🐳 Weekly Edition: BTC Dives Bringing Alts With It

Today’s dip on $BTC.X ( ▲ 0.44% ) down to $103k drove mass liquidations on majors as well as alts, with the estimated total for today at just under $800M. Taking a step back, seeing liquidation numbers this high on what was a relatively small move in BTC indicates these were mostly highly-levered late longs. In other words, people FOMO’d into positions they shouldn’t have, and to make up for lost time they cranked up the leverage. In case the message hasn’t become clear, leverage can be a great tool when used correctly and a death sentence to your portfolio if used incorrectly. Take the infamous James Wynn for example, who managed to turn over $90M of profits into nothing in a matter of days this past week.

The world’s renewed interest in crypto has sparked a frenzy among institutions and Web2 companies as they look for ways to gain exposure to the fastest growing industry in the world. For many, this has come in the form of adding Bitcoin to their balance sheet, a strategy (pun intended) that has begun to spread to other coins as well. Today Web2 gaming company SharpLink announced its intentions to raise $1B in order to acquire $ETH.X ( ▲ 4.75% ) , which has resulted in a significant pump on their stock price. As long as the market continues to reward the companies doing it, we’ll continue to see a steady stream of copy cats popping up. In the context of our coin prices, buying pressure of this magnitude is undoubtedly a good thing in the short term. Long term, however, these companies represent a fairly significant threat: these companies are not run by Michael Saylor, and have no imperative to “never sell.” Eventually they will liquidate their holdings to take profit (or stem losses), which could set off a chain reaction. Only time will tell!

The Beluga Trading Wallet balance continues to bounce around with the market, with most coins staying unchanged since last week’s update. With our portfolio strongly in profit and the market taking a bit of a breather, this is the time I’d like look for new positions. Arbitrum and Optimism are by far our worst performers as they’ve been hit by the market’s sentiment towards ETH and the performance of ETH itself, and while I think Ethereum’s ecosystem sees a strong revival soon, at a certain point you have to question the opportunity cost of continuing to hold those positions versus allocating to something new.

Due to the volatility of the market, lots of projects have pushed off their launches from their intended dates earlier this year. Now that volume has returned and Bitcoin sits on the precipice of all-time-highs, teams are once again resuming token plans. Our strategy is more of a buy and hold rather than a intraday trade as new launches lend themselves too, however I do believe the market desperately wants something different. For now the portfolio remains the same, but I expect over the next few weeks we’ll change things up. As always, you can see our wallet and trades live on the Beluga site!

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