Discussion on recent market movements, trading strategies, and the psychological aspect of trading in a volatile market. Introduction to Perennial Finance, a derivatives platform for DeFi trading, and its features. Analysis of the market liquidity, impact of institutional players' absence, and the role of options in a ranging market. Evaluation of the pricing of the ETH ETF, trading strategies for ETH and BTC, and the impact of market movements on ETF pricing. Discussion on Bitcoin's impact on altcoins and the potential opportunities for altcoins to outperform. Insight into selling weak assets and the impact of market catalysts on Bitcoin and alts. Analysis of beta chasing in crypto and the performance of altcoins in the current market. Discussion on the potential for an institutional benchmark-led rally and the impact of regulatory changes. Comparison of the sophistication of crypto participants in different market cycles and the impact on market behavior. Discussion on the impact of fundamentals on market behavior and the role of market flows in driving prices. Insight into the regulatory environment and its potential impact on the market outlook. Discussion on short-term trading strategies and the importance of looking for alpha in the current market. Analysis of potential opportunities in the market and the trends in altcoins and high FTV assets. Insight into user adoption dynamics and the potential impact on market trends and valuations.

Market Analysis and Reflection

- The speaker advises taking July off and looking for Alpha
- They discuss their trading experience in the market and the challenges they faced
- They talk about the need for a trading process and framework to navigate the market
- The episode is sponsored by Perennial Finance, a DeFi primitive redesigning derivatives for the DeFi native

- Perennial Finance is a derivatives platform and liquidity layer for DeFi
- They offer great trade execution, low fees, and an on-chain permissionless platform
- Perennial v2 introduces faster oracles, lower fees, and cash-settled trades
- Traders can gain access to deeper liquidity with only a fraction of the TVL
- The market is expected to be tough in July but may see an up move in Q3
- It is advised not to overtrade and to focus on trading at extremes in the market
- The speaker discusses their experience with oil trading and the importance of getting in and out of positions at the right time.

- The speaker discusses the psychological impact of market movements on trading decisions
- They suggest buying a small amount of a position to reset the brain and help clarify market direction
- They caution against overtrading in volatile markets and recommend using options to manage risk and express market views

- The speaker compares the current environment for $3,100 ETH to the feel of sub $1,000 ETH in 2022, suggesting it's a good time to invest
- Altcoins have been doing okay despite Bitcoin's sell-off, and there may be opportunities for them to outperform
- It's advised to sell the weak asset impacted by news, rather than trying to short other assets
- The speaker is bearish on altcoins, believing retail investors have been burned and institutional benchmark-led rally will occur
- Retail participants are seen as less sophisticated, focusing on meme coins rather than complex DeFi products
- The current market behavior is driven by the potential for profits, rather than fundamentals or technical analysis

- The speaker believes that when securities legislation is in place, it will make people money and bring sophistication back to the market
- They discuss the potential impact of a Trump election on the regulatory environment and suggest buying certain fundamental assets
- They recommend shorting high FTV altcoins against majors and discuss the potential of the Ton blockchain
- The speaker emphasizes the importance of finding alpha and preparing for a market rally in August
- They also caution against relying on their advice and encourage focusing on individual trading processes

- The speaker discusses the value of clicking a hamster to earn "hamster coin"
- They express skepticism about the complexity of crypto technology and the profitability of MEV extraction
- They suggest that most money in crypto is made by clicking the hamster rather than engaging in complex trading strategies
- The speaker ends by expressing a desire to step away from the screen and enjoy the summer

- Speaker advises taking July off and looking for Alpha
- Discusses trading experience, challenges, and the need for a trading process
- Sponsored by Perennial Finance, a DeFi primitive redesigning derivatives
- Perennial Finance offers great trade execution, low fees, and an on-chain permissionless platform
- Perennial v2 introduces faster oracles, lower fees, and cash-settled trades
- Market expected to be tough in July but may see an up move in Q3
- Advised not to overtrade and to focus on trading at extremes
- Importance of getting in and out of positions at the right time and managing risk with options
- Bearish on altcoins, believe retail investors have been burned and institutional benchmark-led rally will occur
- Market behavior driven by potential profits, rather than fundamentals or technical analysis
- Emphasizes the importance of finding alpha and preparing for a market rally in August
- Caution against relying on their advice and encourage focusing on individual trading processes
- Skepticism about the complexity of crypto technology and the profitability of MEV extraction
- Most money in crypto is made by clicking the hamster rather than engaging in complex trading strategies
- Speaker expresses a desire to step away from the screen and enjoy the summer.

In this episode, Avi and Jonah dissect the summer's choppy market. They reveal strategies for surviving range-bound trading, discuss the impact of upcoming ETFs, and debate the future of altcoins. The duo shares personal trading experiences, psychological tips, and unexpected insights - from institutional flows to clicking digital hamsters. Learn how to find alpha in a sideways market and prepare for potential moves ahead. Thanks for tuning in!

We'll drop a new 1000x episode on Empire's RSS feed and the 1000x YouTube channel every two weeks. Hit the links below and give us a follow!
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Perennial is an on-chain derivatives protocol built from first principles to be a DeFi primitive. The core protocol is minimalist, flexible, and efficient, allowing Perennial to mold to the needs of many different users & use cases.

Perennial has a super efficient core protocol that lets LPs use native maker leverage — allowing $1mn in TVL to back to $5-10mn in Open interest.

Trade and LP at: https://perennial.finance/1000x
Social: https://x.com/perenniallabs
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Timestamps:
0:00 Are We Back?
9:59 Perennial Ad
11:31 Why Avoid Overtrading 
17:45 Timing Market Re-entry
28:13 Is ETH ETF Priced?
32:20 Altcoin Season Odds
42:28 What to Trade Now? 
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Disclaimer: Nothing said on 1000x is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Avi, Jonah and our guests may hold positions in the companies, funds, or projects discussed.

Stop worrying about trying to pick the bottom unless we trade 55.

Like don't, don't worry about going all in.

And then depending on where we are, August, mid August.

So make your shopping list of coins now and I'll see you at 100k.

This episode is brought to you by Perennial Finance, the on-chain DeFi primitive redesigning derivatives for the DeFi native.

You'll hear more about perennial later in the show.

All right, Welcome back to another episode of 1000X.

Now we're actually going to be talking about markets.

We went deep on our weave, but enough has happened in the markets that I think it's worthwhile talking about.

So we sold off pretty aggressively, tagged that 58.5 bubble, bounced really hard.

And now we're sort of just meandering around.

I actually think that the market was reasonably easy to trade up until the last week or up until that set off.

So I don't know about you Jonah, but I bid a lot on that day that we collapsed and then we bounced and I wasn't really sure if that was the full bottom or not.

So I ended up taking off a lot of profit on that initial bounce.

And then what ends up happening is that, you know, we're like hitting 62, 62, kind of hard to get through.

But I made a bet around, you know, 61.5 that we were going higher.

So I ended up buying a lot of just a lot of length, end up.

I grew a rally stash hoping that we'd get to 64.

And then the US government starts moving BTC, we sell off, we get down to that 6, 800 level.

And I just go, oh, fuck, did I make a mistake?

Adding, adding a ton of length, end up basically cutting all my positions, getting, getting to flat selling, you know, BTC against some of the, some of the alts, ended up getting out of all the soul and all the whiff and bonk.

And then I wake up today and an hour later, you get this crazy salon of ETF news and everything that I sold is up 20%.

I mean, we can pat ourselves on the back from missing the drawdown, but the reality is that This has been a tough market, I think, for a lot of people.

It's hard to maintain conviction because the camps are so divided right now.

Okay, well, there's 1 that says we're at the bottom of the range.

The reality is that we're still not getting a ton of ETF inflows.

It's kind of hard for it to get through significant levels.

You have some dispersion that's come back in the market, which is really good to see.

ETH and Sol have been trading really well.

And we're kind of in this weird spot here where I think Bitcoin has become the weak asset.

And the question is, well, how do you trade that market?

If you want to trade it, how do you trade it?

Because 1 of the things that's scary is whenever you get this dispersion in the market, alts are doing well, Bitcoin's not.

If Bitcoin pukes down to 55, the results are dead.

They're probably down 30, 40% on you, then you're in the hole.

It's like this weird dynamic where it's very easy to get chopped up.

It's very easy to make mistakes, and it's also hard to build conviction.

So when you're in this type of market environment, what do you do, Joe?

Well, first of all, I just wanna say I appreciate you being a little bit vulnerable on the podcast and saying, hey, you know, I added length, I sold it a bit lower, and then I watched the coins that I sold rally, and I wasn't participating.

I really admire that you're willing to do that because even me, on just when I talk about my positions, often I'm inclined to talk about my wins and pretend I never lose.

So I think it's important for everybody to just be honest with themselves.

And it's nice to hear that even crypto traders who have made it like you in a major institutional way can still have these feelings that even the very beginners have.

It's What's kind of funny is that I've traded a lot this month.

I've put on probably more than $100 million worth of volume through on trades this month alone and I'm flat because of...

But I'm still like basically flat on the month, even with all this effort that I put in, which is kind of funny.

You know, sometimes that's just how trading works.

I mean, I'll pat, you know, I give myself a little pat on the back just because I didn't take a loss.

Yeah, I mean, if you're trading that much volume, transaction costs are negative and guaranteed.

So if you're trading that much volume in and out, like, you know, you're you're basically your process made money and you bled it back on transaction costs is basically what what happened.

You know, like, it's hard to trade that much volume and not lose money.

That's a lot of volume to be in and out of.

But yeah, I appreciate that you're telling the truth and being honest because it gives all of us license to be honest too.

I look at the chart and I just see something that's been ranging since February, since late February.

I see the more I zoom out, the more I just see this like flat line.

Like realized 60 day realized volatility in Bitcoin Avi is 35%.

Like this is, it's this, this asset looks like a tradfi asset in terms of how little it's doing so you know like it's very easy to get hyper involved when it's rallying and then hyper bearish when it's selling off.

I try to remind myself that this thing is going sideways.

It is boring and not to touch the screen.

Like I have like a yellow sticky note on my monitor saying don't over trade.

That's basically how I deal with these types of ranging sideways markets.

That, you know, in commodities, especially in like the refined product space, you find mean reversion traders who just love selling highs and buying lows.

And if you're a mean reversion trader, this is a great market.

Every time it goes down to 63K, you buy and you just round trip that again and again.

You would have had a really awesome few months.

But like how many of those traders exist in crypto really?

Like people who tried to fade moves in crypto all died like $50, 000 ago in Bitcoin.

They got fired or stopped out or rage quit because they lost so much money.

So what you're left with is this group of momentum traders like you and me, and we struggle during these times when it's ranging.

So basically the only way to make money in a market that's ranging this tightly is to have a process, something you can cling to when the market's going down and something you can use as a framework to decide if you should be adding or selling on rallies.

So like, if you don't have a process and the market sells off, you start to doubt yourself because you're obviously long, then if something comes up like the US is moving tokens to Coinbase kind of thing, then you can panic and sell, which is the right thing to do.

But then when deciding whether or not to rebuy, that's where your process kicks in.

Because you're scared, you've just avoided a steamroller, you don't know what to do next, you have to have some framework.

And for me, I don't really have a good systematic framework.

Like the systematic frameworks that I learned at Cumberland are all mid-frequency things that like basically with an outlook of minutes or hours that I can't really replicate in my PA because I don't care enough and I don't have time.

But like, you know, in terms of this type of like longer frequency trades at the horizon of days or weeks, I got nothing systematically.

So really the only framework that I cling to right now, Avi, is the idea that I'm like, ludicrously bullish for Q4.

Like I think by then we'll be like really rallying.

So all, that's the only thing that allows me to psychologically hang on.

And if we go, you know, I kind of have this $55, 000 level in mind, if we go down there, I'll probably buy more.

In the meantime, all I'm doing is fucking around at the meme coin casino, which I don't really consider investment.

I like you're probably trading it as levered crypto, right?

For me, it's more just like something to have fun with while I'm bored with the benchmarks.

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I think that's a very key point, which is don't over trade.

Don't try to do too much in this market environment.

I mean, you can have your core allocation if you're bullish on crypto, but then with your trading, it's about, okay, well, instead of trying, okay, I'm going to buy a ton here.

It's just so easy to get shaken out, speaking from experience, that it just doesn't make sense in this particular environment to be very aggressive.

It's things that you genuinely have an edge on, things that you think are going to work, regardless of if Bitcoin's at 65, if Bitcoin's at 55.

1 trade that I've had on for a while is just short all of these coins that have massive unlocks coming that are super high FTV.

You hold it against ETH and Bitcoin and Seoul.

Maybe you have like 5 million bucks of that long, you have 5 million bucks of those coins short and then over the next month, 2 months, can be pretty confident that that outperforms.

You obviously have to be worried about squeezes and whatnot, but most of these things have actually a positive funding, which is wild, because I just think there's so much spot selling involved.

Oh, actually, I know exactly who's doing that.

It's the people who, every time it starts to rally, they get their gambling addiction, like starts to tickle them, and then they go in on, you know, buy bit and OKX and get long with leverage on these sort of, you know, alt coins or shit coins, depending on the token du jour.

And then as soon as the market sells off, they all get liquidated.

Like this week we had the big, during that big puke down to 58, 500, we had the biggest long liquidations since April.

So clearly there's still people out there who just can't resist getting levered long.

Guys, gals, If you're out there getting levered long altcoins right now, paying funding away every day, bleeding, just hoping to catch this next up move in a range, like the market can stay rangy longer than you can stay solvent.

And if it goes down, which is kind of a coin toss in a ranging market, you get liquidated.

It's really, it's insane to me that people still do that.

Just taking a step back, looking at the market, where do we think things are going to go?

My personal view is in line with yours, but maybe a little bit earlier.

I think that Q3, basically what's going to happen is over the summer, you don't have a lot of decision-makers in the market that are actually making big decisions.

Everybody that's allocating real capital is probably fucking off in Europe somewhere,

in the Hamptons, or who God knows where these people are.

And so all the institutions, the people that are buying, that are, that are buying BTC, even retail, they're less engaged during the summer.

So what tends to happen is that come September, These people come back in the market and now that we have the ETF vehicles that are going to be live you're gonna probably I'm 80 90 percent sure that the ETH ETF will be live by September 1st The after Labor Day these people are gonna come back and they're gonna start by I Think they're gonna start they've made they made their decisions are gonna come back in the market.

It means that July is probably going to be tough, but you're probably going to see some front running mid August into, into labor day, and then we can really start to get that up move.

It's possible that we trade 52 in July at some point because there's a lack of inflows, because there's a lack of interest.

And that's why I'm trying to take a step back.

When you get crazy, really, in crypto, when it comes to trading directionally, you kind of only want to trade at the extremes, right?

or you want to, you have to trade when you need to get out of the way of something like a big US Marshall sale or an FTX like event.

Sometimes you just have to like pull your chips off the table before the table emulates itself.

But sometimes that's exactly what went through my mind when I cut all my positions, when the US government started moving their coins and then everything went up.

I mean, I couldn't have known that Vanek was going to come out with this fake ETF listing, this fake ETF product.

I say fake because I don't think it's going to get approved.

VanEck is I think running a marketing campaign off of it.

If BlackRock files, it's very, very, very different story.

But I don't believe that VanEck even believes internally that it's going to get improved.

I think that they're just doing it to generate, generate some hype.

If Trump is reelected, which, you know, Nate Silver puts it 65%, then I think there's probably a 20% chance that, maybe a 30% chance that during, at some point during his administration, the Solana ETF gets approved.

But as of right now, as it stands today, I think very unlikely that that happens.

It just means that I wouldn't put all my chips on the table and not gig along.

It was hard for me to have known that a priori that selling Whiff at 195 or whatever I stopped out at would have been a bad idea.

You got out of the way of the steamroller, which our listeners should always do.

Like if something, you know, there's obviously a balance here.

Like if you hear something that's like marginally bearish, you're not supposed to take all your chips off the table.

But if there's like a massive amount of government flow about to smack the market in, you know 9 or 10 figure size imminently, which is what happens when Tokens get sent to a major exchange like you get out of the way now something that I'm horrendous at in my oil trading career is I'm very good at getting out of the way of those things or getting in as they're like just before they're Happening and profiting but then what I'm terrible at is taking my position off afterwards Or if I've taken it off re-adding it like I'm very bad at resetting to the state that preceded my drastic action.

And I've lost so many millions of dollars in my oil career over the years.

For example, getting long for all the right reasons ahead of a very bullish summer in 2018, but then when Trump wavered Iran sanctions and oil started to puke, I was in denial.

I'd gotten in for the right reasons, but then I didn't realize that the world had changed.

Equally, in this example, you get out of the way of a big steamroller out of a big selling flow, you and I both know that selling flow doesn't last for months or years, or if it does, it doesn't have an impact on the market.

Like you have to get back in quick, right?

I actually have a psychological trick for you Because I also was horrendous at this.

I mean, let's say, let's say you, I'll give you the example.

And you get this news of the government So and you get out you sell right and then it bounces back and nothing happens You're like, wait a second Well, the way that most people's their brain works is because they sold and it didn't work.

They get anchored to the idea that it's bearish and you start, you start looking for reasons why the market is bearish.

And then you convince yourself that it's bearish and then you never get back in position and if it rips in your face you're fucked.

And sometimes, by the way, by the way, sometimes that's the right thing to do.

But you in that moment are not looking at it clearly.

You get back in to your original position a little bit.

Not a huge amount, not the, not what, and then your brain starts to go, Well, maybe, you know, if Bitcoin's up, at least I'm up now.

So you start to look for the bullish reasons and that, you know, that actually resets your brain a little bit and you're not risking a ton.

You're not getting chopped up a huge amount.

You have skin in the game again, and it helps you think more clear.

It's amazing how difficult it is to understand a market without skin in the game, and you have a very solid point.

It's like, it's tempting to just be on the sidelines after something's just happened, anchored to that thing, even if it's gone and dissipated, but then you should have skin in the game because then you feel the market a little bit more without the 100% risk that you were running previously.

I've done that like inadvertently without realizing I was doing it a couple of times.

And now that I reflect on it, that was a successful way to maneuver myself back into things.

I should just write that down in my trading journal and do that more often.

It's amazing how many things about trading are psychological because even if you're extremely data-driven, which I know we both are, if you're a discretionary trader at the end of the day, even if you're using a lot of quantitative metrics, You still have to make that decision.

And what ends up happening in these moments is you end up introducing inertia.

So when you get on the sidelines and then that decision to get on the sidelines doesn't seem like it's playing out.

Your instinct as a human is to just stay there because you don't want to deal with the idea that you were wrong.

So the buying it, buying a tiny bit, what it does is it helps you accept that you might have been wrong.

And then you look at it clearly, and then you make a decision.

And also what's so beautiful about this idea is it dovetails absolutely perfectly with our earlier Conversation and something that I really a point I really wanted to make which is that you said all the big hitters are you know Off to you know, wherever wherever hitters go for the summer.

But you know who else is not playing right now?

All the people who just got burned on this chop, all the momentum traders in crypto who have been momentum trading for years and is now an hour in a range, they've gotten chopped up, they're pissed off, they've taken their chips off the table and they're not doing an Avi.

There's not like 5% of the chips back on.

And what happens in those markets is, like this happens in oil too, especially during the summer, like you said.

You know, if it's a summer where everybody's super dialed in, like the summer of Ukraine, then whatever.

But this summer, people are gonna dial out the crowd that's gotten chopped up and lost a bunch of money is out.

So, well, like who's providing liquidity?

Like sell-offs, they go lower than they would have otherwise if there are a bunch of people like aggressively clicking and buying because of whatever reason.

Rallies tend to get extended to the upside.

And you end up with these like kind of random noise, Brownian motion, high amplitude, hard to analyze markets.

And a lot of people from the institutional players to the day-to-day traders who would be trading, but like are sidelined right now for the reasons we just discussed.

It feels like the initial spat of institutions coming in to get like kind of structurally long via the ETF.

It feels like that flow's died off, but the ETF inflows and outflows are massive, Avi.

Like there was, you know, I think there was a streak of like $1.2 billion worth of outflows that just got broken this week.

And what's happening there is I think there are institutions that are playing basis So not all of it is like directional flow.

It's just you know people getting in and out of the ETF Against CME futures, but that also drives sentiment.

So people see ETF outflows and they freak out and sell.

So ultimately what you're left with is these like CTA like kind of momentum players in a ranging market.

So what I'm doing is I'm, maybe I should be, I'm long, but I'm not like trying to trade this range.

I'm long with a plan to add if it really shanks, because like you, I think we're gonna be in for quite a rally later this year.

Every halving in the past has preceded 1, And I don't think this time's any different.

Maybe it's as simple as selling short-dated vol, buying long-dated vol, just trying to find places where the view that you express, you actually have high conviction in.

Like if you decide to go buy a ton of vaults right now, or you decide to go long BTC, or you decide to go long ETH, what's your actual conviction level?

It's like, it's 1 thing if, I mean, I'll give you an example.

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Surviving Crypto's Summer Chop | 1000x