0xKyle's Weekly Market Updates #11
What you need to know with CPI & Shapella coming up. 10 April - 15 April, 2023
DISCLAIMER: The information contained in this newsletter is for informational purposes only and should not be considered financial or investment advice. Any opinions expressed in this newsletter are solely mine.
Welcome to the 11th week! Hope everyone has a great week ahead. P.S. Do I know anyone in a crypto startup in SF? I’m looking to get a job there, and would definitely appreciate any help <3
$BTC 7D: -0.1% | $ETH 7D: +2.7%
The first week of April has been an extremely choppy and sideways market so far. Both neither bear nor bull cases have been validated, and I think that a lot of us (myself included) fall prey to the idea that we “need a nuke”; the truth is, this crab market could last a lot longer than we expect it to.
It is thus important to look at market regimes and how alts react to specific price movements. This past week we’ve had DOGE and ACH take the stage - and if you don’t already know, the “quickness” of news moves is quite a telling sign of how market participants think.
The fact that the move couldn’t last past the initial news pump and sold off extremely quickly is not what you want to see for a bull case. Again, this doesn’t mean “nuke everything”, just that you might want to be careful longing the dip on alts - the dip can keep dipping.
In these market regimes, I prefer to trade majors - the asymmetric downside on alts doesn’t provide good R/R.
Moving on, all eyes are on Shapella and CPI, with both on April 12th. For CPI, I think that what has happened for the past few weeks will happen again - sharp volatile wicks in either direction, but overall quite a nothingburger.
The reasoning for this is simple - the past few CPIs have been quite in-line with predictions, and whenever that happens, it hasn’t set up an “insane giga bullish month” or anything like that. It seems that people have realised that the Fed will keep on doing what the Fed has said they would do, and that fundamentally, there’s not going to be a giga gap up or down without any substantial news.
I believe Shapella is more or less a nothingburger as well. These events that everyone knows about are more or less priced in - the closest event we can compare Shapella to is the Merge. But once again, it is most likely EV to not take a trade - when you are uncertain, the best thing to do is not to trade.
Overall, the market has been quite the boring shitshow, and will likely continue until a breakout in key swing points happen (30k/26k).
Ethereum’s Shapella Upgrade
This has been an absolute shitshow to trade. I think many traders expected a run up like in January, and while we did get some incredible prices up till 2.8, it’s disappointing if you wanted to build a bull case. Overall, some money was made, but I’m not re-longing it after seeing recent price action and how close we are to Shapella - 2 days away, and it’s more or less jus sideways. Not a good sign.
OPNX (h/t DefiMaestro)
This one’s a little tricky - the launch of OPNX was disastrous, with a little over a dollar of trading volume (thanks Su). But the argument can be made that the main product - the ability to trade tokenized claims - isn’t out yet; and hence the thesis isn’t invalidated.
Personally though, I’m a little hesitant to take on this trade.
Shorting Overextended Alts
This will probably be the best alpha I can drop for you guys. Shorting overextended alts has been extremely profitable, and if you can take the time to backtest this advice on some recent news pumps, you’ll see what I mean.
The biggest caveat is that you’ll get eaten alive by funding rates though. Take $NKN for example - a coin that pumped for god knows what reason. The thing is - I totally missed the move up, and missed that juicy entry above .15. I entered the short at around .14 - at which point if a full retracement was done, it would result in a 12% gain.
Funding rates were at an incredible 3% though - if I were to hold the trade for more than 24 hours, that’s a 9% fee.
Well, BTRFLY announced their coin which pumped, and then dumped - not a good look for onchain stuff as well.
$PARTY or whatever the latest CT ponzi was did disasterously after a few days - another leading indicator that capital preservation is the name of the game
I would like to end off saying that:
Making Money > Doing Nothing > Losing Money
That means => If you can’t make money, the next best thing is to do NOTHING - you gain nothing, but you lose nothing. As I said, if it’s uncertain, it’s ok to not do anything. The market will be here tomorrow.
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