J P Morgan is my friend, not the bank, but the Victorian banker. He said ‘” I’ve made a fortune selling to early” and as a Bitcoin seller at $32,000 I invoke him as justification. Having said that, and I have stated this tactic in previous columns, I have done at least as well with about half the VAR (value at risk) by playing with the fire that is DeFi.
If you are using decentralised exchanges or keep tokens or pass them through your wallet, it is often hard to keep track of it all. It is even easy to forget what you have and where. However there is a great sapp to keep tags on your Ethereum and DeFi positions and its called Zerion (www.zerion.io. It is a tremendous tool for keeping a tally of what you have in the wild game of token trading and its free and you can log in using your wallet so there is no painful registration process. I am finding it indispensable.
Meanwhile I am now back in the same position as I was before I sold the Bitcoin, of hanging on to my positions by my cuticles to a wildly undiversified and unbalanced portfolio that morphs by the day into a gloriously profitable but unmanageable series of extremely volatile positions. Leaving good investing and/or trading practice at the door is an extremely hazardous approach but it seems unavoidable to capture this rapture.
In a matter of days I’ve gone from ‘buying all the things’ to wanting to flee but that is purely because pretty much all DeFi credible or otherwise has gone on a massive vertical that dwarfs the performance of Bitcoin and Ethereum.
Here is one of my favourites which I hold and you can see why an old school equity guy, a value investor to boot, gets a nose bleed from this kind of price ascent.
Polygon, which was Matic is not a one of off, it is just a good example. The ‘why’ of it is simple, Matic is a solution to many of the difficulties facing Ethereum and its congestion, it is a seasoned project, linked to a lot of major players in Silicon Valley by investment and has a market cap of about $1bn, 10% of a Bumble. In the current hepped up investment environment this is chump change and the winners in DeFi will go on to be worth $10-100 billion, even without the printing press shifting the decimal point with inflation. Chainlink the leader of the gang is already nearing a $10 billion valuation. So this is not a ridiculous valuation if you grok that DeFi really a revolutionary tech that will change everything, its just the price performance that makes an old investors nerve endings start shorting out.
All that aside, the key question once again, is, is the market going up or down.
Bitcoin down, all Crypto down, Bitcoin up all Crypto up
To me, I believe these price levels are the upper faces of this mountainous cycle, but many still consider them the foothills.
So what can help us know where we are?
The all-seeing eye of Google can help.
Here is a chart from Google Trends
…and you can see how diagnostic Google trends is when you see the progress in search of the Crypto hero of the day, Doge and can judge the rise and fall of the stock hoard of Reddit’s Wallstreetbets.
Bitcoin is the leader and definer of this cycle and its performance will direct the performance of all the other Cryptos. Musk’s Bitcoin tweets are in the data for all to see.
Whether you are a BTC $1m by Christmas prophet or a doubter expecting an imminent correction, this is a chart to watch because the price of bitcoin and Ethereum is FOMO driven and when that impulse passes that will be the top for this cycle. FOMO, and we are now seeing corporate FOMO, is a powerful force but it is a acute one not a chronic one, so Crypto will not ride the FOMO wave indefinitely.
There are a lot of extremely strong technical charts out there, so for now I’m hanging tough, but as we have seen before as Bitcoin gyrated between $30,000 and $40,000, these markets are fragile.
Volatility is liable to shake me out soon, but it could be days or weeks, perhaps even months before it does but a week is now a long time in Crypto and that in itself is a signal which one can choose to pay attention to.
The final indicator is transaction fee. These are no exorbitant. When they start to fall it will be a signal that the FoMo is falling and for now the only way transaction fees are going is skywards.
While I have to rise a 6am to get reasonable transaction fees before the rest of the world wakes up, I’m going to be holding on.
Good luck everyone. Enjoy the vertical.