VL0K retweeted
As someone who thought the inevitability of this sort of wipe had been building for months, it was still shocking to see the severity and speed of it.
I had figured it would be an easy buy for “high quality” bags, and technically it was if you caught the severe dislocations at the bottom of alts. Talking ENA at $0.12, ATOM at $0.001, many other big alts up 2-4x quickly from bottom wicks.
But what really happened was, a lot of “stink bidders” filled and then got liquidated at the bottom. People with shorts got ADL’d all over the place, often times way before the bottom. All sorts of things stopped working (data feeds, some exchanges, market makers).
Once the bottom happened, the books were empty. I saw ENA at $0.14 on one venue and $0.35 on another. I started to bid with a combo of limits and semi-passive algos. The former got 0 fills and the latter filled around $0.33. average over 5 minutes despite price starting at $0.14. This happened on pretty much all alts, this is just one example. Truth is it was very hard to get fills near lows for size unless 1) you already had bids there + didn’t get liquidated from filling too much too early or 2) you got ADL’d on shorts
Fortunately, I wasn’t in a position to be liquidated anywhere, so avoided the worst. I was able to cover all of my short legs for the spreads I was running (some got ADL’d, rest just closed).
From here, could see all 3 outcomes playing out, in large part depending on Trump, macro, and exchange (in)solvency.
1. So many people got 0’d and run it back up turbo, max pain
2. We have to chop for a while to digest this— return to BTC.D
3. This is the start of the turn (stocks only down 3-4%), and enter a bear market. Also good for BTC.D
As a trader, I can’t not buy a crash like that. Those are the highest EV spots. Undecided on hold time. Often times we will bleed down and retest the wicks and set higher lows after the initial mechanical bounce is over. But that was far from a “normal crash”, that was the prototypical sh*t hitting the fan.
In any case, it’s a good time to clean up positions and return to things you genuinely want to own and hold, without leverage. I continue to hold mostly BTC with some smaller positions in a small number of alts I think can do well in the quarter(s) ahead.
I hope everyone is okay. If you lost, it’s only money that you can make again, and a valuable lesson on leverage/risk management that you will never forget. There is always another trade.
Dont Know.
VL0K retweeted
So this is the playbook for the Fed tonight and how it plays out over coming weeks
Fed cut 25bps (quite possibly 50bps)
Market chops as we all look at the dots and forecasts forgetting that the previous dots were wrong and quite useless
Then JPow speaks
He’ll note a softer labour market than previously thought, but inflation remains above target and economy generally looks ok but the downside risks to the labour increasing are why they cut
Lots of ink will be spilt on was it a hawkish cut or a dovish cut and which one is bearish or bullish for markets
If we initially knee jerk higher, markets will get levered long at the highs and all get washed out
If we initially knee jerk lower, markets will get levered short at the lows and all get washed out
Everyone chopped up, casino wins
Then things settle down
Calmer heads will note that whilst Labour market clearly soft, economy is slowing not collapsing and in fact recent data suggests still resilient
Inflation sticky but not accelerating
Then we realise that markets are a function of rates and liquidity and the rate environment just got easier
Yields lower and dollar weaker are reflexively positive for risk
The big money then over the next few weeks start to deploy real capital and everything melts up
Funds under positioned risk throw the towel and forced to chase
Bitcoin and broader crypto finally catches up to the risk move and we push to 150k BTC into November, 6k ETH and broader alts all pumping
Bears in despair, bulls “just got lucky”
