Thread by @dkcrypto13

Market musings:

So the Nasdaq Bearishly engulfed the Fed relief rally, which makes it look more and more like a short squeeze. The S&P wasn’t quite as bad, but the picture isn’t pretty for risk assets. Unless we turn around quickly, this could mean stocks are in for more pain.

https://twitter.com/dkcrypto13/status/1471132350432096266

As I said before, I think that crypto as a whole has become a risk asset like all others, meaning that I find it hard to see that crypto rallies extensively but stocks don’t. So therefore unless stocks recover quickly my stance will be cautious.

In an ideal world, we can get a de-coupling between $BTC and productive alts (those with actual network usage, like $ETH & $SOL). The latter have been much stronger on this rebound so that is a good start, but I am not convinced.

Both $SOL & $ETH are sitting right at weekly support here and momentum is already waning. Technically speaking you’d want to buy support always, but this one has been probed a lot. I think to really bounce we need a santa rally from stocks as well.

On top of that, there is the problem of a missing narrative for investors atm. Liquidity is slowly being reduced, the reopening trade has happened, DeFi is exhausted as an intellectual topic aside from literal ponzis (Olympus) and NFTs are so mainstream they’re everywhere.

That doesn’t mean that we won’t see continued innovation in the digital assets space and it is something that I am firmly betting on, nor does it mean that all of a sudden stocks won’t go up 6 out of 7 years, but it does mean we are potentially due for a pause.

Covid crash, Ubiquitous liquidity, Reopening of the economy, Vaccines, Variant chasing, Supply chain issues, Inflation and Liquidity reduction (potentially soon) - Markets have been through a lot. Sideways action is not at all unhealthy and could see some weeding out.

My feeling for the next period is that the more productive an asset is, the more likely it is to do well.

For crypto that translates to:

Strongly used layer 1 > Ownership in revenue generating protocols > Cryptocurrencies without other uses > Memecoins

The problem is that we are in a transitioning period. Liquidity is still there, just everyone assumes it won’t be in 6 months. The virus is still there but everyone hopes it won’t be as dominant in 6 months. Markets are bouncing between inflationary boom and stagflation scenarios

So in short: the easy money (as you no doubt noticed too) has been made. Markets will be tough for a while now. Still $ to be made, but more difficult to get. May not be the worst time to take a break from trading for most people.

Never advice. I know absolutely nothing. Nite.