Post-Bloody Friday Thoughts
Whenever a disastrous black swan event happens in the crypto space, it's good to take a step back and do some self-reflection: was I prepared for this? If not, what can I do differently in the future if something like this happens again?
First of all, what did happen?
After not being awarded the Nobel Peace Prize, US President Donald Trump had a tantrum and declared new tariffs on China. Markets then got spooked, SPX started to drop, and crypto followed. However, this was only the beginning and a catalyst for a much larger crypto crash ahead.
What happened next was brutal. Because of an insane amount of high leverage used and thin liquidity, a sharp downward move triggered margin calls and stop-loss orders. Adding panic selling to this, and we have a perfect storm.
Alts were (again) hit hardest. Almost all assets now have a long inefficiency wick on their charts waiting to be filled. When all of this was happening, I tried to look for long entries, but it proved to be impossible as prices were jumping up and down like crazy, and I would have just been chopped to pieces.
I remember reading that some tokens, like $ATOM, for example, even briefly touched zero. When watching something like this live, red candles falling so hard, it is very intense even though I didn't have any long positions open at the time.
I do use leverage a lot, but mostly with delta-neutral strategies where long and short positions are opened at the same time (doing this to farm airdrop points on tokenless perp dexes). In a case I had these open when the event occurred, at least my shorts would've been printing. That being said, I never leave them unattended, and I don't keep them open for a long time. It's all about creating volume.
Many people are now seriously down with their positions, and many wallets got totally wiped out with liquidations.
I do feel sorry for everyone who lost a lot of money on this bloody Friday, and I think it's unfair to say that "yeah, but they shouldn't over-leverage" or something like that, because surely many had a good thesis and had been building their positions wisely. They just got caught off guard by a black swan event where everything was perfectly aligned.
Also, very sad to read stories like this where a person felt their whole world came crashing down, together with the market.
This isn't the first and won't unfortunately won't be the last suicide in crypto space since there are mind-blowing amounts of money in play. Crypto isn't everything, and even if it was, you can always get back up and start again. Talk to a friend, talk to anyone. Suicide is never a solution; there's always gonna be better tomorrows. Some lost a little, some lost plenty, some lost all, but it's a shared experience.
Even though CT may sometimes seem like a cold, cynical place, there are a lot of great, supportive people who know exactly how you feel. Reach out, you are not alone.
Where Do We Go From Here?
The next thing I'm waiting to play out is the closing of the Bitcoin weekly candle. I wouldn't want to see it close below the previous one and become an engulfing bearish candle.
The next important event I'll be closely monitoring is the opening of US stocks on Monday. As mentioned, stocks took a hit as well amid the tariff FUD and closed in a ~3% decline.
Fingers crossed that we will see a V-shape recovery like the ones here on the S&P 500 chart. This would most likely drag BTC and the rest of the crypto market out of the water as well.
Conclusion
As for me, Saturday morning felt like shit; today is already much better. Just need to get back on the track. Before the crash, I was about 50% in stables and the rest in spot, so the impact in my case wasn't very harsh.
Still, I've done some portfolio management, cut a few losers, and added to new ones ($MNT) which offered a decent entry thanks to the dip. Besides that, I've been delta-neutral farming perp dexes, rebalancing concentrated liquidity pools, and creating content here and on X. So all good here.
Some time ago, during the last summer, I decided to dedicate some of my stables to farming airdrops and in retrospect, it's proven to be a pretty solid idea. After Friday's mega dip, I was even thinking, why not do that with everything I own? Sure, there are always certain risks when interacting with new protocols, but at least my assets would be relatively safe from sudden, violent market moves... well, perhaps not. There's still that little degen in me who believes we are headed for a last big bull run. Alts included.
Thank you for reading, and stay safe.
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