AriaNaka

Truflation is showing US inflation near 0.68% while layoffs, credit defaults, and bankruptcies are all rising, yet the Fed still says the economy is strong.
If you look at the economy right now and compare it with what the Fed is saying publicly, there is a very clear disconnect building.

The Fed keeps repeating that the job market is still strong. But real data coming out from layoffs, hiring slowdowns, and wage trends is telling a different story.
We are already seeing cracks forming beneath the surface. The labor market is not collapsing overnight, but it is clearly weakening faster than what official statements suggest.
The same disconnect shows up in inflation data.
The Fed continues to say inflation is still sticky and not fully under control. But real time inflation trackers like Truflation are now showing inflation running close to 0.68%.
That level is not signaling overheating.
It is signaling that price pressures are cooling rapidly and the economy is moving closer toward disinflation and potentially deflation if the trend continues.
And deflation is a much bigger risk than inflation. Inflation slows spending but deflation stops spending. When consumers expect prices to fall, they delay purchases, businesses cut production, margins shrink, and layoffs accelerate.
That is when economic slowdowns turn into deeper recessions.
Another area flashing warning signs is credit stress. Credit card delinquencies are rising. Auto loan defaults are rising. Corporate credit stress is rising.
These are late cycle signals that usually appear when households and businesses are already struggling with higher rates.
Bankruptcies are also moving higher across sectors.
This shows that the cost of capital is starting to break weaker balance sheets. Small businesses and over-leveraged companies are feeling the pressure first but that pressure spreads if policy stays tight for too long.

So the bigger question becomes policy timing.
If inflation is already cooling…
If the labor market is already weakening…
If credit stress is already rising…
Then holding rates restrictive for too long can amplify the slowdown instead of stabilizing it.
Monetary policy works with a lag. Which means by the time the Fed reacts to confirmed weakness in lagging data, the damage is often already done.
That is the risk the market is starting to price in now. This is no longer just about inflation control.
It is about whether policy is now overtight relative to real-time economic conditions.
And if that is the case, then the next phase of the cycle will not be driven by inflation fears… It will be driven by growth fears and policy reversal expectations.
That is why the Is the Fed too late? question is starting to matter more for markets going into the next few months.

Most people believe that owning a hardware wallet is the final step in crypto security. That assumption is dangerously incomplete. A Ledger can protect you from malware, phishing, and remote attacks. It does nothing against the fastest-growing threat facing crypto holders today: physical coercion.
According to Chainalysis, crypto-related home invasions and physical extortion incidents have increased sharply since 2023. As crypto wealth becomes more visible and more concentrated, attackers no longer need to hack your device. They only need you.
1. The Threat Model Has Changed
Online threats are no longer the primary risk for serious holders. If someone forces you to unlock your wallet under duress, your hardware wallet offers no resistance. At that moment, security becomes psychological, structural, and physical rather than technical.

2. A Decoy Wallet Is Your First Line of Defense
In a worst-case scenario, you need something you can safely give up. A secondary hardware wallet with a completely separate seed phrase, funded with a believable but limited amount, acts as a sacrificial layer. Transaction history, minor assets, and realistic activity make it credible. Its purpose is not storage but deception.

3. Hidden Wallets Add Controlled Disclosure
Some hardware wallets allow the creation of passphrase-protected hidden wallets. One device can therefore contain multiple wallets, only one of which is visible under pressure. This enables staged disclosure, giving you options rather than a single point of failure.
4. Convincing Escalation Preserves the Core
Under coercion, attackers typically escalate until they believe they have extracted everything. A small visible balance followed by a larger decoy balance often satisfies that expectation. What they believe to be your full holdings is not your real portfolio.
5. Your Real Holdings Should Never Touch That Device
Serious holdings should be generated and stored fully offline, using air-gapped devices that never interact with internet-connected hardware. Seed backups should be stored on durable, fireproof, and waterproof metal solutions, never digitally and never on a device used for daily activity.

6. Seed Phrase Obfuscation Removes Single-Point Failure
Splitting a seed phrase across locations, scrambling word order, and separating index information ensures that no single discovery compromises the wallet. Partial information should be useless by design.

7. Reduce Visible Attack Surface
Once the real seed is secured offline, visible devices should contain only decoy wallets. If stolen or forced open, they reveal nothing of value. What cannot be discovered cannot be taken.

8. Physical Security Complements Wallet Security
Home security layers such as silent panic systems, offsite camera storage, and motion alerts reduce response time and increase deterrence. Seed backups should never be stored at your residence.

9. Silence Is the Final Layer
Even the most advanced setup fails if attention is drawn to it. Publicly sharing balances, trades, or security details creates unnecessary risk. Anonymity remains the strongest security primitive.

Final Perspective
If you hold meaningful crypto, your security architecture must be as sophisticated as your investment strategy. Real protection comes from layered deception, offline redundancy, geographic separation, and disciplined silence.
They cannot take what they cannot find, and they will not look for what they do not know exists.

#Bitcoin is currently trading on two different clocks at the same time: long-term power-law mean reversion, and short-term moves driven by macro and liquidity.
Short-term (macro clock): $BTC is tightly coupled to risk assets. 30-day correlations remain elevated with Nasdaq at +0.731, S&P at +0.727, HYG at +0.665, and even VIX at +0.543, with recency-weighted correlations still around +0.58 for both Nasdaq and S&P. Lead–lag analysis shows equities and credit tend to move first: S&P and Russell lead BTC by ~1 day, HYG by ~2 days, VIX by ~3 days, Nasdaq by ~4 days, and DXY by ~10 days. In practice, when equities or credit soften, BTC usually follows shortly after. Short-term direction is therefore macro-led, not narrative-led.
Microstructure (options & gamma): Spot is around $69,318 with the gamma flip near $68,692 and max gamma pin at $70,000. The main downside support sits at the $65,000 put wall, while upside resistance clusters near the $75,000 call wall. Net GEX is negative at -$32M, squeeze score is 58/100, and 30-day realized volatility is elevated at 80.2%. A large portion of gamma expires soon, with 15.4% on Feb 13, 20.8% on Feb 27, and 26.1% on Mar 27, and each expiry meaningfully increases breakout odds. Below or around the gamma flip, price action tends to be choppy to bearish, while sustained acceptance above $70K opens a cleaner path toward $75K.
Long-term (valuation clock): Power-law fair value is currently around $122,915 versus a market price near $69,243, implying a -$53,672 gap or roughly -43.7%. The Z-score sits at -0.82, signaling oversold conditions relative to the long-term trend, with a mean-reversion half-life of about 133 days. A projected reversion path places BTC near ~$111,751 by 2026-06-20, ~$142,452 by 2026-10-31, and ~$166,516 by 2027-03-13.
Short-term price action remains macro-fragile, while long-term valuation stays structurally bullish.
Near-term chop does not invalidate the long-term repricing math it is noise within a large valuation dislocation.
#AriaNaka #RiskAssetsMarketShock

As time is passing by with more data coming out, it's becoming increasingly more clear that the violent sell off had something to do with $BTC ETFs amidst one of the most violent days in the capital markets. We know this because IBIT had record trading volume (2x prior high at 10Bn+, wow what a record), and historic options volume activities (see below - highest contract count to date since launch of the ETF). Perhaps a little unusual relative to past activities, we can also observe the options activities were led by puts (vs calls) given the trading volume imbalance. (More on that later)

At the same time, we saw incredibly tight correlation of IBIT price action to software equities and other risk assets over the past few week. Goldman's PB desk also published that Feb 4th was one of the worst daily performance events for multi-strategy funds, a z-score of 3.5. This is a 0.05% event, and 10 times rarer than a 3-sigma event. It was catastrophic. It is always after these types of events that risk managers at pod shops step in to ask everyone to de-gross indiscriminately and urgently. That would explain then why Feb 5th was such a blood bath as well.

For all the record setting activities and direction of the price action (down 13.2%), we would most likely have expected to see a net redemption number come through. Using historical data, like Jan 30's record -$530mm redemption on IBIT when IBT was down 5.8% prior day, or February 4th's -$370mm on a losing streak, it would have felt plausible to expect at least $500-1Bn in outflows. But in fact, the opposite happened - we saw broad based net creations: IBIT saw approximately 6 million new shares in creation, driving 230mm+ in AUM. The rest of the ETF complex added flows as well, counting at $300M+ inflows and going.
This is a little perplexing. It's marginally imaginable that the outflows could have been reduced by the strong price action on Feb 6th, but to turn it into a net creation positive output is an altogether different story. It means that there are likely a confluence of various factors playing together here, but that they do not paint a singular narrative. Based on what we now know, there are several assumptions you can make, on the back of which I will propose my hypothesis:
the Bitcoin sell off likely touched a multi-asset portfolio/strategy that is not exclusively crypto native (it could be a multi-strat hedge fund as noted above, or it could also be something like Blackrock's Model Portfolio business that allocates between IBIT and IGV and had to auto-rebalance given sharp moves)the acceleration in Bitcoin sell off likely had to do something with the options market, particularly to the downsideThe sell-off did not result in end outflows of Bitcoin assets, which means that this was mostly driven by "paper money complex" activities led by dealers and market makers running generally hedged positions
Based on these facts, my current hypothesis is as follows:
The catalyst to the sell off was that there was a broad based deleveraging across multi-asset funds/portfolios due to the high downside correlation of risk assets reaching statistically anomalous levels.This in turn led to a violent deleveraging that included Bitcoin risk, but a lot of this risk was in fact "delta neutral" hedged positions like the basis trade or RV vs crypto equities or other types that generally tend to box the residual delta across the dealer community.This deleveraging then caused some short gamma to come into effect that compounded to the downside, which required dealers to sell IBIT, but because the sell off was so violent, the market makers had to net short Bitcoin without accounting for inventory. This creates new inventory, which reduces the large outflow expectations.Then we saw positive IBIT flows come in 2/6 by IBIT buyers (the question is what kind?) taking advantage of the dip, and that created an additional offset to what would otherwise have been a small net outflow.
First, I tend to believe that the catalyst was driven by the software sell off given the tight correlation that it is exhibiting vs even gold. Take a look at the two graphs below:

This makes sense to me because gold is broadly not an asset that is held by multi-strat funds that are part of funding trades, though it could be part of RIA Model Portfolios, so this checks out to me that the center of drama are more likely multi-strat funds.
And then this starts to make even more sense on the second point, which is that the violent deleveraging includes hedged #Bitcoin risk. Let's consider the CME basis trade for example, an all time favorite of the pod shops:

Take a look at the full data set with the CME BTC basis on 30/60/90/120 days since January 26th through yesterday (h/t to the best research guru in the industry dlawant). It can be observed that the near-dated basis trade jumped from 3.3% on 2/5 to a whopping 9% on 2/6. This is one of the largest jumps that we have personally observed in the markets since the ETF launch and speaks to what most likely occurred: a de-grossing of the basis trade by directive. Think about the Millenniums, Citadels of the world who had to forcibly unwind the basis trade (sell spot, buy futures), and given how large they are in the Bitcoin ETF complex, you can see how they would blow this out. I've written my hypothesis on.
This brings to the third leg. As we know understand the mechanics for IBIT to be sold in a broad deleveraging, what is accelerating the downside? One possible "fuel" to the fire is structured products. While I don't think the structured products market is nearly big enough to be solely responsible for the sell-off, I think it's entirely possible that when everything is freakishly and perfectly aligned outside of what any VaR models could ever tell you, it can be the acute event that creates a cascade of liquidation style behavior. This immediately brings me back to my Morgan Stanley days, where KI put barriers can be devastating in causing situations where option delta increases larger than 1, something that Black Scholes does not even contemplate for vanilla payoffs.
Take a look at one of the notes JPM priced in November last year. You can see the barrier is right at 43.6. If the notes continued pricing into December when Bitcoin went lower by 10%, you can see that there would be a lot of barriers in the 38-39 range, which brings us to the eye of the hurricane.

In these barrier breaches, if the dealer hedged the Knock-In risk using some combinations of being short puts, the gamma moves so fast especially with negative vanna dynamics that if you are dealer you have to sell the underlying asset aggressively into weakness. And that's what we saw with IV imploding to record levels, almost touching 90% that would read to catastrophic level of a squeeze that it's then possible that dealers had to short IBIT to a level that ended up creating net new units. This part requires a little more imaginative stretch and hard to ascertain without more spread data. Yet it is entirely possible given the record volume traded that the APs were involved in that effort.
Now combine this negative vanna dynamic with the fact that because volatility has been low, we've generally seen put buying behaviors by clients in the crypto-native land over past few weeks. This means that crypto dealers are also short gamma naturally as well, and basically sold options too cheaply relative to what the outsized moves would eventually be, exacerbating the downside. You can see that positioning imbalance below as well where dealers were mostly short gamma on puts from 64-71k range):

That brings us to 2/6, when Bitcoin made its heroic 10%+ recovery. Here what we can point to be interesting is that the OI interest in CME expanded much faster than Binance's (h/t again who looked at the hourly snaps to get it to 4pm ET to line the below up). You can see the drop from 2/4 to 2/5 as the OI collapsed (this again confirms that the CME basis trade was being unwound on 2/5), but that perhaps it came back yesterday to take advantage of the higher levels, neutralizing the effect of the outflow.

This puts it all back nicely together now, where you can now imagine IBIT is generally flat for creates/redeems because the CME basis net recovered, but the price is lower because Binance OI has collapsed and that means a lot of the deleveraging likely came from crypto native short gammas and liquidations.
So that's my best theory on what happened 2/5 and 2/6 thereafter. It makes some assumptions and it's not entirely satisfying in that there is no 'culprit' to blame for what happened (like an FTX). But the punch line is this: the catalyst came from non-crypto tradfi derisking, which happened to push Bitcoin down to a level where short gamma accelerated the downside due to hedging, but not directional, activities which in turn led to the requirement for more inventory- this then reversed quickly on 2/6 for tradfi market neutral (but unfortunately not for crypto directional). As unsatisfying as this may be, it's also perhaps comforting to at least determine the possibility that yesterday's sell off had nothing to do with 10/10.
Yes, I do not believe what happened last week is a continuation of deleveraging from 10/10. I read a post that alluded to the possibility of the debacle being a non-US HK based fund that is involved in a JPY carry trade that went wrong. There are two substantial holes to this theory. The first is that I simply do not believe there is a non-crypto prime brokerage that would service the complexity of the multi-asset trading and also provide a 90 day cushion to meet margin deficiencies that would not already have been underwater by a tightening of the risk framework. The second is that if the funding carry was used to purchase IBIT options to "get out of the whole" then a decrease in Bitcoin would not necessarily cause acceleration to the downside - the options would simply just go out of the money and its greeks dead. This means that the trade had to involve downside risk, and if you were shorting IBIT puts while being long dollar yen carry, well - then that prime brokerage deserves to go out of business.
The next several days will be really important, because we'll see more data towards whether investors are taking advantage of this dip and creating new demand which would be very bullish. For now, I am quite heartened by the potential ETF flows as I continue to believe that authentic RIA style ETF buyers (not RV hedge funds) are diamond hands, and there is so much institutional progress on that front that we are seeing across all the work that is being done by the industry and my friends at Bitwise. To see that, I am monitoring net flows that come without the expansion of the basis trade.
Lastly, it also goes to show you that Bitcoin is now integrated into the financial capital markets in a very sophisticated way, which means that eventually when we are positioned for the squeeze in the other direction, it is now going to be more vertical than ever before.
The fragility of tradfi margin rules is Bitcoin's antifragility. Whenever the melt-up comes the other way, which is inevitable in my opinion now that Nasdaq increased the OI limits on options, it's going to be so fantastic.

Most people believe the hardest part of crypto is getting rich. That belief is wrong. The real difficulty begins after the money is made. Across multiple market cycles, the majority of crypto millionaires eventually lose their wealth, not because markets collapse, but because their financial structure and behavior never evolve beyond speculation.
This article focuses on the structural rules followed by the small minority who keep and grow their capital long after the hype fades.
1. Taxes Are a Structural Risk, Not an Afterthought
For large portfolios, taxes drain capital more efficiently than any bear market. Serious investors think in terms of jurisdiction, residency, and legal structure. Several countries legally offer zero or near-zero taxation on personal crypto gains, including the United Arab Emirates, Portugal for non-business activity, Puerto Rico for eligible U.S. citizens, Malaysia, El Salvador for foreign investors, and Switzerland for private investors. Wealth without tax planning is temporary wealth.

2. Capital Preservation Comes Before Capital Growth
Generating outsized returns is only the first phase. Long-term survival depends on security and risk control. As portfolio size grows, cold storage, multi-signature custody, controlled position sizing, and holding liquidity become essential. Diversification beyond crypto reduces dependency on a single asset class and protects against systemic shocks.

3. Post-Gain Capital Allocation Determines the Future
Large wins create the illusion that speed is required. In reality, patience is the correct response. Capital that exits crypto cycles is often redirected into tax-efficient real estate markets, undervalued emerging economies, and productive hard assets. The goal shifts from exponential returns to stability, yield, and capital durability.

4. Privacy Is an Asset That Compounds
Visibility increases risk. Public displays of wealth attract unwanted attention from social, legal, and personal vectors. The most resilient individuals operate quietly, prioritize discretion, and treat privacy as a form of insurance.

5. Emotional Stability Protects Capital
Sudden wealth magnifies emotional impulses. Without discipline, it leads to overtrading, lifestyle inflation, and reckless decision-making. Maintaining routines, pacing lifestyle changes, and avoiding constant stimulation preserve both capital and clarity.

6. The Highest-Returning Investment Is Personal Capability
Markets change, but skills compound. Physical health, continuous learning, language acquisition, and macroeconomic understanding expand opportunity sets far beyond crypto. Individuals who invest in themselves remain competitive regardless of market conditions.

7. Mentorship Accelerates Wealth Maturity
Navigating wealth alone increases the probability of costly mistakes. Guidance from those who have successfully navigated multiple cycles shortens learning curves and protects against ego-driven errors.

8. Lifestyle Inflation Is a Silent Wealth Killer
Net worth growth does not require proportional spending growth. Sustainable living costs reduce financial pressure and allow capital to compound uninterrupted through volatile cycles.

9. Relationships Outlast Market Cycles
The strongest form of wealth is a small, trusted circle built before financial success. Loyalty, discretion, and intentional relationships create stability that money alone cannot provide.

10. Capital Finds Meaning Through Impact
When personal needs are met, capital becomes a tool for contribution. Supporting causes without expectation builds long-term fulfillment and reinforces healthy decision-making.

Final Perspective
Getting rich in crypto often involves timing and luck. Staying rich requires discipline and structure. Growing wealth across decades demands strategy. The five percent who succeed long-term treat crypto as a phase, not an identity.

Wealth is not defined by how much you make in one cycle, but by how much you keep after it.

There’s a far deeper level of understanding in the market than most people realize. Beyond technical analysis, there’s something few truly consider, and that, my friends, is the mathematics behind trading. Many enter this space with the wrong mindset, chasing quick moves, seeking fast gains, and using high leverage without a proper system. But when leverage is applied correctly within a structured, math-based system, that’s precisely how you outperform the entire market.
Today, I’ll be discussing a concept that can significantly amplify trading returns when applied correctly, a methodology leveraged by institutional capital and even market makers themselves. It enables the strategic sizing of positions while systematically managing and limiting risk.
Mastering Market Structure: Trading Beyond Noise and News

When employing an advanced market strategy like this, a deep understanding of market cycles and structure is essential. Traders must remain completely objective, avoiding emotional reactions to noise or news, and focus solely on execution. As I often say, “news is priced in”, a lesson honed over six years of market experience. Headlines rarely move prices; more often, they serve as a justification for moves that are already in motion. In many cases, news is simply a tool to distract the herd.
To navigate the market effectively, one must understand its clinical, mechanical nature. Assets generally experience predictable drawdowns before retracing, and recognizing the current market phase is critical. This requires a comprehensive view of the higher-timeframe macro structure, as well as awareness of risk-on and risk-off periods, when capital inflows are driving market behavior. All of this is validated and reinforced by observing underlying market structure.
A Simple Illustration of the Bitcoin Market Drawdown:

As we can observe, Bitcoin exhibits a highly structured behavior, often repeating patterns consistent with what many refer to as the 4 year liquidity cycle. In my view, Bitcoin will decouple from this cycle and the diminishing returns effect, behaving more like gold, silver, or the S&P 500 as institutional capital, from banks, hedge funds, and large investors, flows into the asset. Bitcoin is still in its early stages, especially when compared to the market cap of larger asset classes.
While cycle timings may shift, drawdowns are where institutions capitalize making billions of dollars. This example is presented on a higher time frame, but the same principles apply to lower time frame drawdowns, provided you understand the market’s current phase/trend. Multiple cycles exist simultaneously: higher-timeframe macro cycles and lower-to-mid timeframe market phase cycles, where price moves through redistribution and reaccumulation. By understanding these dynamics, you can apply the same approach across both higher and lower time frame cycles.
Examining the illustration above, we can observe a clear evolution in Bitcoin’s market drawdowns. During the first cycle, Bitcoin declined by 93.78%, whereas the most recent drawdown was 77.96%. This represents a meaningful reduction in drawdown magnitude, indicating that as Bitcoin matures, its cycles are producing progressively shallower corrections. This trend is largely driven by increasing institutional adoption, which dampens volatility and reduces the depth of pullbacks over time.

Using the S&P 500 as a reference, over the past 100 years, drawdowns have become significantly shallower. The largest decline occurred during the 1929 crash, with a drop of 86.42%. Since then, retracements have generally remained within the 30–60% range. This historical pattern provides a framework for estimating the potential maximum drawdown for an asset class of this scale, offering a data-driven basis for risk modeling.
Exploiting Leverage: The Mechanism Behind Multi-Billion Dollar Gains
This is where things start to get interesting. When applied correctly, leverage, combined with a solid mathematical framework, becomes a powerful tool. As noted at the start of this article, a deep understanding of market dynamics is essential. Once you have that, you can optimize returns by applying the appropriate leverage in the markets.
By analyzing historical price retracements, we can construct a predictive model for the likely magnitude of Bitcoin’s declines during bear markets aswell as LTF market phases. Even if market cycles shift or Bitcoin decouples from the traditional four-year cycle, these downside retracements will continue to occur, offering clear opportunities for disciplined, math-driven strategies.
Observing Bitcoin’s historical cycles, we can see that each successive bear market has produced progressively shallower retracements compared to earlier cycles. Based on this trend, a conservative estimate for the potential drawdown in 2026 falls within the 60–65% range. This provides a clear framework for identifying opportunities to capitalize when market conditions align.
While this estimate is derived from higher-timeframe retracements, the same methodology can be applied to lower-timeframe cycles, enabling disciplined execution across different market phases.
For example, during a bull cycle with an overall bearish trend, one can capitalize on retracements within the bull phases to position for the continuation of upward moves. Conversely, in a bearish trend, the same principle applies for capturing downside movements, using historical price action as a guide.

We already know that retracements are becoming progressively shallower, which provides a structured framework for planning positions. Based on historical cycles, Bitcoin’s next retracement could reach the 60–65% range. However, large institutions do not aim for pinpoint entry timing, it’s not about catching the exact peak or bottom of a candle, but rather about positioning at the optimal phase. Attempting excessive precision increases the risk of being front-run, which can compromise the entire strategy.
Using the visual representation, I’ve identified four potential zones for higher-timeframe long positioning. The first scaling zone begins around –40%. While historical price action can help estimate future movements, it’s important to remember that bottoms cannot be predicted with 100% accuracy, especially as cycles evolve and shift.
This is why it is optimal to begin scaling in slightly early, even if it occasionally results in positions being invalidated.

In the example above, we will use 10% intervals to define invalidation levels. Specifically, this setup is for 10x leverage. Based on historical cycle retracements, the statistical bottom for Bitcoin is estimated around $47K–$49K. However, by analyzing market cycles and timing, the goal is to identify potential trend shifts, such as a move to the upside, rather than trying to pinpoint the exact entry.
Applying this framework to a $100K portfolio, a 10% price deviation serves as the invalidation threshold. On 10x leverage, a 10% drop would trigger liquidation; with maintenance margin, liquidation might occur slightly earlier, around a 9.5% decline. It is crucial to note that liquidation represents only a fraction of the allocated capital, as this strategy operates on isolated margin. For a $100K portfolio, each leveraged position risks $10K.
This approach is what I refer to as “God Mode,” because, when executed with a thorough understanding of market phases and price behavior, it theoretically allows for asymmetric risk-reward opportunities and minimizes the chance of outright losses.
The Mathematics

Now, if we run a mathematical framework based on $100K, each position carries a fixed risk of $10K. We have six entries from different price levels. If you view the table in the top left-hand corner, you can see the net profit based on the P&L after breaking the current all-time high.
Considering inflation and continuous money printing, the minimum expected target after a significant market drawdown is a new all-time high. However, this will occur over a prolonged period, meaning you must maintain conviction in your positions. At different price intervals, the lower the price goes, the greater the profit potential once price breaks $126K.
Suppose you were extremely unlucky and lost five times in a row. Your portfolio would be down 50%, with a $50K loss. Your $100K pool would now sit at $50K. Many traders would become frustrated with the risk, abandon the system, and potentially lose everything.
However, if you follow this mathematical framework with zero emotion, and the sixth entry hits, even while being down 50%, the net profit achieved once price reaches a new all-time high would be $193,023. Subtracting the $50K loss, the total net profit is $143,023, giving an overall portfolio of $243,023, a 143% gain over 2–3 years, outperforming virtually every market.
On the other hand, if the third or fourth entry succeeds, losses will be smaller, but you will still achieve a solid ROI over time. Never underestimate the gains possible on higher timeframes.
It is important to note that experienced traders with a strong understanding of market dynamics can employ higher leverage to optimize returns. This framework is modeled at 10x leverage; however, if one has a well-founded estimate of Bitcoin’s likely bottom, leverage can be adjusted to 20x or even 30x. Such elevated leverage levels are typically employed only by highly experienced traders or institutional participants.
Many of the swing short and long setups I share follow a consistent methodology: using liquidation levels as position invalidation and leverage to optimize returns. Traders often focus too rigidly on strict risk-reward ratios, but within this framework, the mathematical approach dictates that the liquidation level serves as the true invalidation point for the position.
This is how the largest institutions structure their positions, leveraging deep market insights to optimize returns through strategic use of leverage.
Extending the same quantitative methodology to lower-timeframe market phases:

Using the same quantitative methodology, we can leverage higher-timeframe market cycles and trend positioning to inform likely outcomes across lower-timeframe phases and drawdowns. As previously noted, this requires a deep understanding of market dynamics, the specific phases, and our position within the cycle.
Recognizing when the market is in a bullish trend yet experiencing distribution phases, or in a bearish trend undergoing bearish retests, enables precise application of the framework at lower timeframes. This systematic approach is why the majority of my positions succeed because its a market maker strategy.
This methodology represents the exact structure I employ for higher-timeframe analysis and capitalization. By analyzing trend direction, if I identify a structural break within a bullish trend, or conversely, within a downtrend, I can apply the same leverage principles at key drawdown zones, using market structure to assess the most probable outcomes.

Short Term Holder Net Position Change just rolled over after a strong accumulation phase, with the 30 day cumulative metric slipping back into red. That shift signals fresh supply entering the market as recent buyers start realizing profits or cutting risk.

Historically, sharp green spikes above +500K BTC marked aggressive dip buying and local bottoms. Now we are seeing the opposite behavior. Net outflows are accelerating while price stalls near highs, a classic late cycle distribution pattern.

Price action remains elevated, but the divergence is clear. Holders are selling into strength rather than stacking. Liquidity gets absorbed, momentum fades, and volatility expansion usually follows.

If selling persists, $BTC could test lower demand zones before the next structural reset. Watch for capitulation spikes to signal exhaustion and the next accumulation window.