Where are we in the Cycle? w/ Darryl Wang

Summary

In episode 21 of the Crypto Market Wizards podcast, Garen returns to discuss the current crypto market cycle, sharing insights on market sentiment, investment strategies, and the impact of political events like Trump's assassination attempt. He also delves into the future of crypto, touching on topics like the potential of Solana, the role of DeFi, and the importance of narrative trading in the evolving landscape.

Takeaways

• 📈 The guest, Daryl, discusses his current market views, noting a shift from a bearish stance to a more aggressive position following recent events, such as the Trump assassination attempt, which he believes has bullish implications for the market.
• 🐻 Daryl explains the different levels of market positioning, ranging from 'Omega bearish' to 'aggressive', and how Tangent has been operating within these bands, adjusting their net beta based on market conditions.
• 🔄 Daryl highlights the challenges of the last three months in the crypto market, describing it as the most difficult period since he started in crypto, due to the market's volatility and the unexpected downturn.
• 💰 He discusses the importance of not being fully invested in Bitcoin (BTC) and Ethereum (ETH), suggesting that to outperform the market, one needs to take bets on altcoins that are not part of the consensus.
• 🌐 Daryl shares his views on Solana (SOL), stating that it is currently their main beta position and that they hold no BTC or ETH, indicating a strategic shift in their portfolio composition.
• 🏦 The conversation touches on the potential impact of a BlackRock ETF on the market, with Daryl suggesting that it might not deliver the expected supernormal performance due to increased competition and market saturation.
• 💡 Daryl emphasizes the importance of narrative trading in crypto, arguing that traditional value investing frameworks do not apply as effectively in the crypto space, where narratives and market sentiment play a significant role.
• 🚀 Daryl expresses his long-term aspirations beyond crypto, including contributing to humanity's progression towards becoming an interstellar species and his personal goal to go to space.
• 🤔 The discussion includes advice for new crypto participants, suggesting that they focus on preserving capital, understanding market cycles, and being prepared for the challenges of a brutal PVP (Player vs. Player) environment.
• 🌐 Daryl shares his thoughts on the current state of crypto Twitter, noting its decline in providing valuable alpha and the importance of building an online presence and social capital in the crypto community.

Q & A

What is the current stance of Tangent on the crypto market?

Tangent has been operating within bands one and two, which indicates a very bearish to cautiously defensive stance. Their net beta has never been more than 50% long at any point in time, and they have been focusing on tight validations on a low time frame trading setup.

How has the market been performing in the last three months according to the podcast?

The last three months of the market have been the most challenging since the start of crypto, with significant drawdowns and volatility. The market has seen wild swings, including a double bottom formation and a quick reclamation of range on the back of a political event.

What was the impact of the Trump event on Tangent's market position?

The Trump event was a pivot for Tangent. They were 15% long going into Sunday but after the event, they closed their shorts and went long, operating within the most aggressive band again, which is the 75 to 120% range.

What is Tangent's current long position in the crypto market?

Tangent is currently about 78% long, with a significant portion of their positions in Solana (SOL) and other altcoins. They do not hold any Bitcoin (BTC) or Ethereum (ETH) at the moment.

What is the significance of the ETF in the context of the crypto market?

The ETF (Exchange Traded Fund) is seen as a potential outflow for traditional capital to invest in crypto, specifically Ethereum. However, expectations for the ETF are not overly high, and it might not deliver the supernormal performance that some investors anticipate.

What is the current sentiment on DeFi in the crypto market?

DeFi is currently seen as undervalued by some, but the general sentiment is that it may not be the best bet for E beta. The market is not necessarily looking for undervalued assets but rather narratives that can drive prices up.

How does Tangent view the potential of Solana in the current market?

Tangent views Solana as a potential proxy coin for speculating on Republican wins in the US elections. If Republicans win, the probability of the ETF goes up, which could positively impact Solana's price.

What are the main factors influencing Tangent's market positioning?

Tangent's market positioning is influenced by two main factors: a Republican win in the US elections and easing liquidity conditions. These factors help them determine whether to be conservative, optimistic, defensive, or aggressive in their market approach.

What is the current cycle phase of the crypto market according to the podcast?

The crypto market cycle is currently seen as tricky, with some arguing that it is in the mid-cycle phase. The dispersion between altcoins and Bitcoin suggests that the market is still in a PVP (Player vs. Player) environment, with potential for a shift to PVE (Player vs. Environment) when conditions change.

What advice does the podcast offer for new crypto investors?

New crypto investors are advised to focus on gaining experience in the market, understanding the cycles, and balancing on-chain and centralized exchange trading. They should also be prepared to navigate the challenges of a PVP environment until the market shifts to a PVE environment.