Aylo

I've been having quite a few conversations with a friend that has life changing money in crypto currently. He's been in this position before, but lost/rode it all down last cycle. Here are some thoughts from those conversations: I don't know how long this bull market lasts. I would guess we are at about 60-70% of the way through at this stage. However, I don't have a crystal ball, no one does, and I do believe you should remain humble in the fact that you can't predict the future. There are simply too many variables and unknowns. If you are an individual that finds yourself in a position where if you cashed out/rebalanced to less risky assets today that it would completely change your life, then you are now in a position where you can only lose going forward. Let me explain. Once you have enough money to take away all/most worries, then in general, more money makes very little difference to your happiness. If you are very materialistic then you might feel differently, but for most humans this is the case. More stuff is just more stuff. It doesn't really have a multiplying impact on purpose, well being and happiness. So, if you find yourself with life changing money at stake, then I would argue you can only lose by continuing to hold a large position in crypto. I don't really think you can "win more", as more gains will make very little difference to your overall wellbeing or happiness. Once you have secured the bag, then by all means come back and speculate to your heart's content, but securing some form of financial freedom is the biggest upgrade you can possibly make in life. It sets you up forever and puts you in a position to explore boundless opportunities in the future. Greed and arrogance is really the only thing that stops humans from taking the chips off the table, even when they have already won and beaten the market. There's also an ever present narrative that "this is the last chance to make it" and it will be impossible to have chances to make outsized money again. This irrational fear and logic also drives people to just keep holding even when they already have unrealized life changing gains. Most are simply unable to overcome this imagination of missed gains in the future, and it's why we see most crypto participants losing life changing money on a consistent basis. It's also not a popular thing on CT to tell people that "selling early" is ok & the right decision even if it is going to have an outsized impact on your life in the real world. I have an immense respect for anyone that sticks to their own plan and isn't swayed by external influence/noise, and is able to step away from the perceived gains that the majority says is a certainty in the near future. Just a little ramble, maybe it helps you in some way now or in the future.

I think way too many ppl are delusional about this idea of letting Iran control the SoH, having the US pull out, and just letting Iran set up a toll booth. Where does Saudi’s power actually come from? It’s not just because they’re rich. Their entire influence comes from being the world’s only swing Producer. We need oil, and Saudi controls that market. If Iran takes over the SoH, they become the most powerful, one of a kind Global Swing Producer in history. If they don’t like the oil price? They can just "adjust" the traffic in a strait that handles ~20mb/d to swing prices however they want. If the UAE gets on Iran’s bad side? "No passage for UAE tankers." If Kuwait tries to build a bypass? "Fine, the SoH is closed starting today. Let’s see if you can finish that bypass—which takes years—without making a single dime." By letting Iran control that flow, the US is effectively making Iran the ultimate energy gatekeeper. The entire regional hegemony shifts to Iran. Saudi and the UAE lose everything. Think about it—if you were MBS, would you let this happen? Let’s say the US pulls out this week. The US started this mess, and now the GCC has to just sit there and watch their power handed over to Iran? Let me give you a reality check for Americans: Imagine Mexico now controls the North American continent. "Want to fly to the UK? Get Mexico’s permission. Want to import jet fuel from Asia? Pay Mexico a toll and take the route they tell you to. Did you dare to criticize Mexico? Now, no container ships can enter your waters. You can’t say a word against the great President of Mexico." It sounds like a fantasy, but that’s the reality for the GCC. If the US tries to run away? If I were the GCC, I wouldn’t let them leave. I’d grab them by the hair and drag them back to clean up the mess they made. I’ve said before that this is an existential issue for Iran and Israel. Well, Iranian control of the SoH is an existential issue for every other GCC nation. And the GCC has leverage. They have massive wealth invested in the West, huge U.S. asset holdings, decades of lobbying networks, and they are the biggest donors for Trump’s terms. And of course they have oil. Do you really think Brent would stay below $100/bbl if the GCC teamed up and cut just 3mb/d for six months? Even the most optimistic guy knows the answer is zero chance. They don't even need a fancy excuse: "Oh, since the US gave up on us and Iran owns the SoH, it's not safe. We have to cut production. Sorry!" Within months, the US would be begging to come back. It’s just pushing the Middle East into an even bigger pit of fire. Thanks for listening to my TED Talk :) #oott #iran

@CoukosStephen Here are the odds the Strait is open by the end of April. I'm not really considering it as a high probability outcome. 15% chance sounds about right.

@alpha_pls Trump has repeatedly shown he can turn on a dime. Saying the war will last at least as long as he said - 2-3 weeks - and not potentially shorter as one of your outcomes makes little sense and suggests a lack of objectivity about the facts

No one likes being bearish, but there are times when "defensive pessimism" (as I call it) is the only rational stance. All the outcomes before Trump's speech pointed to bearish outcomes of varying degrees. The reality of where we are: • The conflict will last AT LEAST another 2-3 weeks (hopeful scenario), which means that the Strait of Hormuz is still closed, which would be 46-53 days closed. • Approximately 20–21 million barrels per day (bpd) flow through the Strait. If closed for 50 days, the cumulative deficit would be over 1 billion barrels. • The current closure of the Strait of Hormuz is officially the largest oil supply disruption in human history. It dwarfs the 1973 Oil Embargo (which saw a peak cut of ~4.3 million bpd) and the 1979 Iranian Revolution (~5.6 million bpd). • Inflation will rise over the coming months. Expect headline CPI to surge by 2-3% over the coming months as energy costs filter through the supply chain. • Central banks are trapped. They will be paused (maybe hike), and very concerned to not stoke the flames of inflation this year. 1970s-style inflationary spiral is embedded in the psyche of many at the Central Banks. • As energy costs act as a "tax" on consumers and collateral volatility rises, liquidity will tighten aggressively. The market has remained very optimistic/complacent and hasn't priced in the above. I think the nothing ever happens crowd are wrong here. In the same way that crypto participants were very complacent for months following its cyclical top, stock market participants are doing the same. Once the market prices in the reality that is unfolding and some of the worser case scenarios (the Strait being closed for even longer than another 2-3 weeks) then I think you will find many opportunities out there.

@seventyXforty It’s not an April fools joke

@alpha_pls bad april fool's joke

Oh man. Potential $200m hack on Drift.

Modern wars are fought on X.

@KAIZ3NS Student of history

@alpha_pls Lucky enough to know how 2022 played out.

Funny how all we need to do is bet on history repeating the majority of the time to win consistently. I think the average human is geared up to worry about “what if this time is different.” And therefore plays for “this time is different” the majority of the time, when really the odds say you just need to play for “this time is the same.” The hard part is pattern matching the right part of history and conditions that match where you are today. Humans are predictable and will continue to exhibit the same reactions and behaviours to events just like they did in the past.

2022 SPX fractal. Won't be a perfect fit of course, but something like this seems likely to me. Still possible we get another move to the equal/marginal ATH, before rolling over again (not my base case, and r/r for multi-year hold is poor regardless). The effects of this war will create some structural inflation which will keep central banks paused, weaken businesses and the consumer, and we will see a bottom and new business cycle emerge later on this year. Unless this time is different.

Is the Strait of Hormuz open? The answer remains no. It has been effectively closed for 32 days. The physical shortage of oil is a fact that fake headlines can't fix. Trump can walk away and cede control of the Strait to Iran if he wants (effectively admitting he lost this war), but that would still mean many months of disruption for the global economy (in the absolute best case scenario). It would take time for any legitimate insurer to underwrite the Iranian toll system, as they would need very clear guarantees by other sovereign nations. Europeans would be forced to negotiate with Iran - this is not an overnight thing. I think everyone is frazzled by the will he invade/no he won't invade headlines. No one knows what Trump will do next, even he doesn't know. But, I think it is clear that no scenario is bullish for markets. We have only bad and catastrophic outcomes from here. I think the eventual destination is lower, and the market will continue to gamble with relief rallies along the way. I am a patient bear.

@litocoen I suppose I should have said they keep the strait closed for a while longer (not forever) in order to see if they can force concessions.

@alpha_pls i dont think option 1 is realistic why would iran keep the strait closed if trump exits? they want to make money and rebuild their infrastructure

I think the outcomes are: • Trump exits with nothing achieved and Strait of Hormuz closed • Trump exits with nothing achieved and Iran operates a toll like system in the Strait of Hormuz which will be highly unstable • Conflict continues for longer All bad for risk assets in the medium term.

@udiWertheimer I don't know the core devs like you do, but I also agree that Bitcoiners will make this happen. Many new institutional Bitcoiners are not going to sit on the sidelines here.

@alpha_pls bitcoin devs aren’t smart and many of them don’t own bitcoin bitcoin holders have an incentive to replace them with competent people, and i believe they will

"Show me the incentive and I'll show you the outcome." History has shown us that humans can overcome any challenge given the right incentive. There is a massive incentive (quite literally all of their savings and future wealth) for Bitcoiners to solve the problems that quantum poses for both the network and older existing coins. If this paper doesn't light a fire under the Bitcoin core devs and community than nothing will. It will take herculean effort, but I believe they will get it done. I don't bet against smart motivated humans. Quantum is the final existential risk that Bitcoin faces, and quite possible the last great generational entry as a result.

The Google quantum paper likely proceeds the next leg down in this bear market. It was very likely to happen in April regardless, but now you have another trigger that people can latch onto alongside the macro.

This chart should make you very wary right now. DXY on the verge of breaking out. Technically looks very bullish. Not sure how much longer this resistance can hold in light of the macro. Would expect risk assets to leg down on a meaningful break up. There's embedded structural inflation for the foreseeable future, so seems unwise to bet against dollar strength in the near term. Any counter trend rallies are for selling imo.

Remain of the opinion that the markets have not accepted the reality that this is a prolonged conflict. Nothing to do but wait for more panic. This doesn’t end with orderly selling.

@Scotters333 Probably resolves with a big capitulation, as it always does.

@alpha_pls So basically it always ends up lower. I can't really see how this doesn't resolve lower eventually

Some observations: The TACO trade is dead. The algos rigged up to that are being killed. The market no longer believes Trump's lies. You are starting to see real world stories across Asia and Australia about oil shortages, fuel rationing, and shutdowns, which is adding to the market fear. Every day the Strait of Hormuz stays shut from here the Oil price rises, and those on the other side of the trade start to give up. We had crowded bullish positioning by institutional money in equities, and that is on the cusp of flipping as they depend on economic data coming in for their decision making. This is how crashes happen. Trump now must escalate the conflict in order to open the Strait. He needs to use the military to get it done. I don't see that he has any other option. Even if he steps back, Iran have no reason to open the Strait out of kindness. They want real concessions. I don't see Trump exiting and giving Iran want they want. His ego is far too big. Almost seems to me like the best case scenario is boots on the ground and fairly instant military success. That is still bad for risk and drives oil up in the short term. The worst case scenario is drawn out conflict, with the US military in Iran with no victory in sight. Markets are not prepared for that outcome. Of course this too shall pass, but worth keeping your eyes open here as we may get some extraordinary buying opportunities should certain events play out.

The main risk if you are bearish is a surprise diplomatic resolution of some sort. As long as this drags on with escalation or without escalation, that still stops the spice flowing which affects the global economy.

@Scotters333 Range of outcomes: • Big nuke and some great volatility for short term trades • Relief rally because of some perceived good news, and then we go lower later as the damage is done Lower.

@alpha_pls Mmmm feels like we're in for a big nuke