7/25/25 - Market Recap
In the past few days, crypto has had a significant drawdown from the top of the leg we’ve had in July so far. It’s pretty normal to expect some sort of a market pullback after a really strong market. Almost like a rubber band that stretches too much and releases that pressure.
When I see crypto going up aggressively, I always force myself to be reminded that this is temporary and we will see a violent move soon. It needs to be like that. We are here trading systems, and we have to think long-term. We need to force ourselves to think about net profit relative to the year, 2 years, even 3 years, and not so much of the unrealized profit we have now.
In the past 24h alone, there has been $646M in liquidations, mostly composed of longs.
It’s natural that when we have significant move to a certain side, that participants feel the urge to join because apparently everyone’s making money. But this reflexive behavior is what leads to inflection points in markets at their extremes. People are too afraid when it’s time to buy and too optimistic when it’s time to sell. Why? Well, think about it. Don’t you prefer to put money on something that appears to be more confirmed or guaranteed that you’ll make money? Well I certainly do. No one likes losing money. But that’s a problem that we as traders must fight—the urge for certainty.
Obviously if you get a tip about material information (say no to insider trading kids!), that is as close to a guarantee as anything. But in the real world, we don’t have that, or shouldn’t have that, and if we’re waiting for others to join in, push prices higher, until they confirm a certain “thesis” we have, well that’s a recipe for disaster. The best risk is taken when risk is hardest to take.
But now you may question:
“Aren’t you a trend-follower, and the basic idea is buying things on the way up and selling them on the way down, on price confirmations?”
Well, that’s a really good question. Yes, I do buy things on the way up, but I never expect certainty. I buy a blend of different things, and hope to capture a net profit from the effect that momentum has on price, over LARGE samples. That’s what I do.
After a few years, you begin developing some sort of intuition about markets, that you can’t quantify. One of my intuitions is that my best times to trade have always been out of EXTREMELY uncertain events. I was buying aggressively the S&P500 following the Trump tariffs as the markets were collapsing and a lot of people I respect were also selling. I was buying ETH at the ~$1,600 this year. I was buying HYPE at $9. My trend systems collected most of their exposure when crypto was coming off a really bad period, that no one expected to come out of so soon, especially not during the summer.
You know what all of those events had in common?—Extreme uncertainty. I’ve went on detail about my thesis behind each of these events before and don’t want to be going over again. I didn’t blindly put risk on just because I wanted, there was a thesis and a plan to get out if I was wrong. But the point is, extreme uncertainty is where the best opportunities come from, because it’s human nature to panic, and panic invites mistakes.
My Portfolio — Update
Today we’ve closed 4 positions on our trend portfolio following this market’s retracement we’ve talked about above.
If you’re wondering where you can find my portfolio open trades data, here’s the post with the instructions to access it:
