Thoughts on the Crypto Market Meltdown and What to Do About It

May 11, 2022

Here’s my unvarnished thoughts on the current market situation. (I’ll tell you my thoughts and then what I think you should do)

This is all the coins we follow over the last few days. 

You can see that aside from LUNA and ANC (both of which I hold - which sucks) everything has held up pretty well.

Ethereum, which the Automated Wealth Creation Engine System is in, is clearly outperforming Bitcoin

Score one consolation point for us, I guess.

The unwinding appears to be a forced liquidation event confined to the LUNA ecosystem and it’s UST stablecoin and the BTC it held.

What happened was the Luna foundation guard had 4 billion in bitcoin to defend the stablecoin UST price.

Someone big attacked it, shorted it in massive size and forced them to sell their bitcoin to support the stablecoin peg.

A detailed analysis is here but it was pretty sneaky and borderline evil.

Especially clever to do it on a day that the real markets were tanking and there was literally nowhere to hide.

^^^ Diversification, the only free lunch in…what in the actual fuck?

All in the game, yo.

So where are we now? 

LUNA, UST, ANC… all the rest of the Terra ecosystem are pretty much damaged goods. 

They probably will get a savage relief rally when a short squeeze plays out, which the funding rate is telling us will be pretty soon. (right now you get 1.2% PER FREAKIN DAY if you want to leverage long LUNA - paid by leverage LUNA shorts)

I will be exiting my LUNA and ANC and related shitcoins on any meaningful bounce, taking the loss. (will let you know ofc)

The S&P 500 has breached support and long term looks to go a lot lower.

But today the range to the downside was VERY small considering the overwhelming bearish sentiment. Expect a bear market rally today.  

Why? The news all screaming “bear market” and the market reliably goes up. Mrs Market is a cruel bitch who doesn’t make it that easy.

Crypto looks to get some of that relief rally (correlations go up in bear phases) and our Super Saiyan Support from July MUST hold… or really bad things will happen.

So that’s where we are. We probably go up today, and down over the next week to hit support.

That support will probably attract a serious bid.

BTC at $28K, you wished for it, you got it.

^^^^ He’s lovin it!

If we slice through that support, really bad things could happen. 

So, it’s all a bit up in the air, right?

Well if you trade the Automated Wealth Creation Engine, stick tight, follow the rules… ETH (which we are in now) is holding up well.

The Luna stuff has to be unloaded, the thesis is dead and none of that will recover fully.

Don’t get stuck as a bagholder, it's the worst thing in the world.

What about other stuff?

Here’s the deal.

This changes things.

It looked like we were in either the start of a new bull run OR a sideways market.

Now it looks like we are either in a sideways market OR a bear market.

In bear markets BTC typically goes down a lot more than this.

So we have two situations.

Situation normal, all fucked up (SNAFU)

Now note that I’m not saying we turn around on a dime here. 

I’m saying that the sentiment is so overwhelmingly bearish that we are closer to an end than a beginning.

We probably go down a little more and reverse… but it’s still a totally different game than last month.

Why?

Well nobody is gonna want microcap alts for a while. 

In fact nobody is gonna want anything even remotely risky for a while. 

We have a strong recency bias and when touching the stove burns… nobody’s touching for a little while.

So the things you really love (I’m keeping my WOO for example) and be ruthless about getting back to the safer coins (BTC and ETH)

So go through your portfolio and dump anything you don’t really have a good reason for holding.

If you hold NFT’s (I don’t) I’d gtfo and take the loss.

Don’t fucking pretend it was ever about the art. The art sucks and it always sucked.

I am going to sell most of my alts and put that bag in with my AWCE money for a while. 

It’s the easiest thing, and I know if we enter a bear market the AWCE will switch me off into cash pretty quickly.

What are the odds of us entering a bear market?

Well it depends on a bunch of stuff that's really hard to predict, and we SHOULDN’T predict.

It comes down to the policy response of a bunch of old white guys in the Fed with no good choices… if they decide to live with inflation rather than have a recession it’s probably ok.

If they decide to tank the stock market to save the economy… that probably doesn’t work either.

A very, very skillful Fed response could walk the tightrope… or maybe BTC decouples as an inflation hedge like its s’posed to.

But all that’s above my pay grade.

What I’m doing now?

Not trying to catch the knife and buy stuff here. 

That’s stupid.

I’m looking to get as much of my portfolio as I can into BTC and ETH. 

If that support breaks I’m following the AWCE and getting back to cash when it tells me.

If you haven’t got the AWCE it’s gonna keep you safe during all the fuckery and you can get it here

Let me be clear. I STILL THINK a sideways market bouncing from BTC 28K is the highest probability.

But let me also be clear. This is a game of survival. You gotta be careful and cautious in these situations.

My job… how I really can be useful… is guiding us through this situation over the next few weeks.

Expect frequent and regular updates.

Scott

P.s. If you want the system designed JUST FOR INCOME that works in a bear market just as well… here it is for free