How I’m Taking Advantage Of The German Crypto Firesale!

Things are going crazy in the US. We have a president who the government confirms functions cognitively only six hours per day. The US government is custodying their Bitcoin with Coinbase, a company they are suing simultaneously. McDonalds launched two $5 meals. It’s looking increasingly like a convicted felon will be running the country in 2025. And you can now buy Bitcoin at under $60K!

My main concern is the final point: the huge firesale in the crypto markets right now. After last week's gigantic flush of leveraged traders (second highest in history after the FTX debacle), the crypto markets are rife with rekt speculators (who longed the market at the wrong time), desperate altcoin holders (count me in this boat), and countless experts and analysts telling us exactly where things are going next.

I wanted to add my theory and how I approach the current pullback in the crypto markets. In six months, we will know if buying this dip was clever and rewarding or if we ignored the charts' obvious story. I am optimistic that now is a good time to add to positions. Allow me to share why.

Was The July 4th Crash Orchestrated?

Coincidentally, the German Bitcoin sale and Mount Gox Bitcoin movement occurred on the Fourth of July, a major US holiday. A major holiday was a perfect time to squeeze longs because the stock market was closed (no ETFs buying), and most wealthy Americans were taking a long four-day weekend.

When markets resumed normal trading on Monday, the ETFs lined up to buy BTC at reduced prices after the long weekend. The ETF’s bullish actions are a reassuring signal that future dips from this FUD will probably be bought up quickly.

Meanwhile, altcoin holders had the entire long weekend to get spooked out of their positions by negativity and fear coming from all directions. Contrasting headlines, Twitter feeds, and influencer opinions bombarded us. Markets hate uncertainty, and this last weekend had peak uncertainty.

The smart money was scooping up these alts and adding to their Bitcoin, while most solvent retail traders were befuddled like a deer steering at a big rig’s headlights. I know I was confused, and it’s hard to pull the trigger to buy more when you watch your portfolio bleed out.

Why I Believe This Is a Buying Opportunity

I’ve spent hours determining if now is a good time to add to my portfolio, hold, or sell and cut my losses. I’d gone back and forth a few times and, ultimately, decided not to make any changes over the weekend. I continued with my daily Bitcoin buys and took a wait-and-see approach.

Then, yesterday, as the Bitcoin market stabilized under more German Bitcoin dumping, I decided this was a buying opportunity. Here are the reasons I came to this conclusion.

• A lot of the selling last week was forced by longs getting liquidated. Any other selling occurred by weak hands who probably dumped as the markets were getting nuked.

• Negativity and uncertainty are at their highest levels in over a year. When the crypto community talks about the cycle being over, things are being overblown, and historically, this has been a good time to buy in bull markets.

• Major long-term overhangs are disappearing; Mount Gox is getting addressed, and I’m not losing sleep if Germany wants to give away its Bitcoin horde.

• Analysts are playing both sides of the market. One day, they are bearish; the next, they are bullish. I have fallen for this and regretfully sold my bags from the inconsistent fear-mongering. Here is an example of two headlines where the same analyst draws two contradictory conclusions within one day of each other:

Peter Brandt Identifies Bitcoin “Foot Shot” Pattern, Predicts Potential Rally
Legendary Trader Peter Brandt Suggests $40,000 Pit Stop for Bitcoin Before Rally

Similarly, here is an example of two YouTube thumbnails from the same channel within 12 hours of one another.

Why I’m Staying Bullish

There are too many reasons to stay bullish on the crypto market and not enough reasons to flip me bearish. I wrote down why the entire crypto market will be higher in six months and what could make it lower in six months. Here’s a summary of my list.

Reasons to be bullish:

1. The halving occurred in April of this year. Typically, within a year after the halving, the value of Bitcoin and the entire crypto market shoots massively higher.

2. An Ethereum ETF is coming, and Ethereum is trading around the same levels as before the ETF approval. In the long term, this is incredibly bullish for crypto because it will attract more liquidity in the market.

3. The Fed has beat inflation. As mentioned earlier, McDonalds has a $5 meal. Lower reported inflation means Federal interest rates can decrease, which is bullish for risk markets.

4. If Biden continues running, we are nearly guaranteed a bullish Trump presidency for investment markets.

5. Altcoins are trading at levels seen at the end of last year. Stocks are trading at all-time highs. Both alts and crypto could play a game of catch-up.

Reasons to be bearish:

1. Influencers and TA experts predict Bitcoin will return to the $40-$50K level. I’ve found these ‘experts’ are right about 50% of the time.

2. We don’t know how much Mount Gox Bitcorecipients will sell or when it will occur. Also, Germany still has more Bitcoin to sell, and the US could follow in Germany's footsteps.

3. The US/world could enter a recession, and the Fed may not cut rates, negatively impacting investment markets.

4. Wild cards: SEC attacks on crypto, black swan events, negative feedback loops from more selling, negative price manipulation, etc.

When considering the risk/reward, I have concluded that the rewards outweigh the risks at current price levels. At the same time, I’m not ruling out that the crypto markets can’t drop more soon.

How I’m Playing the Pullback

After hours of stressful deliberation, I created and have begun implementing my strategy to take advantage of this dip in the crypto markets. The hardest choices I had to make were: 1) how much to buy? 2) what to buy? and 3) when to buy?

The ‘how much’ question depends on personal risk tolerance. I’m fairly speculative, but I won’t buy anything on any leverage except maybe Bitcoin at 1.5–2x leverage. If I were fully invested, I’d hang on and watch the markets because there wouldn’t be anything else to invest. However, I wouldn’t be offloading all my bags at these depressed levels. If I hadn’t already dumped my XRP, DOT, and ADA bags from the last bull, I would possibly consider reallocating some of my positions to alts I am more bullish on.

The ‘what to buy’ question is challenging. Do I want to be conservative and stick with BTC, ETH, and SOL, or do I want to be more speculative and open myself up to greater returns? I concluded that if I’m bullish, I should try to take advantage of the cards dealt to me.

I’ve written a lot about my high-conviction plays for this cycle. I planted my flag with three memecoins: PEPE, WIF, and BRETT. I believe these are high beta plays on Ethereum, Solana, and the Base ecosystem with more upside and limited downside (compared to other altcoin categories). For example, if ETH increases by 10%, PEPE may increase by 20–30%. Prices moving congruently isn’t a guarantee, but it’s a pattern I’ve noticed this year.

Additionally, these memecoins are trading between 38–65% below their all-time highs, while other popular altcoins I follow are significantly further from their local and all-time highs.

I’m still buying Bitcoin continuously, as I have for a long time, and am adding to my SUI bags. I like SUI at $1.15, so why should I not like it at $0.70? SUI is my speculative dark horse Layer 1 to outperform this cycle. I wrote my reasoning and thesis in Boost Your Returns By Ditching L2s For This Better Option.

Finally, I had to strategize when to buy. Should I time another dump and go all in? Should I buy the same amount daily? Should I do a combination of these strategies? After much reflection, I decided to split my buys into four equal investments that I will buy one week apart from each other. If the prices drop, I can buy more at a discount, or if they continue going up, I’ve bought at or near the bottom.

Key Takeaways

The hardest times to buy are often the best. It’s easy and feels good to buy into a green chart, but buying into a red chart challenges our instincts. Buying a red chart is like choosing to enter a dangerous situation.

Remember, I’m just another talking head on the internet. The best option is to consider the potential outcomes and draw conclusions. At least if you think about the potential outcomes, you are not committing to purely emotional investing decisions. I’ve done plenty of emotional investing, which typically doesn’t work out well.

Share your thoughts in the comments. Do you disagree with me and believe the bull market is over? Is this huge sell-off occurring during a major holiday a coincidence? Should I replace memecoins with AI plays, beaten-up new coins, or RWAs? Am I missing other reasons to be bullish or bearish?

I own a position in SUI, BTC, WIF, BRETT, and PEPE. This information should not be taken as investment advice. I am no more qualified to give financial advice than to dance like a ballerina. Digital assets like crypto and NFTs involve risk, so you should always perform due diligence before investing.

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