🐳 Weekly Edition: Trouble in Paradise for Michael Saylor, Traders Liquidated on Both Sides

We weren’t able to escape the crypto liquidation rollercoaster this week as billions of long and short positions bit the dust despite Bitcoin still trading within a few percentage points of where it was last week. This is really the continuation of a disconcerting trend of levered perpetuals leading the market versus spot buyers. As traders holding positions created using margin pay funding rates (sometimes as high as over 100% in annualized fees), they are by nature shorter term investors than those buying spot — for a crypto market looking to build its long-term value proposition in an effort to legitimize the industry, this can be a problem. We’ve gone through periods like this in the past and I expect the ship to correct course on its own, but in the meantime we’re faced with liquidations into an illiquid market, driving major volatility in both directions.

Speaking of major volatility, Bitcoin DAT giant Strategy (formerly MicroStrategy) now trades at $180, more than a 60% drop from its peak of $450 this summer. The bad news for Michael Saylor is now being compounded, with MSCI now debating whether or not to remove Strategy from several of its major equity benchmarks over concerns that it resembles an investment fund, which are not eligible to be included. Senior voices at Strategy maintain that even if it were removed there wouldn’t be much of an effect on the stock, however JPMorgan estimates they could see almost $9B in outflows if removed from popular indices. With even the big dog in the DAT world getting hit, we should expect to see the smaller DATs continue to struggle to maintain their buying schedules and equity prices. That is except for Tom Lee’s Bitmine of course, who purchased another $130M in ETH just today, bringing their total ownership to 3.7M ETH or $18B.

Not much has changed in the Beluga Wallet over the past week as we sit in our conviction positions and ride out the red wave. I’d love to start allocating to some new positions but at this point I’m not seeing the interest from the broader market in buying altcoins. Not to say we have to wait until they’re hot again, but I feel until we see a real recovery in majors, it’s probably best to sit on our hands. With the end of the year (and a new tax season) rapidly approaching, things could be bumpy for a few more weeks. Overall, however, when we have major moves in crypto that are unexplainable by current events, we should look to see those moves revert. In other words, I remain cautiously bullish.

Gwart might be my favorite account on Crypto Twitter at this point

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