Alright.. Continuing yesterday, it was indeed the 11.58 magic spell.. After shouting for a long time and not being able to catch it, I ended up hitting my stop loss in the middle of the night.. Today there are quite a few things to discuss..
First, on the macro side, both pieces of news are known, one is that Old Trump signed the executive order allowing 401k pension funds to enter crypto.. This has been interpreted by the market as a positive. It is considered an ETF-like event.. In the future, part of the trillion-dollar 401k could enter the crypto space... The other is the subsequent appointment of a temporary director to the Federal Reserve.
I wasn't that sensitive when the executive order was signed yesterday.. This was already mentioned last month, and at that time it was just an intention. When the intention was announced, the market's reaction was relatively flat, if I remember correctly, it was only a few hundred to a thousand points... So when the first announcement came out about signing the 401k executive order, my first reaction was.. Is it really worth such a big reaction? Isn't this an old news...
So under the stimulation of this news, when the price reached 115,800, it was still normal to short at that level...
Of course, the market's response proves that I still underestimated the impact of this wave.. (Of course, this should also be related to the explosion of Ethereum shorts.. more on that later)
Since that's the case, I also went to delve into what exactly Old Trump signed this time and how much impact it could have in the future.. How long will it take for these funds to come in...
1. What is a 401(k)?
This is Old Mei's retirement savings plan... Basically, a portion is deducted from each paycheck and deposited into the 401k account, and the employer matches a part as well.. For example, if you save 5%, the company will also save 5% for you. The portion deposited is tax-free.
The money deposited cannot generally be withdrawn before the age of 60, and early withdrawals incur penalties. The deposited funds can be used for investments. Generally, there is a fund basket provided by the 401k account provider, which usually includes some stock funds, bond funds, etc..
It can be said that this is one of the three major sources of retirement income for Old Mei.
2. Can 401(k) now invest in crypto? Like IBIT and similar ETFs..
Theoretically, it is possible. As long as it is an SEC-registered ETF (like IBIT).
However, the vast majority of providers will not include cryptocurrency ETFs in their investable fund baskets. Because of the large volatility, they fear that employees might make reckless investments and then sue employers or plan providers for losses. Therefore, most employers prefer to offer various stable growth funds to ensure steady growth of employees' pensions and avoid subsequent troubles.
Currently, very few 401k plans can provide options to invest in IBIT.
3. What did Old Trump sign in the executive order yesterday?
The main core requirement is to lift the restrictions on 401k for other alternative assets, specifically naming digital assets..
The main requirement is for the Department of Labor (DOL) to reassess the legal liabilities of these alternative assets. It requires cooperation from agencies like the SEC to make it easier for individuals to buy alternative assets in their 401K (in other words, to put things like IBIT into the regular investable basket).
4. Why is it interpreted as a major benefit?
Currently, the scale of 401k is about 7 trillion dollars.. Even a 1% allocation would be a potential buying power of 70 billion.. Analysts have predicted that 5-10% of funds might come in..
Moreover, the funds in the 401k account are generally held for decades and are not moved, so it is equivalent to locking in the purchase.. There is no selling risk.
So this will be interpreted as an ETF-like event.
5. How long will it take to take effect?
It's important to note that I emphasized earlier that this executive order is just a 'request' process... He requested various regulatory agencies to amend the rules..
The specific implementation still needs to go through a series of processes..
For example, the Department of Labor, SEC, Treasury, etc.. All need to study and revise relevant rules.. Only after the rules are clarified will various 401k providers adjust the basket of investable funds..
At this time, 401k funds will start to enter ETFs similar to IBIT.
This process may take 6-12 months.. It needs to go through the entire process similar to that of ETFs back then... However, if it can be smoothly promoted, it can indeed be a trend-driven long-term benefit.
So.. actually this is more of an emotional boost.. There is still a long process to go before it lands..
Looking back at yesterday, my own plan was to short, entering at 11.58 and 11.64.. The exit points were at 11.68 and 11.71, but I hesitated for a bit.. 11.68 mainly because the short liquidity above 11.60 had already been cleared near 11.68, creating a void area.. 11.71 mainly wanting to leverage the resistance at the round number of 11.70... In the end, I chose 11.71.
Actually, after the announcement of yesterday's news, it did reach the resistance point at 116,800.. After clearing the liquidity, it stopped.. Later, when it dropped to 115,600, I hesitated for a bit and eventually chose to reduce half of my position at the cost price. Because the rebound was too fast after the dip, I felt there might be an upward risk, so I reduced half the risk first. The reason I didn't reduce it all was that I still wanted to believe this wave was just emotional, and thought it was about time near 116,800, still wanted to take a gamble.
But unexpectedly, in the middle of the night, there was another wave of appointments of new temporary directors to the Federal Reserve, equivalent to Old Trump inserting another person into the Fed.. The market had another positive wave... This caused the loss of the remaining half of the positions.. There was no other way.
Since it has dropped, let's just enjoy the show...
Yesterday, although I lost a bit, for several heavily shorted whales, it can be said that the losses were severe....
1) First, there was the "Insider Brother" who was mentioned a few days ago. He had also shorted Bitcoin and Ethereum.. A couple of days ago, when Ethereum went up, he cut his Ethereum position.. Yesterday he completely liquidated his Bitcoin position... Now HL's account has gone to zero.
The account went from a floating profit of 6.9 million on August 3rd to a realized loss of 6.58 million going to zero...
His HL account has already lost a total of 28.8 million from June to now... Back then, he made profits by using extreme leverage to roll over and catch a big wave, but with such extreme leverage, he lost it all in the fluctuations.. Profit and loss come from the same source.
After HL went to zero, he took out 470,000 margin and went to another chain exchange to short Ethereum, resulting in another zero... Truly tragic.
It feels like it's already out of energy....
2) The other one is the old brother who shorted 70,000 Ethereums... Previously survived by continuously increasing margin.. However, yesterday this wave still couldn't hold, and was forced to liquidate down to only 28,000 Ethereums in short positions.. Now still relying on increasing margin to hold on.
His account went from a floating profit of 14 million on August 3rd to a realized loss of over 5 million plus a floating loss of 6 million.. The entire PnL curve is quite similar to that of the insider brother above... The trading style is also quite similar... The results are also quite similar...
3) What was done correctly this time was that previous '400 million old brother'...
After the previous zeroing, he transferred 4.6 million again yesterday to reopen long positions in Bitcoin and Ethereum.. He caught this wave of 401k, now floating profits of 3 million.... He has started his slow recovery path...
After the melon is eaten, let's take a look at today's market...
From the orders, actually from 115,000 to 117,500 yesterday.. The spot side only used over 780 CVD.. The buying power wasn't that strong.. But in the absence of strong buying, the price surged by 2500 points.. The reason is still as mentioned before, the order book near 115,000 was too thin.. Basically there were no orders. So without much active buying, the price was driven up.. And the first small order position on the spot was at 117,700, where there were less than 100 orders. However, it successfully hindered the price from probing three times.. This further explains that the buying power for Bitcoin in this wave was actually not very strong.. (Even less than 100 sell orders couldn't be absorbed)
Similarly, from now on all the way to 112,000, the buying orders are not very strong.. If something stirs up, a market sell order of 1000-2000 Bitcoins could easily push it down by 3000-4000 points...
So this middle position is still quite difficult to trade.. Small funds drive large fluctuations.
This 117,800 was actually seen yesterday, but 1) did not want to place a loss of 2000 points, and 2) was not sure whether this pressure of less than 100 could withstand this wave of buying.. So still placed at 117,100 at the liquidation vacuum zone..
Today's thinking was originally to say a more aggressive low buy idea in the group, in the range of 116,300~116,000.. I placed an order at 116,200.. This is yesterday's transaction dense area + a previous low.. I felt there would be a rebound to a small high point at 116,800.. But didn't get filled, and 116,300 jumped up.. So I just skipped it..
If it goes down further, the aggressive low buy is still looking at the 11.58~11.60 range.. 11.60 is still the previous low support + 11.58's previous breaker block (pressure turning into support). There will be a wave of people like me who entered short at 11.58~11.60 without a loss to exit near the cost price (closing shorts means buying, which is the rebound point). If it breaks 11.56, exit at the previous low.
Further down near 115,200, this was also a pressure point breaker block tested several times previously + Wednesday's transaction dense area...
For aggressive shorting, around 117,300, this is the gap position where it opened down today + the pressure points above.
To be safer, you can observe the orders at 117,700~118,000 after going up.. Enter near 117,700~118,000. If it breaks 118,000 and the orders are eaten and do not pull back, exit.
