Risk-Off

It's a bloody red day, but it is important to keep cool, calm, and collected.

G’day Folks,

It’s a bloody red day, with almost all markets flushing out left, right, and centre. Bitcoin has traded down to $50k at the time of writing, and has a printed a big bloody red candle on the price chart. What a move.

Days like this can be particularly challenging, and our uncertainty regarding what is going on is peaking. We start to ask ourselves how bad it can get, and fear that the world is ending reaches new heights (note, the world is certainly not ending).

Naturally, everyone’s social media feed this week will be full of posts trying to bull-cope with the pain, touting that ‘this was super obvious man’, ‘just zoom out bro’, and ‘how’s your little safe haven' bitcoin going dude?’

The truth is, nobody knows what the next few weeks hold, and I find it useful to accept that, and try navigate as best we can.

Having seen several such days in my time as a HODLer, here are some useful tips I’ve learned over the years which help me manage my emotions:

• What we’re watching is a proper risk-off flush out event. I will cover what I think is driving it in this post, but rest assured, these events are violent, fast, furious, but are ultimately temporary.

• Bitcoin is going to be just fine. Folks of significant size are becoming forced sellers, and they are selling what they have to, not what they want to. This process does get the market closer to exhaustion, and likely signals the end of our beloved chop-solidation thesis.

• It is ok and prudent to be patient, and just wait. Allowing the market to find its level is always a good idea. There are no prizes or trophies given out for picking the absolute bottom tick, and catching falling knives results in bloody fingers. The recovery will take time, but it will recover.

• Being prepared for events like this in advance, makes all the difference. Trust your experience, trust your training, and trust your HODLers instinct. When you have already run through the calculations on ‘what will I do if price hit $50k’ , it is much easier to execute it with a cool head as it happens.

So without further ado, let’s run through a quick situation report, and see what this red market has laid out in front of us.

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