Thread by @rektdiomedes

Thread: Navigating The Coming Economic Craziness As A Crypto Degen

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Alright my fellow apes, frogs, and fighter-mages...

Time for a thread on this craziness...

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While I am primarily a degenerate ape, I have also been geeking out on macro to an insane degree for years now, and thus I wanted to bring your attention to some important variables to consider, AND discuss what we as degen yf'ers should do as a result of them.

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First of all, as we all know, the US gov is freaking out about inflation and pushing Powell/the Fed to "do something".

And I must admit he seems pretty focused on "doing" it. His recent Senate Q&A is a must-watch:



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It does appear at this point that Powell (at behest of politicians terrified of inflation hurting their ballot results) is willing to let the stock market and overall economy contract quite a bit for the purpose of "defeating" inflation.

https://twitter.com/MacroAlf/status/1500871647682654210

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The problem though is that the US can't afford to actually substantially raise rates and engage in such hawkishness, because we are in debt up to our eyeballs due to promises we made the Boomers (ie Social Security and Medicare).

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No one has done a better job of explaining this than @LukeGromen.

In the following video he explains in great detail the extent to which the Fed is trapped and has no good options:



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TL/DR is that over the next ten years, the US & all Western governments are going to have to print MASSIVE amounts of money or do the same in truncated form via re-valuation/switch to new reserve asset, etc.

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This likely means all assets are going to go way up over the next ten years, at least in NOMINAL (USD) terms.

It appears though that before they can, the Fed is going to have to sink markets one more time, until ppl are reminded of just why 'austerity' is not palatable.

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If you are super into crypto this is at first a frustrating prospect, as it implies we will see even lower lows, however, I think it is better to think of it as being given a "second chance" to pick up assets dirt cheap like in March 2020.

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The question is timing...

Until recently it looked unclear whether Powell would break the economy now, or in 3 months, 6 months, etc...

But the Russia stuff may bring it all crashing down sooner.

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The fallout of Russia's actions and our responses may end up hurtling the global economy into a recession quite soon.

Here is a fantastic video from @Blockworks_ on the topic, featuring @MarkYusko and @profplum99.



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Here is another excellent video from @LukeGromen on the subject, in an interview with @PrestonPysh from @TIP_Network:



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@RaoulGMI also just released an excellent video on the current situation that I would highly recommend (though you do need to sign up for the $1 trial to @RealVision to see it):

https://twitter.com/RaoulGMI/status/1500892269527937034

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Also @CryptoHayes has been writing absolutely incredible articles on this that are 100% must-reads in my opinion:

blog.bitmex.com/annihilation/

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That brings us to the question... what to do about it...

I am not a gigabrain or a whale (perhaps a reasonably smart Cichlid of some sort), but here are my thoughts on it...

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1) I have gone to about 35% cash out of total investable assets (+10% gold/silver) to hopefully "buy the dip" a'la March 2020 (which I largely missed bc liquidity was tied up in ecom businesses at that point).

And...

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2) I am at about 35% stablecoins as well within my crypto portfolio.

With that said, I am NOT in many stable/stable pools, as the yields in them have been pushed down to insanely low levels. h/t @DegenSpartan

Instead...

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I am mostly farming token/stable pairs like $ETH/ $USDC, $AVAX/ $USDC, $FXS/ $FRAX, etc at much higher apr's.

I think the higher apr's on these is well worth the premium vs stable/stables, if I want to have <50% stablecoin exposure anyway.

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To wit, if you can earn 60% apr on a Token/Stable farm, the token would have to go down by 70% over a year to make it worse than stable/stable at 20%.

I do not believe that ETH, AVAX, or FTM will be down 70% a year from now.

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I'm also doing a decent amount of *roughly* delta-neutral farming.

IE deposit $USDC, borrow $AVAX, and farm with it (would do same with $FTM but borrow rates are much higher for whatever reason).

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And, I am also farming tokens and ecosystems I am bullish on, like $METIS, $MULTI, $HND, $QI, $FXS, $GMX, etc.

There are still tons of great yield farms out there... just check out @beefyfinance's incredible array of vaults.

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I am also heavily in the GLP pool on @GMX_IO, which I think is the single best position in all of crypto right now (50-75% apr on 50% stables 50% blue-chips).

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When/if the US stock market falls to -30% vs prior top, I will start buying both equities and crypto, as I do not believe there is any political appetite in the US for this kind of drawdown (meaning Fed will hit the gas again on the money printer).

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If the overall crypto market cap falls to 1.3T before that I will start deploying stables, and if it hits <1T I will fully deploy all stables.

OR, if the Fed rolls over before either of those things occurs I will also start re-deploying.

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I am not claiming everyone should do this or saying I am right, but just wanted to share my thoughts in case they are helpful for anyone :)

If you found this valuable please follow and rt!

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Also... to add on to the above... there is no one I would recommend following more than our resident gigabrain @noahseidman, who covers the confluence of macro and crypto 3 days a week on his YouTube channel:



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Would also highly recommend following @JackNiewold for insights on crypto market.

Also @blocmatesdotcom.

@thedefiedge is another great one...

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For yield farming, my favorite follow is @Cryptoyieldinfo.

Also my man @BillyBobBaghold, and @Route2FI, and @phtevenstrong's excellent YT channel 'The Calculator Guy'.

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Also highly recommend @Ceazor7's YT channel 'Ceazor's Snack Sandwhich' for analys of defi protocols.

@FTMAlerts for amazing coverage of Fantom ecosystem.

And @cobie for his downright spooky ability to call market tops and bottoms :)

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