The Castle Chronicle: The Bleed Out
PLUS: Why you should always be selling!
Welcome to Edition 147 of The Castle Chronicle!
Hello all! We know you’re all glued to the screens waiting for the market to rebound, or maybe just to watch the newest announcements from DevCon, but we’re glad to see you here for another edition of our newsletter. Let’s lock in and get to reading!
Gm all, Here’s what we have for you today:
🔍 Market Watch - The Bleed Out
🫂 A Social Etherscan
🎯 Take Some Chips Off the Table
📖 Recommended Reads - Top reads from the best researchers on CT
🔍 Market Watch
Gm frens! It’s off-season, most stuff is bleeding out, and we’re waiting for demand to show up again. I’m not looking for any trades right now. Instead, I’ll use this opportunity to once again preach patience and enjoying time away from the charts.
Price Action
BTC hasn’t quite found a bottom yet. Given the HTF trend, the expectation is re-accumulation. During early phases of re-accumulation, supply overpowers demand - this is completely natural and expected. After that, some money changes hands and eventually demand once again overpowers supply. That is our confirmation to participate again. Until that happens, I’m patiently sitting on my USDC stack.
Top Performers
Let’s take a zoomed-out view of the market again, since we’re not necessarily looking for any setups this week. This is the TOP 10 sorted by 90d %.
Our main goal during the off-season is to pay attention to which assets show the most resilience to the sell-off. We want to see clearly trending charts over the past 3 months with shallow pullbacks. We’ll be able to find quite a few similar-looking charts even outside of the TOP 10, but here I’d pay attention to ZEC, SOON, DASH, and XMR. All of them are currently pulling back (just like the rest of the market), but they’re pulling back from a position of a strong preceding trend AND the pullbacks are relatively shallow. That’s what we want to see!
If BTC (and the entire market with it) goes back to bullish mode, chances are these assets will present great opportunities.
Narrative Performance
We’ve seen this time and time again - when BTC bleeds out, the rest bleeds out even harder. This should bring the point home that there is absolutely no point trading bullishly in this environment, as supply is clearly in control. That being said, Prediction Markets and Privacy are showing the most resilience to the current sell-off (ZEC, DASH, XMR? It’s not a coincidence).
Rewiring the need to trade
During my journey of becoming a full-time trader, I had to make many mind shifts. One of them was the expectation of being able to trade all the time. I thought I could log in pretty much anytime (especially since I started with 24/7 crypto markets) and outperform the market with my skill. You can only imagine how much frustration that led to…
These days, I truly believe that the markets are only to be traded during very specific moments, when one side is clearly overpowering the other (supply/demand), which allows me to join the winning side for as long as it lasts. And with that, several expectations had to be adjusted.
I’m not overexaggerating when I say - I filter out more than 99% of price action. I patiently wait for the market to get into a good spot, and then I look for setups. Often, I won’t even get any. Price might run without presenting a setup, a newly set up context might fail the next day, and all I’m left with is sitting on the sides doing absolutely nothing.
In the past, this sitting out was killing me. I wanted to trade so bad. I wanted to put my money to work and make more money! Can you relate? But these days it’s different. Trading is, by nature, a very flexible job. There will be weeks and months of absolutely nothing, and then there can be weeks of scalping the market every day from morning to evening. Knowing this, our expectations should be properly synced.
So I encourage you to take advantage of this unique trait that trading presents. When there’s nothing to trade, don’t see it as a negative thing. There is nothing to do right now. You’re free to do anything you please! I use these days to simply enjoy life to the fullest. And if I really want to put some work in, I can always hone my edge by backtesting and refining my processes.
Remember that trading is seasonal and patience is everything!
Risk responsibly, and I’ll see y’all next time!
Courtesy of 0x_Vlad - trend-based trader and MentFX student
Not following what I’m talking about? Check out my quick cheatsheet to understand how I approach a chart.
🫂 Interface.social : A Social Etherscan
I recently, randomly met the founder of
https://www.interface.social/
And found the concept very interesting.
Simply said, it is a social trading application built on the Ethereum blockchain, designed to enable users to discover, follow, and copy trades from other traders in a community-driven environment. Availble on desktop or IOS/Android, this App lets users follow the 0x address they found interesting on the network (most of the time associated with Y personality from CT or a specific ENS), and they can see their onchain transaction, what they bought, what they sold. The idea is to make onchain tracking social & easy to execute on Ethereum & Layer 2. (Most of the onchain EVM action is taking place on BASE now, that's what the founder told me)
Another interesting function in the app is the Takes section, where users can give their thesis & takes on a new project that they just bought in. Or just express their vision on a different topic in the space, a bit like CT or Farcaster.
In this case, wijuwiju.int.eth (The founder of interface.social) is explaining why he just bought some $PEAR token to his followers. I met him while shilling my bag to some VCs.
(i’m the cofounder of nothing, just BD LMAO)
Or in some other cases, explaining why you cut a trade after your followers saw you exiting onchain.
One last interesting feature is the copy trading one, with a leaderboard that enables users to easily copy trade the BEST onchain guy. You can see the most active & followed traders on the network.
Just select him/her
& easily copy trade in 1x click. That makes it easy for the average normie to make money onchain & the trader that is being copied receives a small fee in exchange, aligning the interests. (Very interesting social feature imo)
Anyway, I just started using it & I think some of our readers could be interested, so check this out. This is a highly ETH-aligned project, and the founder is a chad.
Have a good w33k
From CL, with love
This week’s edition of the Castle Chronicle is brought to you by Umami!
🎯 Take Some Chips Off the Table
If you’re lucky, you can walk away from crypto having secured generational wealth for you and your family, but the odds of that are getting increasingly small. Having gone through my fair share of crypto cycles and bear markets (three since 2017), I feel like I have a better grasp of it all now.
Although if you’re active on CT, you’re not going to get the best perspective on what I’m about to discuss. In fact, most people probably think it’s some form of heresy.
But the best advice that I’ve ever seen in crypto is this simple phrase: Always be selling.
See? Told you it would be heresy.
How many times have you been on CT and seen someone post “I’m in this for 10x or nothing!”?
Or better yet, “Holding this till $1M in profit or zero!”?
Unfortunately, this happens altogether too often, making these individuals unable to give or receive good advice.
So, why should you always be selling? There are plenty of reasons, but the biggest one is this: You are your own worst enemy.
Psychology suggests that humans crave status and recognition, and we also tend to prefer round numbers. People tend to hold onto trades longer for more money and to hit specific numbers; that’s just part of our nature.
In crypto, this ends up being a horrible combination, as the industry is so volatile and prone to excessive price swings, far beyond what normally occurs in TradFi. That’s why so many of us are numb to massive drawdowns.
We call those a rite of passage around here.
But it doesn’t need to be that way.
The thought process behind “always be selling” is that you should be taking profits off the table bit by bit and removing it from crypto entirely. Here’s the kicker though: don’t bring it back to crypto under any circumstances. Once it’s out, it stays out.
That’s how you keep building a nest egg that’s removed from the volatility of crypto. I know we tend to say that “cash is trash”, but until BTC or ETH is the primary currency of literally everything, cash is still king when it comes to transacting in real life.
“But Schizo, I don’t want to hold cash, its value is constantly eroding.”
Blah blah blah, yeah, I’m aware.
Here’s the thing: this money that you remove from crypto needs to be used for the essential things in life. What are those important things you ask?
If you’ve managed to carve out a home for yourself in our little magic internet money community, then odds are you did it to gain wealth. You could be here just because you believe in sovereign, programmable money, but c’mon, that’s probably the minority of you, right?
Either way, a lot of you likely have debts that could be erased, mortgages that could be chipped down or outright paid off, or maybe even setting aside some money for your future children. You need to make the money feel real, which means spending it and realizing the gains.
If you can do this enough and get used to the feeling, then selling will become easier for you. It feels weird to sell positions that you’re heavily, mentally invested in, but you have to get used to the feeling.
What happens if you don’t?
Well, you end up like all those traders who were up gorillions and decided that they were going to hold for more, just to get wiped out. Take the Bonk Guy, for example, he was up roughly $30 million on his position and didn’t sell. Instead, the position got wiped out on 10/10.
Yup, you read that right. Millions and millions of dollars gone in an instant.
So if you were in that position, incrementally selling all the time, you’d have plenty of money socked away for a rainy day. There’s plenty of danger in greed, and selling bits and pieces forces your hand and makes you take some chips off the table.
The moral of this story is that we are all greedy and dumb, and we need to hedge ourselves from our own failings. The best way that I’ve found to do this is to take money off the table often.
Force your hand. Pay off debts. Set yourself up for the future.
If crypto is destined for another bear market (maybe we’re already in one) where prices go down another 30-50% across the board, you’ll want to have secured profits away from the casino.
Don’t put yourself in a position where it’s super hard to come back, because you’ll be more likely to make bad decisions in the name of “making it all back”.
Just take some chips off the table.
Schizo out!
📖 Recommended Reads
This was a gem of a read from our friend Hoeem, around ways to set yourself up for the future
A look at a new research collective featuring GLC Research x Four Pillars
An excellent article from Ching Tseng around Agentic micropayments and some barriers to their success
That’s it for today’s issue, we hope you enjoyed it.
You can check out our X for new research reports and weekly gigabrain content.
See you in the next issue,
The Castle Team
In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.