Update on my sell off - Dad's Degen Diary

Disclaimer: This is for entertainment purposes only. I am not a financial advisor, and this is not financial advice. If you choose to be a Degen, you are responsible for your decisions. The Degen community is fun though.

How am I feeling about selling off a large portion of my portfolio on Monday?

I have mixed feelings but generally feeling good about it. Why?

Well, the Deepseek correction could have been much worse. Sitting in stable coins provided stable value and allowed me time to reconsider when I enter and re-evaluate allocations. Initially many influencers were calling sellers “paper hands” and proclaiming that if you sold, you’re NGMI (not gonna make it). That might be true… for panic sellers.

My selling was intentional, calculated and measured. Part way through the week, some influencers actually had a different tune. Some acknowledged that while crypto dumped hard the event could have been “much worse”. Had it been worse, it would have mattered even less to me in stable coins. In case it’s not already obvious, I am definitely not an influencer.

There was a point on Monday where I thought maybe I sold some of my positions at the local bottom. Well, I was ok with that from a risk management standpoint. Even if I missed a few percentage points of gains on a rally, the protection from further downside was attractive.

What did I do next?

I was ready to buy on confirmation of strength. I did see the market try to bounce back and also noticed uncertainty. During the attempted rally in ALTs, I observed decreasing volume on the daily charts on many ALTs with a few exceptions (DeFi & ETH showing relative strength). I did begin to re-enter during the week and mainly allocated to DeFi and tokens associated with World Liberty Financial. I’ll explain the “why” on this later.

The underwhelming volume led me to believe that many ALTs during this rally lacked conviction and may “roll over”. Many of them basically have done this as we get into Saturday morning.

The good news…

BTC is defending 100k well so far and did close the month above 102k. That represents the highest monthly close in the history of BTC!!!

The Tariff news scared the market Friday afternoon, and the market overreacted. This was on the heels of the Deepseek overreaction. Also, bears typically try to dump BTC price the last few hours of every month just before monthly close. BTC stood up to immense selling pressure to set a historically high monthly close.

It looks like buyers stepped in at the end of the day in the stock market with volume ticking up. BTC stood its ground. Maybe the tariff selloff is done, maybe it isn’t. We won’t know this until early Monday morning.

What’s happening right now 2/1/2025

This weekend the weakness in the ALT rally is playing out and many ALTs are returning to zones we saw on Monday and Tuesday.

I still have a lot of “dry powder” (stable coins) to deploy. I get the benefit of documenting some “capital losses” from selling (for taxes) and picking my horses for the next rally. Overall, I am satisfied with this outcome. I started to re-enter through the week taking reasonable positions in high quality projects even though the market seemed to lack conviction. Volume could have picked up at any time to validate those moves. I also held a lot of stable coins back in case the rally stalled out. I’m glad I did.

It was hard as the market makers were trying to make it look like the bottom was in and create FOMO to buy back in with a mid-week pump. I even had a few moments where I wanted to FOMO back in with larger positions. I kept talking myself out of it and into patience using volume profiles, RSI, MACD and other technical indicators to convince myself that this ALT rally would struggle to get off the ground

What to watch for right now

So far, BTC is showing it wants to trade sideways or slightly lower through the weekend than the daily close yesterday, but this could change. If BTC continues to trade lower, it would create a small CME gap for BTC above where it trades this weekend. If BTC “pumps” this weekend, it would form a CME gap below the trading price. Note: CME closed around $102k yesterday and does not trade on weekends. “Smart Money” has incentive to minimize CME gaps.

Typically, the CME gaps close with high probability, but nothing is 100%. What does that mean? With high probability, BTC goes $102k-ish on Sunday evening from wherever it is. A CME gap is a powerful magnet for BTC price.

BTC baseline of $102k should be considered the “starting point” for the week when CME futures open at 6:00PM EST Sunday. High probability of this outcome.

Key events near term

There are several important events between now and Monday morning that will influence Bitcoin and ALT price movement. I expect a lot of “indecision” in the market over the next 48 hours with potential accumulation opportunities.

Sunday 6:00PM EST: CME opens. Look for BTC to move toward $102k
- Could be a “delayed move” up during the week to fill the gap at $102k
Sunday 6:00PM EST: Nasdaq futures
Sunday 7:00PM EST: BTC weekly candle close.
- Expect bears to try to dump price between 6:00PM and 7:00PM EST. The last hour or so of each week tends to see a lot of sell pressure with bears trying to push price down.
- With the stock market “spooked”, I don’t anticipate this will be an exception where we pump the last hour of the week which does happen on occasion.
Monday 4:00AM EST: Premarket stock trading starts
- This was the leading indicator of the NVDA correction last week.
- We will know very clearly between 4:00AM-5:30AM EST whether the stock market is going to continue to dump on tariff news or recover from it.
- Bitcoin will move the same direction as the premarket stock trading. ALTs will move the same direction, only faster/farther.
Monday 4:00-7:00AM: Likely times to confirm breakout to the upside or downside in crypto. Likely also backed by volume.
Monday 8:00AM: Higher volume premarket stock trading and I don’t expect any surprises here
Monday 9:30AM: All price moves already “front run” by 4:00AM crowd. Stock market reacts buying or selling with higher volume.

ALT Season? Why the long post?

I believe we’re going to get a selective ALT season instead of what we have gotten in the past where everything goes up. That was a big factor in my decision to sell and re-allocate. Normally I’m into lower cap stuff, and I will take more calculated positions there soon. For now, I am consolidating into mid-larger cap projects with potential institutional appeal. I’m bullish on LINK, XRP, AAVE, ONDO, MOVE, SOL, SUI, ALGO and will continue to park money in some of these projects while I recalibrate my low cap decisions.

Why the change of stance on this? Long story short: The market got too diluted with coins due to launch pads making it easy for anyone to launch new tokens. Now that we have millions of different tokens as opposed to tens of thousands of different tokens, there is not enough retail liquidity to move them all up. The ones that do move tend to be whale activity creating FOMO for people to ape into and get dumped on. ALTs will never be the same because of this.

Institutional ALT season? This I believe in. Institutional liquidity dwarfs retail liquidity and will focus on exponentially fewer tokens.

“Mainstream MEMEs” with established brand recognition and community should perform well with organic growth (not whale manipulation). Examples might be DOGE, SHIB, PEPE, BONK and FARTCOIN among others. Heck, maybe even WIF will make another run.

We’ll likely see some traction in select quality gaming projects and ecosystems as well.

Smells like ALT season

ETH vs BTC looks like it might have found a bottom and and made a sharp move up. ETH showing strength with general uncertainty and weakness around it toward the end of the week is bullish for ALTs.

Bitcoin dominance is showing weakness.

Total3 chart (ALTs) are in an uptrend.

World Liberty Foundation continues to load up on ETH and other projects.

New SPOT ETFs like XRP and SOL currently at 80-86% probability to get approved on Polymarket.

We’re getting “negative news” and bearish moves on ALTs every time we think they’re getting off the ground. This is intentional and drives people out.

This bearish sentiment seems like it is designed and wonderfully executed by big players in the market who would like to position themselves before this market runs.

“Smart money” is buying, and some believe (myself include) that unfavorable news coming out during this accumulation is not a coincidence. You can accuse me of wearing a tinfoil hat. I’m good with that.

Hardest market to navigate yet

Pump.fun and similar tools have almost completely ruined what our expected ALT season will look like. Retail is so distracted, and liquidity spread so thin in ALTs, that you have better odds throwing money on red or black at a casino. I fucking hate pump.fun.

Fortunately, I believe the institutional cycle is here. I know that as crypto enthusiasts, we want crypto with “the people”. It still is. Institutional entry was inevitable and, as it turns out, necessary. They will drive unprecedented liquidity into this market and focus that liquidity in a much tighter range of projects. Institutional liquidity can move what we consider “large caps” in crypto similar to how retail used to be able to move smaller caps before their liquidity was spread too thin across millions of coins.

Ethereum, the #2 crypto by market cap, would barely crack the top 25 in stocks. Any of these top 100 crypto projects by marketcap is capable of their “Amazon moment”, “Google moment”, “Microsoft moment”, etc… Institutional liquidity is significant enough to move these mainstream projects much more than I anticipated a year ago.

I’m still a degen

Sure, I might look at mid-cap or large-cap projects more than I anticipated this cycle. How can I do this and still lean into my degen nature? Well, leverage, of course. I do plan to use leverage on positions to amplify the effects of volatility.

I am also seeing a lot of great opportunities to “buy & hold” some of these projects. By trying to drive negative sentiment and pushing prices down, the whales and market makers that control these markets are actually giving us opportunity to get excellent entries much later than I anticipated.

Mainstream projects could get much higher gains than I originally thought due to institutional liquidity. Other lower cap stuff, well most of it will struggle to get off the ground for any length of time.

My old posts… where did they go?

Well, a lot has changed, and I wanted to move the posts to “private” for two reasons.

I was wrong about several things, and I don’t want anyone to accidently stumble across invalidated information that might influence them, particularly with some specific project examples I used
I want to assess where I made mistakes, document my learnings and recap in a summary post

There were a lot of things I got right as well. I generally still agree with a lot of the points that I made. Some of the projects I used to illustrate points, I want to replace with more relevant examples. So, moving these posts isn’t meant to hide from the fact that I got some things wrong, it’s meant to help ensure that any live content here is actually helpful in the current environment.

I was wrong

You can look forward to some version of an “I was wrong” post that will contain some lessons learned and how it’s important to re-calibrate in a difficult and highly volatile market like crypto.

Also, I did provide this in every post:

I remain confident and bullish

Things have changed rapidly, and I believe I am pivoting with plenty of time to adjust accordingly, particularly with the way ALTs have bled over time compared to previous cycles.

With the seasonality of Bitcoin, the charts all still look similar to the previous cycles in a lot of aspects. To put it short, the best is still in front of us.

In previous markets, you could throw money at any 3-letter ticker in crypto during ALT season and feel like a genius. That will not happen again.

Maybe it is better this way.

Maybe the pump.fun bullshit will help us identify projects with actual value. As pump.fun spreads the retail liquidity paper thin and most new ALTs fail, it will become easier to identify strong projects relative to the broader market. Very few, if any of those, will have originated from pump.fun. This will serve as a reminder to some of us why we got into crypto to begin with. Some of us really do believe in the tech in addition to enjoying price speculation. Yes, some of us really are “Here for the tech”.

The quality projects will pump, and they will pump hard.

I still believe.