Half-exit / rebalance strategy

First – why?

Since 2022 BTC is correlated to Nasdaq more than ever. So what do we get from investing in BTC? High risk (high reward) with a bonus of tax problems and inability to move liquid funds (to your traditional bank), you can’t use it as collateral on traditional banks, etc. Oh, another nice bonus – you might not be able to withdraw from CEX in some worst case scenarios, not to mention DeFi.

Bitcoin (BTC USD) Correlation With Big Tech Hits Record - Bloomberg
BTC Nasdaq correlation. And it’s getting worse… [Bloomberg]

So is it worth it? If it decoupled from Nasdaq, maybe. I mean… for the good side, of course. Till then, if markets continue to melt down, you better invest in stocks.

For the first time – everything on the table!

Let’s first put ALL of the scenarios on the table. Have you find a single influencer putting all the options on the table? Never.

a. Worst case – recession: hunger, nuclear, geopolitical unrest, commodities crises, pandemic, climate, black swan, whatever.
                           BTC goes nearly to zero. USDT losing peg. All CEXes are bankrupt. No way out to fiat. Years to recover, if any, only BTC in cold storage might be worth something after some decades.

b. Bad case – from inflation to staglation or hyperinflation – 6-18 months to recover. BTC bottom at ±$8K-$14$K. Alts won’t recover, new ones will take over later on, like in 2018-2019. Binance funds are safu, others might now. I don’t consider ETH as an altcoin BTW.  

c. Average case – we’re going sideways from here for several months, midterm elections might start rising in summer for a short period. Existing alts will recover eventually, the survivors will be the big winners (e.g.: ADA, SOL, MATIC, LINK, etc.)

d. Good case – bottom is already in (BTC at $26K), it was a correction and we’re back on track.

e. Best case – BTC to $100K this year.

I currently give 25% (yes, 25%!) for the worst case, 60% for the bad case, 10% for the average case, 5% for the good and ±0% for the best case.

Now the thing is – the percentage allocation prediction should be reallocated on a weekly basis. Any macro fundamental event might change the picture. So the scenarios are here for the near future, but the probabilities will vary on a weekly basis.

Are funds are not safu on case #a above…

What to do with it?

First, write down your percentage allocation. If it’s similar to mine – then it means you’re not thinking independently. I have no way to predict the future, you also, so use your own judgement and not mine.

Second, act accordingly –

If you’re 80% bearish, switch 80% to stables or even fiat if you consider the worst case like me.

If you’re 20% bearish – well, you understand the idea.

Now what to do with the funds switched to stables or fiat?

If you switched to stables, it means you still believe in BTC/ETH in the future. Put limit orders for DCA down and forget all about it.

If you switched to fiat – do the same on some leading stocks. Apple, Microsoft (yeah I hate them just like you), Google, Tesla, Amazon, whatever.

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