Panic Selling

What’s the correct time to panic?

Down days after long rallies always make everyone uneasy. “Yes, maybe that went too far”, “It’s healthy to have a correction”, etc.

The correct time to panic was yesterday. But what to do today?

With regards to my two previously disclosed investments, Badger and NFTX, days like this won’t affect at all (1) the “never selling until 1B” stash and (2) small caps. I won’t sell either way. But what about the “trading” portion of the Badger portfolio?

I sold it all. This may seem a bit counterintuitive to what I said yesterday for the rally having more legs to go on, but it’s based on two things: fear and greed.

Fear: I may be wrong about the rally, and in that case, the cash reserves for this portfolio were too low. If this was just a dip, I still have decent exposure anyway.

But I felt the mood swing and felt fear throughout the market. Definitely not end-of-cycle fear, just the kind of panic that happens from time to time in crypto.

Greed: I think many people will run to the doors to secure their profits. In Badger that may be more true because the DIGG snapshot was already taken, so there’s less incentives to stay in the pools (but TVL has not dropped meaningfully).

I’ll be a buyer of dips in Badger and (depending on the price, YFI).

If this is just a dip and we continue higher, I’ll probably will need to buy when we dip higher, because I won’t have conviction to buy before.

One lesson to keep, that I ignored for this portfolio: always have some reserves. That makes days like this less emotional and more fun.