The FTX Collapse – What Matters Now

Here We Go Again

Well, FTX was probably the last entity that most of us thought would be next to fall. However, there was one incident in particular that got me wondering. Some months back, SBF came out and said that the worst of the bear market was likely over. This was a bit of a shock to me, as I didn’t think someone with his supposed knowledge, experience, and insider information could be that naive. In hindsight, it appears as if he was attempting to “ignite” a much-needed fire.

People rely too heavily on what industry leaders communicate, which is why I generally question everything industry leaders have to say. However, apart from a few isolated events that appeared rather out of place, I too would have never considered such an outcome. Strangely enough, this would have never happened in a DeFi-dominated world. However, it has happened, and now we need to move forward. For some, it will be a lot more challenging than for others.

Yes, regardless of the hurdles, difficulties, and challenges, we continue forward. We cannot ignore the fact that this will undoubtedly trigger a number of “negative responses”. However, that is outside of our control. What we can however do is to try and make the best decisions going forward. This will obviously require solid data and good planning. However, already many are calling $15.5K as the bottom without knowing the full extent of the FTX drama. There still needs to be a “maturation”, which will provide a lot more much-needed clarity.

What Are You Paying Attention To?

Many of the most inaccurate voices have subsequently also been some of the most “followed and prominent” voices. Immediately, you will think of certain personalities on Crypto Twitter and the broader media. I would however encourage you to look a little closer to home. First of all, having an understanding and history of financial markets will automatically enable you to identify someone who has no idea of what they are talking about. How can people make statements without having any knowledge of how deep the fallout goes? Just this morning, BlockFi came out with an announcement, which basically communicated that the company was now unable to process withdrawals.

Many make use of the “swan event” argument, stating that nobody could have seen this coming. True, yet false. Every single capitulation event is connected to a swan event of some kind. How then have accurate predictions existed throughout history? Where are all the models now? Where is that arrogant tone that was communicated to analysts worth their salt, who have since been vindicated, many even in humble silence? Even more importantly, where are these individuals now? They are busy adjusting their narrative and claiming to be right all along.

Nobody gets it right all of the time. However, being proven wrong, and then simply continuing on as if that is not the case is beyond deceptive. People will fail to learn, which is why these events will continue to unfold. Whenever your “bread and butter” is tied to something, you are immediately compromised, you just haven’t realized it. Within communities, acceptance and praise of what certain people have to say can sometimes be quite lucrative. However, I don’t play that game. I have been consistently opposed to many of these false narratives that have been put out, knowing full well that it is not in my best interests.

Eight Months Ago

Earlier this year I signaled a warning in my writings, and to friends in the Crypto space. I basically communicated what I was doing, and then urged them to conduct their own research, as I saw a serious collapse on the horizon. Shortly after, I put together my target, being $18K, with a worst-case of $13 to $10K. Of course, we know how that went down. I proceeded to call fake pumps throughout this bear market, discouraging heavy accumulation. Modest accumulation is never really a bad idea. However, I have stated that dollar cost averaging is a strategy for the masses, not the knowledgeable.

Eight hours prior to the FTX collapse, I published a thread, stating that I would NOW begin accumulation. I avoided every other opportunity, and though prices had not yet dropped, the market structure was signaling what I was waiting for. The FTX shoe then dropped, which appears as if I predicted a swan event. However, this is not the case, but rather evidence of how disciplined analysis often plays hand in hand with “real life”. So, what matters now?

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Don’t accept everything as gospel, question everything… including my analysis. Plan a diversified approach, and never center your assets on a single entity, opportunity, or exchange. These definitely are extremely volatile times. There are so many shoes that could drop at any moment. You really have to put some thought into portfolio construction and strategies.

Final Thoughts

The only thing that matters in financial markets, is being right. What many of these “narrative adjusters” somehow seem to miss, is that when money is involved, many are going to remember. It’s kind of like deleting tweets (SBF) and then expecting people not to remember. As I said many months ago, I don’t expect a very significant reader base, as I don’t really meet the “current criteria”. Many often align themselves with those who will benefit them financially, or tell them what they want to hear.

We all would have liked the market to move up. However, this was not the likely outcome and has since been proven to be accurate. Let’s keep our heads and emotions in check. It’s the only chance we have of navigating our way through this “jungle”. If someone’s opinion is different from yours, don’t attack it. Those who have bombarded the comments section of others’ posts with graphs and models have only made themselves look foolish.

As I have said, confidence is quietly calm. Those aggressively defending their views are openly displaying that there is an inward uncertainty of what they believe, and are somehow unable to face it, usually due to what that will mean financially. Keep it real, and see you next time!

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