The Domino Effect
At this stage, I have simultaneously looked at decreasing my total portfolio exposure to BTC/crypto, while having my conviction growing more than ever.
Since 2017 I’ve been max-long high growth assets with a strong preference to crypto, to eventually shifting in 2019 to 100% crypto allocation and philosophically unbanking myself.
I now am looking at creating a more barbell weighted exposure, to 50% long risk assets (95%+ crypto) and 50% dividend/stablecoin/cash equivalents. I want to focus on both yield and growth and do so in a way that protects a large amount of risk I’m taking.
My plan is to transition into that allocation, selling into the next major bull breakout rally to rebalance to this strategy.
Because of this, my base case thesis is that we still see an idiosyncratic BTC breakout back above ATH’s. I am waiting, be it weeks, months, or 1+years for that to happen.
My view is that we need a real confluence of market forces to push BTC on any trajectory to leave the orbit of the current range.
That we will chop up and down until we get that major catalyst. This means we can retest the $30k ranges or even lower before ranging until some cascade happens that squeezes BTC out of its current stage of gravity.
A series of dominos
What I am waiting for is the cocktail/cascade of positive news will drop like dominoes creating a rally, which leads to the retail FOMO which leads to BTC breaking out above ATH’s.
Here are some possible catalysts:
Dovish FED or lower CPI print
Nation-state, sovereign wealth fund, or more corporate adoption
I think the most powerful and likely catalyst is around the FED, given how that’s dampened the macro picture for risk assets. Any flinch or blink on return to business as usual policy you will probably see a massive move higher, which leaves people sidelined.
Once momentum begins, we would want to start seeing bad news shrugged off by the market, and good news dropped and absorbed like fuel for the rally.
The market never does what you think, so I will be unsurprised if it plays out differently than I imagine it will.
Maximum pain is probably a decade of high inflation AND a recession caused by the FED fighting inflation. I don’t know what to do in that situation, it just means active management is probably more necessary than ever. This would also likely be difficult politically.
If the FED/Macro prevents the fuel from lighting, maybe we’re dampening the adoption path for quite some time.
There are more dots creating the invisible line of dominos that we will look back at in the future as the step-by-step forward of how adoption happened.
It’s just not obvious when you’re in it.
Stay in touch, and as always let me know how I can help,
XX I’m David Sherry, I coach early-stage founders, invest in crypto, and write on the overlap of investing, crypto, and the creator economy.
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