Rapture #197: Personal Trading Reflection and Post FOMC Pump

Rapture #197: Personal Trading Reflection and Post FOMC Pump

As many of you know know, I have been pretty bearish starting in late November of last year, and quite a bit more bearish since the beginning of the year. While BTC has held on better than I have expected the past few months with all of the macro turbulence, I cannot say the same for altcoins.

As of May 4th, courtesy of https://twitter.com/Darrenlautf?s=20&t=PAVeOj1R3tJ6bDLc0oe9AA

My favorite play in the last bull market, AXS, is down a whopping 82.11% since its ATH in early November. Despite my well timed first sale of approximately 50% of my AXS position, which was the vast majority of my portfolio throughout last year, at $125, and my second sale of the other roughly 50% of the position at $55 (not as great but alright), my portfolio is down around 40% from its ATHs using some quick math, which is about the same drawdown BTC and ETH have experienced from ATHs.

Now, 2021 was a banner year for me, where I outperformed BTC by more than 10x (at least by initial calculations) and ETH by multiples (will have exact numbers shortly as my track record review by Marcum should be finally finished in the next two weeks).

Still, in retrospect, I would have preferred to have kept my drawdown to the 20 - 25% range. Not optimally selling my second lot of AXS, especially as my conviction was that we were in a bearish market environment, is the main culprit. Lessons learned, one's trigger finger should always be quicker in a bearish environment, regardless of the yield one is earning on a staked asset.

Currently, the question, as always in bearish environments, is when do I redeploy?

Right now, my answer is: likely not in the immediate future. My base case is further downside.

I am devoting my time to doing fundamental research on coins that I think will be well positioned in the next bull market to outperform BTC and ETH. When I do decide to redeploy in size, I will first be scaling into ETH, which has some serious bullish catalysts on the horizon with the merge and post merge drop in inflation.

That being said, I constantly follow the markets, and thus have some words on the crypto rise in the past 24 hours.

FOMC pump

The market reacted positively to the Federal Reserve raising rates only 50 bps and specifically stating that a 75 bps is ruled out in the next few meetings. In my opinion, this relief will be temporary. Even if this bump led to a rally, I do not think the news in itself will be enough to shift our bearish trend to a sustained bullish one that leads us to new ATHs.

At the end of the day, crypto is searching for new narratives. Significant product innovation has stalled, user growth is slowing, and the macro environment remains bearish for risk-on assets. A sustained rally by equities could give crypto some relief, but even then I think it will be temporary and that we have not reached the lows for the bear market.

The Federal Reserve is doing its best to create a soft landing with the increase in rates, but I think they will have a difficult time taming inflation without creating a recession. Even if they perfectly managed the market, I don't think there are enough sexy new innovations in crypto to reignite a new base of buyers to enter.

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