This past week delivered the largest crypto liquidation event in history. Larger than the COVID crash. Larger than FTX. The leverage that accumulated during months of sideways grinding was violently flushed from the system in a matter of hours.
I’ve been in this market long enough to recognize a pattern: attempts to leverage all the way up the cycle are never permitted by market makers. These severe liquidation events, particularly when they occur with the business cycle positioned as it is now, have historically preceded major legs higher. The clearing of overleveraged positions creates the foundation for sustainable moves.
The past three weeks, I’ve been deep in research, studying every angle of what’s unfolding. This work has forced me to reevaluate my expectations and bring them into sharper alignment with what the business cycle continues to tell us: things are painfully slow and steady.
I now believe we’re in the middle of what I’m calling a “trunk up” run for Bitcoin, Ethereum, and the broader crypto market. Not the clean parabolic moves of previous cycles, but something choppier, more grinding, more frustrating to trade - yet ultimately just as rewarding for those positioned correctly.
Today’s goal is simplicity and focus. I’m laying out my best assessment of how the next year unfolds, abandoning the multi-scenario framework in favor of clarity. The research of recent weeks has caused me to reconsider the portfolio analyzer updates and completely overhaul my exit strategy. These are arguably the two most important pieces of actionable content I provide, and I want to get them right.
This issue establishes the foundation - the “trunking” thesis and why the frameworks point to it. Next issue, I’ll deliver the promised portfolio analyzer overhaul and revised exit strategy built specifically for navigating this type of market structure.
Today's topics
Bitcoin
Business Cycle: Still the North Star
Global Risk Index: The 2015-2017 Parallel
The NASDAQ Analog and Trunk Structure
Ethereum
The October 2020 Temptation
Why the AMZN Analog is More Relevant
Wave 3 Isn’t as Fun as You Think
The Path Forward
Two Camps, Two Approaches
What’s Coming Next Issue
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