In "Celebration" of the current dump.
Today's dipitty dip was a unique opportunity for me in that I've been looking for reasons to make a full exit from MEXC. I no longer trust that exchange anymore and it's only a matter of time before their "recommended" KYC turns into forced KYC. Gonna be DEX tech from here on out, gentlemen. So I sold half of my $2000 BTC stack and powered up 7k Hive just now. A paltry sum but if Hive keeps crashing I'll keep buying. The ultimate buy zone for me is 200-250 sats.
Is this a good idea?
Hm... no... that's why it's called revenge trading. It's always smarter to stick to the plan, and the plan was to wait for the end of September. Buying now and making moves on the alt market is beyond risky at this point IMO. BTC is still very much primed to retest $58k and tempt the $58k gang into defending that level once more. It's also worth pointing out that Hive itself has a habit of hitting rock bottom around the 10-15 cent range during ultimate capitulation, so in theory we could still crash 50% from here which is... something I'd rather not think about but it is what it is. These things happen.
So why dipitty?
At this point it's a bit of a double-edged sword because I'm seeing that UpBit is unloading Hive... which is actually good because they had (and still have) why too much Hive within their coffers.
Upbit had 140M in HIVE, now is 118M, Binance had 26M now is 40M.
So the implication here is that Hive is being dumped on UpBit and arbitrage is pushing tokens back into our biggest global listing. Dumping like this can only last so long because there's only so much liquidity in existence... but it's pretty obvious that there are definitely enough tokens out there to flash crash the price to something like 5 cents if someone accidentally (or on purpose) fat-fingers a market trade. It honestly might be pretty smart to post a very low limit order on an exchange just in case something like this happens (like it did for me in Jan 2019 when I bought the token at 4 cents a pop).
Looking at aggregate data from Coingecko today doesn't seem to confirm this theory that coins are being dumped on Upbit because if this type of arbitrage was occurring the spot price on that exchange should be lower than the average... but the spot price is still slightly higher. This could be explained away in several ways, including today's dip not having anything to do with this overall macro trend... or that Korean exchanges are just weird and have what is referred to as the "Kimchi Premium" where Korea is so quarantined off from the rest of the world economy via regulation that they end up paying more for certain assets like crypto.
https://hive.ausbit.dev/hbd
How's our debt looking?
A dip this aggressive should have hit us pretty hard in the HBD department, but this is actually a lot better than expected. Our normal range is 5%-7%, and we find ourselves slightly outside of that at 8.4%. This is not ideal but also not nearly as bad as it could or even should be. I've always said that lowering yield on HBD now is a terrible idea because it will just force us to pay back debt at the lows and push the price down even more... but at this point it actually might be funny if it happened just to punish the sellers and remove even more liquidity from the market. Still not a recommended move but interesting to think about.
Many are still looking at that 7 cent haircut level as if it's a static number that isn't going to change when the price goes down. Well, the price has gone down and it used to be 8 cents, so the theory has been proven in reality. Part of the downward pressure here are conversions of HBD into Hive, which removes debt and lowers the haircut.
It's hard to see and a bit counterintuitive because the haircut percentage is going up, but the other number is going down which means this is definitely happening. Meaning if Hive actually crashed to 7 cents we still wouldn't be at the haircut. My guess would be that it would be lessened to 5 cents or even lower by that point. Slow dips like this can't cause a haircut we need a big ass flash crash in order for that to happen... which seems unlikely during this stage of the cycle. And if it did happen it wouldn't even be a bad thing: it's basically just free money for anyone willing to buy the discounted debt during overwhelming FUD.
Conclusion
Revenge is a dish best served cold! This cycle is proving itself to be very similar to the previous one despite not having to deal with a hostile takeover and being attacked by vulture capitalists. I must admit this is unexpected and I assumed we'd be doing much better by this point, but it is what it is. Volatility can either be a crippling setback or a major opportunity depending on positioning. On a personal level a dip like this is much more exciting than last cycle because I actually have funds on the outside that I can rotate into my #1. This still isn't feeling like the end of the world like it has before. Perhaps that means we're due for more pain, but I'd like to think it just means I was more responsible this time around.
If this cycle continues to play out like the last one it means we aren't out of the woods until the end of the year (and September at the earliest). If whales insist on dumping should we provide them with their exit liquidity or punish them by not buying (or even dumping ahead of them)? That's up to the individual to decide. Personally I will continue to DCA down into the red.