Cold Blooded Shiller@ColdBloodShill
Alright, little thread on this while I enjoy a beer.
This is taken from the FT Weekend and the regular piece "The Long View" There's some really interesting points in here that I want to bring out and discuss in a little more detail for the current climate in crypto.
There’s a really nice piece for the markets in the FT this weekend, usually not a fan but I actually think the sentiment check is very good, I’ll try to summarise as best as possible shortly with relation to crypto. Lemme just finish coffee.
Cold Blooded Shiller@ColdBloodShill
"One of the more annoying things investors do when they have been in the game for a really long time is to pooh-pooh market skirmishes. You think this is bad? Pah! You should have seen the Black Monday/Soros/Dotcom crash."
Cold Blooded Shiller@ColdBloodShill
I really like this view, because it's true. We do a lot of comparison to previous nukes/crashes/events in crypto and they're not all relevant to each other or should be linked in any way. If we compare the current market conditions we see similar discussions happening.
Cold Blooded Shiller@ColdBloodShill
It's more of a status/time thing, as in, "I was there for the Corona crash, were you? Or are you one of "those" people who got in after." We mark our survival through nukes/crashes as badges of honour and tend to refer to them not for relevance but in a way to stamp authority.
Cold Blooded Shiller@ColdBloodShill
Some really interesting stats from the article: "Bank of America reported the biggest negative view on tech stocks since 2006, beyond what was seen in the financial crisis or the pandemic peak."
Cold Blooded Shiller@ColdBloodShill
"Fund managers also reported their biggest underweight position on equities since May 2020." Hendrik Du Toit said "It's so volatile right now... that it's very difficult to apply a systematic process and get expected results."
Cold Blooded Shiller@ColdBloodShill
"Since 1960 there have been 44 times the S&P 500 has fallen for 5 or more consecutive weeks. US government bonds, meanwhile, have dropped in the same way just 31 times since 1973. Yet these prolonged sell-offs had never coincided, until the start of May 2022."
Cold Blooded Shiller@ColdBloodShill
As you can see there should be a couple of things clear, but I'll draw out the obvious one. No one has a fucking clue. Can't pull historical data because this is a unique event, can't throw systematic logic into the mix because you're not getting the results in the volatility.
Cold Blooded Shiller@ColdBloodShill
The market is a shitshow. Crypto funds getting blown out, tradfi funds winding down, in market conditions where the NQ/S&P are down 20% in the year. It's absolutely insane. The bearishness is running deep, but I suspect that's because of the nature of the exposure.
Cold Blooded Shiller@ColdBloodShill
Market wide we've seen ultra bearish sentiment, but I think that's right, and it can be. It's OK for the market to agree we're bearish and we keep going lower, bulls should remember this from the bull market. Everyone printing money, kept going higher.
Cold Blooded Shiller@ColdBloodShill
The managers don't know what the fuck to do, the traders are struggling, retail is getting slaughtered, but the whole time it's met with confusion. Accept the fact that in these conditions, you don't need to act. If the play isn't obvious then you don't need to be involved.
Cold Blooded Shiller@ColdBloodShill
Now, I will say that I believe the last move was more obvious, sometime I spoke about clearly, but down at these levels I'm less convinced about trying to squeeze out extra juice from the short side. It's easier to remain flat and wait for the good times to come back around.
Cold Blooded Shiller@ColdBloodShill
The other thing that should be clear is that this is not a quick process. Many people are super sped up in their thought process. When crypto sold off they said "right that's it, nuke done, time to go up." Problem is that the situation hasn't really changed.
Cold Blooded Shiller@ColdBloodShill
The common thought process is that attention will shift to commodities. A market area that's been unloved for years and hasn't experienced a true bubble in decades. It would be the logical place for the market to turn, but we all know the market loves irrationality.
Cold Blooded Shiller@ColdBloodShill
For what it's worth, echo the thoughts of others, this market is solely about survival. I mean that, you don't want to chuck capital away, you just need to be sensible. Don't let the emotion of Twitter plebs affect you and most certainly don't let it affect your capital.
