2022-02 Outlook

Last updated January 31, 2022

# Personal Outlook: Cautiously Bearish, Waiting for Capitulation

If you’re holding long-term and not over-leveraged, just sit tight, nothing to do except potentially buy a capitulation. Since Nov I have been consolidating to high conviction plays, and with the past week’s weakness/volatility, have looked to do some hedging for downside protection. Despite relief rallies, I’m waiting for capitulation (or breaking the bear market resistance and holding support) before “buying the dip”/declaring game on:

OI back down significantly, maybe 1 more shakeout? https://coinalyze.net/bitcoin/open-interest/ ; Long/Short ratio: https://coinalyze.net/bitcoin/open-interest/
Of course no one can predict the market. My personal feeling is we’re looking more at a Summer 2020 situation than 2018-2019 type thing, but who knows

# Factors:

Bad macro (FOMC, rates)
Geo-risk (Russia/Ukraine)
Retail bad (Collapse of rebase tokens, Dani/Quadriga scandal, MIM/UST depeg risk)

# Other Takes

Reading the market: https://cryptohayes.medium.com/

Arthur correctly called this correction so his latest article is absolutely worth paying attention to. He’s looking to see if there’s a bounce at 28.5K BTC, 1.7K ETH - if it doesn’t, look for a retest of last ATHs (20K BTC, 1.4K ETH)

Ari Paul https://twitter.com/aridavidpaul/status/1487476471866269699

Like everyone else was looking for a blow-off top rather than uneven distribution, but believes we are now in a “mild winter.”

Ark Invest https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK_BigIdeas2022.pdf

Long term bullish, lays out thesis for $50T crypto market cap, >$1M BTC, $200K ETH in 2030. I mean, I wouldn’t complain

# US Regulatory threats

# Metrics

# Plays

My core holding remains ETH (70%+); I have about 5-10% hedged out in pure stables and am otherwise in positions/bets I’m happy to hold through potential cryptowinter.

# Theses

Strong L1/L2s: ATOM eco, AVAX, MATIC, METIS, NEAR/AURORA
Options Protocols: DPX, GNS, GMX
Money printers: FXS, CVX, CRV, TOKE, LOOKS

# Abandoned

Dani Coins: mostly exited SPELL (it should survive, but took a small L to limit exposure). ICE should should survive as well - I’m actually more bearish on the project as a whole but have such a small position that’s so far underwater it’s not worth liquidating

# Ethereum

Don’t play here w/ <$10K+ or fees will kill you. FXS and Uniswap fees can be $200+/tx

Lots of veFXS locked and generating max yields on gauge stable pools
Rest of FXS in Tokemak until FPI announcement, then will lock as cvxFXS
A chunk of CRV exposure as very tax efficient play w/ yvBOOST since it was trading way below backing price - apparently I wasn’t the only one to spot this…
Additonal income generation with cvxCRV - it’s cheaper to buy on the open market and stake than to convert CRV. Generates about 55% APR including 15% atm of 3crv (stablecoin); <$3 seems like a decent price atm to me
CVX into vlCVX and delegating vote to Votium is you want a decent return in tokens you want to collect (FRAX or more CVX for me); <$25 seems like a decent price to me atm
I’m in a bunch of UniV3 positions that I’m using to generate yield positioned for cheap entries. Not recommended unless you know what you’re doing

# Arbitrum

I’ve done well with farming DPX/rDPX and have been making great monthly returns with deposits in the ETH SSOV
- Understanding SSOVs: https://twitter.com/ZCKRMNDPX/status/1487527984470937604
GMX is also paying decent returns on GLP for some lower-volatility farming, also available on Avalanche

# Polygon

I ran the numbers and actually for ETH deposits, Aave on Avalanche beats out Avalanche (although AVAX borrow and depositing into Impermax or Yieldyak is better for looping on Avalanche). I’m using Aave on Instadapp Polygon for doing shorting with debt swaps between ETH and USDC/DAI. I’m doing this primarily as a downside hedge rather than scalping. If ETH goes below 1700 I will probably freeze all my outstanding stablecoin loans as crypto (ETH or more volatile if possible) until we turn the corner
Mai Finance is offering 60% in weekly QI rewards (on a tear) camMATIC in vaults atm - these are single-staking and require keeping collateral ratios in a band (160%-405%) - it’s a very similar model to Abracadabra, but currently the best place to store MATIC to farm stables. MAI-USDC on Beefy is probably the easiest
UniV3 MATIC/ETH and Quickswap MATIC/PECO offer nice LP returns with limited IL, might be worthwhile (I’m not in these)

# Avalanche

GLP on GMX is like atricrypto but with returns on steroids. Pays 70% in AVAX on Avalanche (ETH in Arbitrum)

# Cosmos/IBC

Airdrops: https://docs.google.com/spreadsheets/d/1CjRglycJ8DwJ4-ZE5PUwSFh3wGgEkfc_u52-YlripGw/htmlview

Most of my ATOM just remains staked, but the limited amounts I have in various Osmosis pools continue to print away
Collected Stargaze Airdrop (staked and LP’d) and Shade Airdrop coming at the end of the month, EVMOS is the next big one I’m looking forward to.
Beyond constant aidrops, reasons to play around with IBC: https://blog.cosmos.network/whats-coming-to-cosmos-in-2022-ce8e48d383ab

# Other

Metis is back in a decent price range and has an interesting H1 2022 roadmap but is definitely a spec play. Will be making little bets (also made one on NEAR/AURORA), especially on Ethereum L2s with tokens this year (zkSync, Optimism, Arbitrum, etc).