1 Down Year 🔻 3 Up Years 🚀 : Part II
Crypto Market Cycles - Wallet/Portfolio Review (Week 16/52)
📟 Disclaimer
I am not a financial advisor, and nothing I say in this substack is financial advice.
This is all educational content you can use as a starting off point for your own research initiatives. I’m just another random individual who started a substack ‘cause I think I have something to share with you all’. 🤷
That said, if you’d like to know a bit about me and are wondering why you should listen to me, read this intro post I wrote 🙌
👛 Wallet Review
This wallet review is a recurring post. The aim is to post an official update every Monday and see how far I can grow this little stash by week 52.
As of January 9th, 09:00 UTC this tiny stash of mine sits at a modest value of $809 USD, dubbed week 15 closing balance & week 16 opening balance.
Week Zero(0) Opening Balance Was: $450
I won't be going through all of my investments in detail in order to keep this review succinct, engaging, and free of repetition. Only those that I have set aside more than $50 for will be covered.
I advise you to review the posts from the previous week and evaluate how this "experiment" is going.
🧐 My Macro Thesis Going into 2023 - Part II
Market cycles for cryptocurrencies occur frequently in the world of digital assets. Prices in the cryptocurrency market fluctuate over time, just as in any other market.
Green is a period of price discovery, red is a phase of price correction, and yellow is a phase of accumulation, as I mentioned in last week's issue.
Investor attitude, alterations in the law, and developments in technology are just a few of the causes that might cause these variations.
One key aspect of crypto market cycles is the depression phase (Late Red Phase, to Early/mid Yellow Phase). This is the point in the cycle when prices are at their lowest, and investor confidence is at an all-time low.
It is often characterized by widespread fear, uncertainty, and pessimism about the future of the market.
Investors may experience pessimism and discouragement during a bad market, which may cause many of them to panic-sell their investments. As a result of the increase in sell orders, prices may begin to decline irreversibly.
However, some investors may start to experience a fresh sense of hope and start reinvesting in the market as it starts to show signs of stabilisation or improvement.
This surge in purchasing activity may provide a feeling of momentum that draws even more purchasers, reversing the market direction.
Herd mentality can thus contribute to both the acceleration of bear market drops and the acceleration of bear market reversals.
Meaning, that the depression phase is followed by a recovery phase, during which prices begin to rise once again.
🧮 Let’s do some simple math to illustrate a hypothesis:
Bitcoin's most recent all-time high was $69,000 in November 2021 (Nice!), and by November 2022, its price had dropped to roughly $15600. That is a decrease of 77.79%.
Then, if we calculated our journey from 15k to 69k, BTC's previous all-time high, not even new price discovery, just getting back to 69k, will be a 311.39% gain!
In essence, math behaves differently going up and down!
NGL, I don't think 2022 was the best year of your life if you bought at 69K and Diamond handed (💎🙌) down to 15K, but better times are coming! Of course, historically speaking.
Having said that, if people decide to buy now, they may be taking advantage of a generational buying opportunity (of-course, NFA, you do you boo, this is just me talking random Tin Foil hat stuff).
Investors should keep in mind that market cycles occur naturally and that the depressed stage is merely a stage in the process.
While it may be tempting to sell off assets in a panic during this period, it is frequently preferable to weather the storm and hold onto assets until the market rebounds.
In summary, the depression stage is a typical occurrence in crypto market cycles. Although it is a period of apprehension and uncertainty, investors have the chance to adopt a long-term perspective and hold onto assets until the market rebounds.
For the Buy/Long Side participants, I have cited examples of the Wall Street Cheat-sheet in the past, but I recently came across something that perfectly captures the Sell/Short Side participants' bear mentality and is really humorous.
In order to avoid succumbing to fear and selling off assets during a downturn, it is critical to remain educated and make judgements based on sound analysis.
Let’s Dive into the Wallet Review!
First things first, I didn't do any new business this week either, and I'm still holding onto my assets as we speak.
In other words, since I haven't conducted any transactions since December 14, 2022, there was no need for me to shift around and my assets grew by 6%. see the transaction log below for an example (You are welcome to confirm on debank)
There's no purpose in changing assets mid-move, as I've stated in prior issues (Wallet review weeks 4-7)! The goal is to place your "bets" in advance of the event so that, when it occurs, you can sell and secure profits as necessary or rebalance appropriately.
I planned, plotted, and schemed over the full months of October, November, and December in preparation for this change in momentum.
The purpose of my experiment and portfolio is to show how taking part in Defi can help you find a secondary or tertiary source of income. It's not a "rags to riches" overnight story/USP.
Here’s what i’m planning on selling in the coming weeks/months.
👛 Let’s start w/assets in my wallet:
If the price of ETH breaks $1600, I intend to sell.06 of it because I anticipate a pullback once we reach that level.
As compensation for bridging funds through Hop.exchange, I received some OP tokens (25.66 | $33). The investor unlocks for these are slated for April to May 2023, therefore I want to sell them around that time (There will be a lot of selling pressure)
The initial token launch date for Optimism (OP) is 31 May 2022. There's an initial total supply of 4,294,967,296 OP tokens. The total token supply will inflate at a rate of 2% per year.
🧮 Polynomial.fi Automated Strategy Vaults
I intend to liquidate/close this vault as well if/when the price of ETH exceeds $1600, and I'll either flip to the short side or hold onto my money until a better investment opportunity presents itself.
🏦 GMX & ETH rewards
lastly, once we reach that $1600 ETH mark, I plan on selling the GMX tokens and ETH rewards I would’ve accrued by then. I do however plan on holding on to my esGMX rewards as they are vested over six months and not available for you to “market sell” the day you claim them.
Note:
I'm thinking about taking profits on these short-term trades. Doesn't mean I no longer have faith in their initiatives. It's possible that I won't even sell if I believe that the market is healthy and that we can move higher.I'm only attempting to provide an example of a semi-basic/healthy profit-taking technique and approach to this market.
And if I do manage to make a few dollars, I intend to put them back into these projects. Simply put, I'm making an effort to increase my asset base while pursuing a passable capital preservation strategy.
Real profit taking won't start until late 2024 or early 2025. (However, nothing is guaranteed, so let's wait and see how everything plays out.)
📣 Weekly Highlights/Drama:
"It appears that Sam Bankman-Fried, the former CEO of the cryptocurrency exchange FTX, won't go down easily.
This week, his counsel entered a not-guilty plea on his behalf in a New York court where he is accused of eight crimes in all and faces a maximum sentence of 115 years in prison if found guilty.
Although the trial is scheduled to start in October, the prosecution has agreed to give SBF's attorneys the material they need within the next two weeks.
Bankman-Fried has been under house arrest while staying with his parents in California, but the judge has now made it illegal for him to utilise FTX or Alameda to access or move any cryptocurrency holdings. Yikes.
🤦 SBF Says: I purchased shares of RobinHood! (Okay, with user deposits, but, that's a minor technicality.)
SBF Fights for Robinhood Shares, Saying He Needs Them More Than FTX Customers Who Only Experience "Possibility of Economic Loss" – FFS this guy!
⚠️ Alameda Assets on the move
Former FTX CEO Sam Bankman-Fried sent all the ether in his public wallet (address: 0x7386df2Cf7e9776bCE0708072c27d6a7135D51CB) to a new address on December 22nd (source: Binance Article & Etherscan).
Here’s what happened next;
$367,000 worth of crypto assets were transferred from 32 addresses owned by Bankman-Fried's trading firm, Alameda Research to the same new address (0x7386)
This new address (0x7386) received an additional $322,000 from other wallets, bringing the total assets to approximately $689,000
The new address (0x7386) then transferred $629,000 worth of tokens to another address (0x64e9B9cD74A46f71e7631CB033afA6E7849a8683)
A total of $1 million was sent to this second address (0x64e9) by 11 wallet addresses labeled as Alameda-owned accounts
Five transactions of less than 51 ETH were also conducted and sent to a newly created wallet address
The funds were then transferred to a Seychelles-based crypto exchange that does not conduct KYC checks for users
Parts of the funds were also transferred through the Ren protocol and subsequently to the Bitcoin network
It is unclear at this time if Bankman-Fried was involved in these withdrawals.
In response, Bahamian regulators have seized $3.5 billion worth of assets belonging to FTX Digital Markets, the Bahamian subsidiary of the bankrupt crypto exchange, in order to prevent the funds from disappearing. The assets will be returned to investors at the court's discretion.
🪤 Outro
Of course, it goes without saying but bears repeating that nothing I say or share here is financial advice. I’m just another random individual starting a substack ‘cause I think I have something to share with you all’. 🤷
Also, like many individuals who are doing this for a living I also am a humble penniless fool. So, if you are a kind, bountiful, and gifted individual who has benefited from this S#!t Postery and wish to buy this S#!t Poster of yours a coffee, Some drip money would definitely be appreciated and will help to keep my fingers going on this mechanical keyboard of mine.