7/30/25 - Market Recap
A week ago I was having one of my best trading PnL ever. I went on a short vacation to Baleal, Portugal, to help keep my head off the markets, and let my exposures work. The market was heating up so I wanted to go somewhere not very far from home, had I needed to go back. This is a bit irrational because I can do everything from my travel laptop anyways.
Looking back, taking the time off, was the right choice.
Up until this year, when I was in a drawdown, or portfolio volatility increased significantly, it was relatively easy for me to stick to my systems. I could always justify it by saying that drawdowns are what we should want, because they tend to signal future periods of positive performance as a trend trader.
The significant increase in AUM this year required some adaptation on my part. Seeing numbers I’ve never seen before, go up and down every day takes a toll, doesn’t matter how much brainwash I do to myself. I will eventually adapt, but I want to say that because this is the reality of this business. It’s all linear when you’re trading with an account that even if you blew up, wouldn’t affect your life, but it changes when that becomes a significant chunk of your net worth.
The past few days the crypto market has been quite volatile, and my portfolio entered a new period of drawdown, after that major leg from the bottom.
(I’ve had material changes to my portfolio open exposures, that I’ll outline at the end of this post.)
As of 2025, my portfolio is up 30%, after being down -33% in March.
Money is the tool to work in this business, and the more tools we have, the better our business will do. The problem is that these tools are not ordinary. They carry the burden of being significant for other areas of real life. So when you work with them, and you risk losing them at the job, you’re not only losing replaceable tools, you’re losing the ability to work and pay bills. That’s what makes this business hard. Because losing is inevitable and you have to be okay with it.
When you look at a multi-month drawdown on a backtest, or on historical performance, it can look bad, but we always think we can get through it. It’s just a line on a chart after all. The real game is when you are going through it daily, for months on end, seeing your hard earned money evaporating, never knowing for sure if it’ll get back… A tough way to make a living and why so many can’t do it.
You must have real confidence in your own work, and that whatever you’re doing in the market, will persist, or at least, not take you out of the game. Our business requires a constant self-belief that I often take for granted, but that I shouldn’t. We need caution when it comes to the uncertain nature of markets, but the moment we start second-guessing our work, it’s probably the moment we should throw in the towel and call it a day, because that will breed mistakes that when stakes are high, we can not afford to have.
This is why people tend to compare trading to professional sports. You must be on top of your game on a daily basis, keep your skills in check, not allow mistakes to scoop in during periods of losses but also of wins. The worst thing you can do is take a step back when you’re winning. I’ve been there and done that. I talked about it in the post below.
I was almost doing it again this time around. But this time, I knew better. I had consolidated my own learnings from previous periods of winning and prepared myself constantly for the inevitable correction. It’s hard to prepare yourself for a drawdown when you’ve made 100% in just a few months, but you must constantly remind yourself that unrealized gains are irrelevant. All that matters is the net realized return at the end of each year, 3 years or 5 years. That’s all we care. Don’t get too enamored by short-term performance, it’s just an illusion. The more you detach yourself from that, the better you’ll handle what’s about to come.
It’s all about keeping that long-term mindset and you’ll probably outperform 99% of the competition out there. I’ve survived this long because I focus on survival, not being a super star trader that has a few months or years of outperformance, and gets wiped out on a single black swan event.
Prepare for the worst.
Market Recap
The altcoins market is quite strong still. Don’t forget that altcoins have rallied 70% off the June lows and is now having a 7% drawdown. People have the tendency to use too much leverage and not allow the market to work for them. I truly believe that most traders would be much better off just trading spot, so that they are forced to have less exposure on, and just chill on a daily/weekly timeframe.
One interesting thing is that the bitcoin dominance continues to decline. Even though it’s not required to have an “alt-season”, obviously the liquidity from the largest asset flowing into other correlated speculative assets is good.
My outlook remains the same. I think that we’ll probably chop around until late September and then have a leg up in the last quarter of 2025 and into early 2026.
In my free time, I am starting to develop again a few scanners for us to look through when I write these updates.
I am trading mostly low frequency trend models in crypto as you know. Even though I’ve done well with other stuff this year, I don’t expect it to always be the case, and eventually my performance will once again be dominated by trend returns.
My best performance comes from sustained long-term trends. One of these indicators is when the % of total coins above the 200-SMA starts rising, as we’ve seen in late 2024, and we’re seeing now. Those are the times where my system really shines. Why? Well, we want sustained trends, and a measure of those trends is how well the assets you’re trading are holding above/below certain moving price averages.
To justify our drawdown, we can see that the coins above the 20-SMA have declined quite aggressively in the past ew days. That is noticeable right away in the portfolio because it means that the broad crypto market is declining in the short-term.
Does this mean that this mini “bull-market” is over for crypto? Well we never truly know right? That’s what we get paid for, the uncertainty of the future.
If we take a look at other periods like late 2023 to early 2024, we can see that there were many times where the % of coins above short-term SMA’s declined while the higher timeframe uptrend continued relatively strong.
Again, I am not making the claim that it will continue up, we never know, I just know that I have to play the game as long as I get signals in my system. Periods of underperformance are not a reason to stop a system, in fact, they tend to be the best periods to allocate in the type of models I trade.
We will create more scanners that help us for future market update posts.
My Portfolio — Update
On our portfolio tracker you can find there the data I am going to describe below.
We’ve closed out a few positions following the decline of the past few days. Some hit our stop-loss and others closed below our trailing price.
The portfolio total allocation now stands at 100%. At one time we had over 1.5x of our portfolio in the market, which was quite aggressive, but during times when signals are really strong, I have budget for it.
We’ve exited the following positions below: