Week 11, Trade 11 : LONG $DRIFT

?? Week 11, Lesson 11

“The key to successful trading is not predicting the future, but managing risk and capital effectively.” Marty Schwartz

We are into Week 11 of the Fifty Two Trades in Fifty Two Weeks. Thank you for reading.

“The 52” deep dives into one trade every week, targeting traders with zero or little trading experience. But I hope that my pro trader friends find this as useful. For details on why I am doing this and who is this for, please read the About section on top, which I will update from time to time.

Most trades that we take will be medium (3-4 weeks) to long term in nature. We might do some swing trading here and there if opportunity presents, but always with proper risk management. After all, our purpose is to make money, not lose sleep over it.

You can track our trades and progress live here at this Hashtalk Link

Over 10 years in banking and now 12+ years dealing with nuances of crypto, I have learned some very hard lessons. I intend to share them transparently as we go. More importantly, please keep the comments and feedback coming, so I know we are on the right track together.

Bitcoin finally breaks the 58K mark

?? Portfolio Update - Open Trades

With the buzz around Token 2049 and the markets reacting to the 50 bps rate cut by the FED last week, we decided to take a pause and observe the market before sharing our next trade. Now, we’re back as we head into the final week of September. All our positions for this month remain open, though some options trades are set to expire today, while most of the positions from previous months have been closed.

With the recent market upswing, we plan to diversify our portfolio and explore more short- to medium-term spot plays. This market rally has already boosted our overall portfolio performance over 70% since we started in July, up from 56% just two weeks ago. Below is a detailed breakdown of our current open trades:

Trade 1: Spot $MOTHER

Status: Holding 25%, Sold 75%

P&L: $MOTHER was the talk of the memecoin world last week, and the price has bounced back to $0.09 so we took profits on 50% of position making our realized profit of over 55%. Though we have kept 25% of our position and raised our take profit to $0.20 as Izzy has been exceptional in promoting it. To limit downside risk, we’re also moving our stop loss to the entry price.

Trade 2: Spot $SUNDOG

Status: Holding 25%, Sold 75%

P&L: We took profits on 50% of our position at $0.26 and another 25% at $0.32, we’ve secured strong returns. We’re currently holding the remaining 25%, with $SUNDOG still trading at $0.32. As momentum pushes toward a $500M market cap, we’re keeping an eye on potential upside.

Trade 3: Spot $BNB (Entry: $530.70)

Status: Holding 75%, Sold 25%

P&L: With the rate cuts and the news of CZ’s upcoming release from jail by the end of this month, $BNB saw a major surge, crossing the $600 mark. We hit our TP1 and closed 25% of the position with a 13% gain. With the market looking strong for a Q4 rally, we're aiming to close another 50% at $625 soon. To protect our downside, we’ve set a trailing stop at $575, ensuring the entire position closes in profit.

Trade 5: $ETH Options – BUY CALL, SELL PUT & SELL CALL

Status: Holding

P&L: We earned a net premium of $320 from our options trading activities. With ETH currently priced above $2,600, if it crosses $2,800 in the next two days, we could potentially realize additional returns of up to $400, depending on where ETH closes today.

Trade 7: $BTC Options – CALL BUY & SELL PUT

Status: Holding the Call and Squared Off the Put

P&L: We bought a call option and sold a put option expiring later this year. After the market's strong rally, we closed our put position at $1,800, reducing the effective cost of the call to $1,800. With no downside risk on this option, we now have unlimited upside once $BTC surpasses $71,800, and we're confident this will happen before year-end.

Trade 8: $VISTA Spot

Status: Sold 100%

P&L: The memecoin frenzy has cooled off, and demand for the platform hasn't picked up as expected. $VISTA hit our stop loss at $10, prompting us to close the position. It's a classic case of trimming the sails when the wind dies down—let your winners run and cut your losses quickly to stay ahead.

Trade 9: Add Spot $BNB (Average Entry: $487)

Status: Following the same strategy we used for our first trade with $BNB, we have closed 25% of our position, achieving a 23% gain due to a lower entry price. We plan to close another 50% at $625 soon and to protect our downside, we’ve set a trailing stop at $575.

Trade 10: $BTC Options – CALL BUY & SELL, PUT SELL

Status: Holding Call Buy & Sell, Squared off Put Sell

P&L: We initially paid a net premium of $1K to enter our options strategy. With BTC surpassing $63K last week, we closed our put sell, reducing our net premium to $1.5K and limiting our downside risk. This move keeps our upside potential open, and with options expiring in October, we’ll break even if BTC closes at $61.5K, with a maximum possible return of $8.5K if BTC reaches $70K. You can find the detailed calculations in our sheet.

We continue to navigate the market cautiously, balancing between risk and reward. Stay tuned for more updates as we adjust our positions based on market conditions.We’ll continue to monitor the open positions closely and adjust as needed to navigate the range-bound market effectively. Stay connected on Telegram for real-time updates and insights.

If you have any questions, ideas, or feedback, please feel free to DM me on Substack or Twitter, Let's continue to navigate the market together!

?? Quick Macro & Crypto TL;DR

THE GOOD:

• The FED is recalibrating as a new macro rate-cutting cycle begins. The market has pushed them to deliver a 50 bps cut, and the FED delivered.
• The Fed forecasts a total of 200 bps in cuts by the end of 2025.
• Global monetary liquidity is increasing at over 6% annually, marking the fastest growth since April 2022 and aligning with the four-year cycle.

THE BAD:

• If the upcoming payroll numbers exceed 4.4%, it would likely raise alarm bells. While they currently appear to be in line with expectations, frequent revisions have undermined their credibility.

THE UGLY:

• Recent Chinese data has sparked concerns that China might begin exporting disinflation to other countries, including the U.S.

For more regular insights into macro and crypto trends, subscribe to our weekly newsletter: 5-Minute Macro and Crypto Weekly.

?? Week 11, Trade 11: BUY $DRFIT

In this week’s trade, we are looking into one of the most hyped coins on Solana ecosystem aka $DRFIT. Especially with the predictions markets being the talk of the town this trade made the most sense. Here is our detailed analysis:

WHY SOLANA ECOSYSTEM?

We have maintained a bullish stance on $SOL since day one, and after nearly three months since our first trade on $SOL, our conviction remains unchanged. $SOL has consistently shown the most strength among the top three coins and has been the best performer in that group over the past year.

If you want to read more about why we are bullish on $SOL you can read more about it here in our previous articles: Week 1, Trade 1: Long Solana

WHY DERIVATIVE DEXES?

In the past 12-24 months, DeFi activity on Ethereum, L2s and Solana has surged, driven mainly by lending & staking platforms like Aave, MakerDAO, Pendle and LIDO, and trading platforms like Uniswap, Orca, and Raydium. The consensus is that DeFi is simply a non-custodial alternative to exchanges like Binance and Bybit. However, as shown in the chart below, DeFi has been growing faster than CeFi, even in its current form.

As shown in the chart above, DEX spot volume currently represents about 12% of CEX spot volume, while DEX derivatives volume trails significantly at just 5% of CEX derivatives volume.

This disparity suggests that while DEXs have made notable strides in spot trading, the derivatives market remains largely untapped in the decentralized space. However, the potential for growth in the DEX derivatives market is substantial. As DeFi infrastructure matures and innovations in liquidity provisioning and scalability improve, DEXs will likely begin to close this gap.

WHY PREDICTIONS MARKETS?

Prediction markets were an early use case for crypto, gaining popularity during the ICO era with projects like Augur. In 2020, Polymarket emerged, focusing on political and current events, and allowing users to trade in $USDC, making it more accessible.

Predictions market have always been an integral part of the crypto industry, with the 2024 US elections approaching, total volume in crypto prediction markets has surged from a cumulative volume of $139M at the start of the year to over $3.2B today.

Additionally, major financial players are beginning to take notice. Bloomberg’s recent integration of Polymarket highlights the growing legitimacy and relevance of prediction markets within mainstream finance, further validating their potential for continued growth and broader adoption.

WHAT IS $DRIFT?

$Drift is a perpetual swaps exchange on Solana that offers on-chain leverage and innovative trading products. Last month, $Drift launched BET, a Solana-native prediction market built on its existing protocol.

Drift's standout feature is its three-tier liquidity provisioning, which ensures tighter spreads and faster fills:

1. Just-in-Time (JIT) auctions – Market makers can fulfill user market orders using a Dutch auction format within a brief time window.
2. Decentralized Limit Order Book (DLOB) – Traders can place limit orders, which are monitored and executed by a network of keepers against the AMM or other limit orders. These keepers earn a percentage of the trading fees.
3. Dynamic AMM (DAMM) liquidity – If market makers don't fill orders, a DAMM pool acts as the final layer of liquidity.

WHY $DRIFT?

• Significant Growth in Volume: $Drift saw trading surge to $5B across perps, spot, and swaps, marking a 50x year-over-year increase from ~$97M in August 2023.

• Significant Market Expansion: In the last 12 months, $Drift has roughly increased its market share tenfold compared to competitors. However, its absolute market share still stands at a modest 2.2%, highlighting substantial opportunities for further growth.

• Rapid Solana Adoption: Solana adoption is swiftly increasing, demonstrating a sustained growth trend across all DeFi applications on the platform. As $SOL appreciates, $DRIFT is poised to benefit even more from this ecosystem expansion, likely outperforming $SOL.
• First Predictions Market on Solana: While Polymarket enjoys a first-mover advantage on Polygon, $DRIFT, despite its later launch, leverages Solana’s robust user base and liquidity. With discussions of a Polymarket token on the horizon, $DRIFT stands to harness this hype for even greater growth.
• No upcoming unlocks: There are no token unlocks scheduled until November of next year, which means minimal dilution is expected in the coming months.

• Backed by big investors: $Drift recently raised $25M in their Series B round led by Multicoin capital

In a recent post, Ansem shared his favorite altcoin long setup, and $DRIFT aligns perfectly with all the criteria outlined in our thesis above.

TECHNICAL ANALYSIS

Given that $DRIFT is a new coin with limited historical price data, our technical analysis relies solely on price movement strategies. In the shorter term, it has begun to accumulate near its all-time high, and once that level is broken, we enter into a price discovery phase.

Our initial target is set at $1, although we anticipate the price may extend even further once it surpasses its previous all-time high. However, with every opportunity comes risk. As the price continues to accumulate, a potential pullback could occur, which is why we've established our stop loss at $0.50, the previous resistance level for $DRIFT.

HASHTALK CRYPTO TRADING FRAMEWORK

Here is the link to Crypto Trading Framework and its template that you can follow live.

?? CONCLUSION

The 11th trade of “The 52” is Long $DRIFT, it is a medium term trade with a time horizon of 1 to 2 months.

LONG $DRIFT

Entry Price- $0.65

Stop Loss- $0.504

Take Profit 1- $1.02

Take Profit 2- $1.20

Take Profit 3- $2.00

Stay tuned for more updates and insights!

You can track all our trades here.

Now go grab a coffee and please DM for any questions. Keep in mind, this is NFA and DYOR.

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