forex and options space. Videos coming soon!
NordVPN
Need a VPN to help access exchanges or keep your data private? I have been using Nord since 2017 and have had maybe 1 or 2 issues with IP address. They are one of very few companies we turns down government attempts worldwide to “share data” and are often voted as one of the best VPNs. 2yr deal currently 68% off!
None of what I put in these emails is intended to be taken as investment advice, there is no BUY/SELL calls in these emails, nor is this any kind of signals group. There is obvious and inherent risk involved with trading cryptocurrencies or any asset, that must be taken into consideration by the investor. Any and all outcomes are your fault good/bad!