Are We Entering a Bear Market? w/ hedgedhog7 (Bainy Zhang)
Aug 12, 2024
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Bainy Zhang, a trader from Fisher8 Capital and known as hedgedhog7 on Twitter, shares his bearish outlook on the current crypto market cycle. He delves into the psychological aspects of trading, discussing the emotional struggles that traders face. Bainy highlights strategies to navigate market fluctuations and emphasizes the importance of balancing wealth with personal well-being. He also reflects on the role of social media in trading performance and offers insights into finding clarity amidst the chaos of the crypto world.
Bainy Zhang indicates a bearish market outlook, believing we are at the later stage of a bull cycle with increasing volatility.
The importance of risk management and clear trading protocols is underscored through Bainy's successful short-only trading strategy since early 2022.
A balanced lifestyle is essential, as Bainy shares how prioritizing health and fitness has positively influenced both personal life and trading performance.
Deep dives
Background in Crypto and Trading Experience
The guest started their journey in crypto in 2017 at a proprietary trading firm, developing skills in click trading on Bitmex. They gained valuable experience through their role as the first crypto trader at Three Arrows Capital, where they learned about risk management and yield generation strategies. Their trading insights include memorable trades such as buying KNC at its lowest point before the DeFi boom. After leaving Three Arrows, they co-founded Fisherate and have continued to focus on trading and incubation of new projects.
Market Cycles and Current Views
The discussion highlights the cyclical nature of the crypto market, with the guest expressing a belief that the current phase is the later stage of a bull cycle. They observed significant volatility, with Bitcoin showing relative strength while many altcoins have faced major sell-offs. The guest shared technical insights, indicating that Bitcoin's performance around the $55-$56K level is crucial for future bullish sentiment. They also noted a divergence in price movements among cryptocurrencies, suggesting a more complex market landscape.
Shorting Strategy and Risk Management
Since early 2022, Fisherate has adopted a short-only strategy and focuses on the risk-reward dynamics of trading. The guest explained a specific trade involving Ethereum that capitalized on breaking important support levels, which allowed them to profit significantly within a short timeframe. They emphasized the importance of entering trades with clear risk management protocols and not exposing themselves to excessive losses. The approach involves identifying overvalued altcoins and executing short trades while keeping an eye on potential long opportunities.
Trust Issues and Experiences in the Crypto Space
The guest opened up about their experiences with trust in the crypto industry, sharing stories of being rugged by individuals they thought were legitimate. They emphasized that trust is crucial but warned that even with legal contracts, financial loss can occur if someone decides to betray that trust. Their experiences highlight the necessity of being cautious and discerning when engaging with others in the crypto space. They have learned to assess risk based on understanding the potential for losses and to approach new ventures with a grounded perspective.
Balancing Life and Trading in Crypto
The conversation also touched on the balance between health and trading, with the guest mentioning their commitment to fitness and its positive impact on their overall quality of life. They revealed how boxing training has provided structure and discipline, improving their daily routine and sleep patterns. The transformation from a crypto-centric lifestyle towards prioritizing health illustrates the evolving nature of their interests. This holistic approach has ingrained better habits that contribute not only to financial success but also to a more satisfying personal life.
Episode 22 of Crypto Market Wizards, an interview series focused on crypto traders in the trenches of the liquid markets. Today we have Bainy Zhang from Fisher8 Capital (AKA hedgedhog7 on Twitter) to discuss where we are in the cycle and why he's generally bearish the markets. We also get into discussions around balancing health vs wealth and the tradeoffs we make being in crypto.
This was recorded on August 8th.
Crypto Market Wizards is an ad-free and sponsor-free podcast.
Guest's Twitter: https://x.com/hedgedhog7
Join the Humble Farmer Army: https://whop.com/humble-farmer-army
Free Newsletter: https://hfaresearch.substack.com/
Free Telegram: https://t.me/+3LgpNxIgJ4IzY2Fh
Taiki's Twitter: https://twitter.com/TaikiMaeda2
Humble Farmer Army Twitter: https://twitter.com/HFAresearch
PODCASTS:
Crypto Market Wizards: https://www.youtube.com/playlist?list=PL6bwqqJO_txgGQySGK5-HSuTPp0LjeGqA
Steady Lads: https://www.youtube.com/@0xSteadyLads
Taiki is the founder of Humble Farmer Army, a community-driven research company founded in 2021 with a mission to create high-quality, digestible content that helps separate signal from noise for DeFi enthusiasts.
Timestamps:
00:00 Introduction
3:01 Hog's Market Outlook
9:17 Thoughts on ETH Underperformance
13:34 Dealing with Being Wrong
16:59 Being Right with Conviction
24:26 How to NOT Baghold
26:52 How to Make it this Cycle
31:56 Are 4 Year Cycles Over?
33:31 Hog's Trading Style & Heuristics
37:40 Life without CT
40:33 How do You Trust People?
43:21 Wealth vs Health
50:41 Growing Pessimism/Cynicism
54:38 Successful Traits of Traders
56:43 Advice to Younger Self
1:00:22 Valuation Models
1:04:32 Final Words of Wisdom
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