The End Of The Luna Crash? – Is The Bottom In?
We are not falling further. Is this the opportunity to speculate a little bit for this to maybe go to two dollars? Three dollars? Four dollars? These kind of videos go out of date quickly, so lets not waste. Further time lets jump right in Music hi. So unless you havent been living under a rock, you should know by now that ust, the stable coin of the terraluna ecosystem has depect, but the pack seems to somewhat revert again right. We had our initial crash two days ago to 60 cents. Then we went back up to 94 cents, then we got the final massive collapse, all the way to 23 cents, but now we are back to 77 cents. Is this a stabilization of the system? Can this now, after all of this pain, finally turn around now? What i think is the most important thing to discuss here is the pack its not necessarily the price of the lunar token, because the entire ecosystem of terra luna it does revolve around d5. The total value lock chart of terra luna has, of course, imploded a lot of money left the system and theres not a single application on the network that has profited from this. So youve got all these kinds of fancy. Derivatives on the lunar network right youve got regular options. Youve got binary options, youve got levitt short selling, youve got synthetic stocks all of the things that traditional finance offers, but its all revolving around the ust stablecoin without ust being stable.
All of this ecosystem is pretty much worthless, and so i think we shouldnt gain any confidence in the lunar ecosystem until we have completely restored that pack, because otherwise, why did we see this massive crash yesterday right? We had already been coming back somewhat two days ago. Right, we had been going from those 62 cents all the way to 94 95 cents, but this last little movement over here right, the last few cents they couldnt be established over a prolonged period of time to be more exact. We had more than 12 hours to get back to one dollar and we didnt, and so every moment where we are not at one dollar, the ecosystem loses more and more credibility. It has already shrunk that much right, so many people have been willing to sell the ust for a discount people had enough people are simply just exiting, and even with that now way smaller size. We are still not able to repack, and this comes after all the stabilization efforts. It comes after selling the entire treasury after upping the burn rate right, the lunar burn rate thats limited each day, so all of this did not yet help, and so the question is really. What are you betting on now when you buy luna? Are you betting on enough money coming in, as in there are external vcs or external whales that want to bet on this that want to see this continue going on, or do you rather want to bet on the brand, maybe surviving on regulation being potentially, maybe not That hostile right because thats the second problem, if we can stabilize the price theres still very likely to be more regulation coming into the space.
This was a massive event and it obviously also caught the attention of janet yellen. People are going to work on new regulation on new restrictions of what you can and cannot do in defy, and this whole process might have just been now accelerated with this implosion of ust. So the thing youre likely going to bet on when buying luna right now and there we go. This is how quickly these things outdate right, youre already now below one dollars. I will have to rename the title of this. The thing youre betting on right now is that enough people will have confidence that adoption will happen, probably outside of the us that maybe the strict u.s regulation will not be adopted by europe or by asia. Youre betting on all of these kinds of things and youre betting on this in an overall bearish environment because thats in the end, the question can maybe the overall crypto momentum turn around and i think theres several ways to try to gauge this right. But you want at least a stabilization to a certain degree. You want to at least the fall to somewhat stop, and if we take bitcoin as a general gauge where the market might be heading, then what i like to do is i like to look at moving averages, because those historically worked pretty well in predicting? Where momentum might be going so ive actually run a simulation of buying and selling bitcoin ive also done this with various altcoins and when we currently look at the most important moving averages.
So this is the best simple moving average over here in green. This is the best exponential one. They both indicate that we still have a very long way to go until we can consolidate either by shooting up from here, which is unlikely, i think, or at least by going sideways for quite a while. Now, what are those most important? Moving averages lets switch gears a little bit lets look at the general market, so this is what ive done. Ive built a back test in microsoft, excel and over here weve got a macro where we can say what kind of a starting capital do we want to use what kind of a trading fee. So this is 0.1 percent thats typical for binance, and then do we want to go long when the price is above the moving average and also do we want to go short when the price is below right. We could, for example, simulate to be completely in cash when the price is below the moving average. We could also simulate to bet on falling prices, so this is the general idea right. You want to be in the market when the price is above. You want to be outside of the market when the price is below the moving averages, simply following the general trend and then the question is whats, actually the best duration of those moving averages, because one could take all kinds of durations right. We could be less reactive.
Take a longer duration but then also have potentially less failed signals, or we could react way quicker right. We could reduce that duration and then always go in and out of the market, so we would be relatively active, but we would also enter the market very early in such a rally and exit during a crash. So the duration of the moving average here really matters. This is in the end, what you want to optimize for then we also want to ask: is it best to use a simple or an exponential moving average, and why do we make all of this trickery its simply to find out? Where is the over market going? Because theres simply so much impact across crypto theres, simply so much correlation if bitcoin goes down. Luna, of course, goes down as well, and now that luna is so small, there is more active speculation happening around this again right, its not just any more money flowing out of anchor. That has mainly happened already. I think so lets look at what moving average duration is actually the best lets start with just simulating to be long when the price is above and to be completely in cash when the price is below the moving average, so whats, actually the best moving average over Here so we are running now the macro and there we go over the entire data set which, by the way, starts here in the middle of august 2017.
. We dont want to go too much into the past right, because the market has changed quite a bit for bitcoin. You cant really compare bitcoin when it was just a few cents. Compared to today right there was different market participants. There was different market dynamics, so you want to look at a time frame thats somewhat at least representative of today, so this is starting in the middle of august of 2017., so i would have gotten 66 per annum by buying and holding and here weve got now The best moving average durations for the simple moving average and the exponential one. So this is the same here in chart format so on the x axis, weve got the moving average duration, so one simply just means looking at yesterdays price. This here is the two day. Moving average the three day, moving average etc on the y axis, weve got the annualized performance, meaning in black weve got the buy and hold line. This is what we have gotten if we just bought and held bitcoin and in green weve got the different back test results based on the moving average duration. So the best simple moving average thats back tested is the 48 day. The best exponential moving average is the 15 day, so this is then, how that looks like on a chart right. Sometimes we go completely sideways because we are in cash, so in green, as the portfolio line in white is the bitcoin price, and sometimes we follow the price movements right.
This is the same here on a logarithmic scale, so you can see over time. We avoid those large crashes, and this data by the way does not even include the recent crash. So when i built this excel sheet, it was the 4th of april. So this is a bit over 1 month old here. The out performance now would probably even be higher right because we have been outside of the market according to that moving average since the 9th of april, so the portfolio line would be going sideways, while bitcoin went further down now. We can also look at this by shorting right, so if we now bet on falling prices and the price is below the moving average, then we can again iterate over this and we can look at what is then the best moving average duration, its going to be The same so, no matter if youre in cash or if you bet on falling prices, the duration will not change, but the out performance will change. So look at this again. The 15 day is the best over here, and the 48 day is the best over here. So this is simple, this is exponential and this is then how the outperformance looks like right, so a pretty constant nice gain versus buying and holding and so thats, then what we see here in trading view, so this was quite a segway, but i think the segway Is important because of the correlation within the crypto space when times are bad everything is going down right and the same is true.
The other way around. I am all for buying the dip right im all for buying the fear, but you have to look at the scenario that turns us around. This is the over crypto market. Probably not is this external money flowing in the smaller? The ecosystem gets the easier it might be to stabilize ust to a certain degree, but still i personally, i would like to see light at the end of the tunnel and that light would be reaching exactly 1 us dollar per ust. Just a small deviation from this. Just opens the gate again for another crash, so if you do want to be contrarian right, if you do feel like betting on something like this, its probably better to bet on ust stabilizing than on luna going up luna currently is probably in way more danger. The focus is on a ust stabilization, and only when that goal has been achieved, then i think it might make sense to get into luna again so thats completely independent of the lunar price, its just looking at the ust pack, of course, when, in the meantime bitcoin Can also stabilize somewhat right, then we might be really off to the races again, but currently we are very far away from this. Things need time to turn around the weekends need to have the opportunity to exit, and only once all of this has cleaned out. Only then i think it makes sense to be risk on again now, if youre interested in downloading the excel sheet of that backtest feel free to check out the premium membership.
Weve done quite a few back tests over here for all kinds of different assets and indicators. Weve also got tutorial videos, of course, a whole course on technical analysis on backtesting and last but not least, whats, probably even the most important weve got the premium community. So a telegram chat where we discuss the current market situation around ust around crypto in general, so feel free to check that out. The bitcoin strategy is the url. The link is in the video description now. Besides all that paid content, i of course still continue to publish videos on this channel regularly, so dont forget to subscribe in case you havent yet and in case youre wondering what currently the on chain data around crypto is saying.