I will be back to the village on April 28th. Rural people still like the green mountains and clear waters, which make them feel relaxed and happy. I have received many private messages in the past few days, which are nothing more than:
1. Sun Ge lost more than 3100 ETH and 2800 ETH, which is equivalent to a luxury car.
2. KOLs said that this time it will reach 52,000 and asked me what I think.
3. You don’t know how to open it. You haven’t talked about the market in the past few days.
The internet connection is already very poor in rural areas, not to mention that I am in the mountains. I have spent a long speech in the community to explain why 3,000 ETH is cost-effective. I will not suddenly change direction because of the decline in the past few days. There is nothing to say about these issues. If the signal in the village is not good, just lie down and breathe some oxygen to live a few more years.
I won't change direction once a week or once a day. I will only make corrections due to variables. I won't make money forever. Regularly reviewing and facing real transactions are what traders should do. Just do your own trading well.
At this point, the biggest mistake in the April trading strategy is that the macroeconomic impact is more important than I thought.
In fact, I have a certain path dependence. As the entry point in the bull and bear cycles, I have experienced the blowout of trading inflation turning (initial large position entry) buying a large amount of $ETH at 899, and the currency-based position at the point of black swan repair and inflation turning as the interest rate cut. In this episode, it is preliminarily judged that inflation is slowing down, violent interest rate hikes are stopped, and interest rate cuts are reduced to enter an interest rate cut cycle (the interest rate cut cycle does not mean that interest rate cuts will start immediately).
After the initial bull-bear cycle, I did not write so much about the macro economy. I paid more attention to the correction of the major changes within the cycle, which is stagflation or inflation. Because when entering the interest rate cut cycle, the game is often about good economy-good inflation-no interest rate cut, these long-term tugs, based on this, I will not keep the macro economy sensitive, especially after ETFs come in, even though the synchronization rate between the cryptocurrency circle and the US stock market has reached 72% at this time.
Based on this, I saw the risks in the GC closed-door trading group in late March, and said that I was going to reduce my positions on the 20th to mine and sell with stablecoins. As a result, as soon as I finished saying the second point, Bitcoin plummeted a lot from its high of 73,000.
Why did I judge that there was a risk of decline in April, and why didn’t I reduce my position in time?
Many people regard being bearish but not shorting as a joke, thinking that it is the same as saying nothing. In fact, being bearish but not shorting is very common among traders.
Let me first answer the first question, which I have also discussed in detail in the Fubao group: the risk of a decline in April lies in the fact that liquidity in April will turn from abundant to tight.
The specific reasons are as follows: Throughout March, global dollar assets actually ignored the strength of the dollar index and the increase in US bond interest rates, which seems to be a little different from our conventional cognition. The dollar index and risky assets are often opposite. Why is it different in March? Perhaps, some people say that Nasdaq is overvalued due to the AI boom, and the big pie ETF has led to high market sentiment. Behind this, there is the support of dollar recharge liquidity (I don’t do popular science in my tweets, @Phyrex_Ni Fu Ni Lace Boss has a detailed article).
On March 20, BTC fell from 73,000 (I saw the risk on the 18th and warned in the GC group). In the last week of March, Nasdaq went sideways for a week, which also showed that risk assets were worried about liquidity in April. What exactly are they worried about?
1. The Ministry of Finance’s reduction in bond issuance will lead to a slower release of reverse repurchases (money market fund investment willingness).
2. Take March 27 as an example:
USCBBS-WDTGAL-RRPONTSYD=-300 (balance sheet reduction) +400 (tga)-270 (reverse repo) =-170.
This is equivalent to a decrease of 17 billion that week, and the decrease on March 20 was even more exaggerated.
3. Based on Arthur Hayes's prediction in early April, from April 15 to May 1, due to the tax season, the TGA account extracted $257 billion of liquidity from the market, and the actual market plummeted on April 14. (I hadn't thought of this on March 20)
Why didn’t I reduce my position in time?
Although I made a lot of money in April by trading fan coins and BTC ecology in intraday or several-day contracts, which are all recorded in my past tweets, I don’t need to repeat them. In fact, my spot position is several times that of the contract, so overall, compared with the end of March, I have a certain retracement, and the reason is that I did not reduce too much spot position. The main reasons are as follows:
1. Whether the reduction of macro liquidity affects the reduction of local liquidity in the cryptocurrency circle, although the liquidity of the US dollar is decreasing, the inflow of stablecoins has been increasing. Although these stablecoins have not formed purchasing liquidity, they also have a purchasing power basis.
2. As mentioned earlier, I have taken a large position at 899. Until now, except for hedging, I have rarely taken large-scale positions in a bull market. I hedged with BTC on tax day, and I don’t want to move my basket of 0-cost altcoins.
3. There was an emotional issue. The market plummeted as soon as I finished speaking in the GC closed-door group on March 18, which made me want to reduce my position or hedge at the high point of the rebound, but I ended up losing every time it rebounded. (This is a bit difficult to avoid)
In addition, my macro-awareness is not as good as it was before. A series of reasons led me not to reduce my positions. It was also a choice based on my risk preference. At that time, I was more inclined to go back to the previous high after the decline.
Don’t be bullish when it goes up and bearish when it goes down. The support and resistance lines cover everything.
On the day I returned to the village, April 28, many kols on Binance Square and Twitter mocked @justinsuntron Sun Ge:
One day ago: Thanks to Brother Sun for leading us to buy the bottom of Yitai. Will Yitai ETF be approved?
One day later: Damn it, it’s all Brother Sun’s fault for taking a concubine and bringing her down.
In fact, Brother Sun has said that his views on ETH ETFs are actually very objective.
My own general judgment will not change much. $ETH at 3,000 is very cost-effective. The arguments and evidence are in my community.
