Day Trader Shares 2023 Investment Strategy: 100% Cash, Shorting Crypto

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Day trader Mark Szemeszki has spent the last year getting into oil trading and shorting bitcoin. In a recent podcast, Szemeszki shared the macro indicators he tracks for his trades. He also explained why he’s currently 100% cash, but why shorting altcoins might soon make sense.

As global markets plunged into negative territory last year, day trader Mark Szemeszki tactically shorted bitcoin, a practice he says has helped him stay firmly in the green.

Luck also worked in his favor, as he was already playing this trade when FTX crashed last November in one of the biggest black swan events in the crypto world, sending prices down again. assets.

Szemeszki, who lives in Denmark and has a master’s degree in accounting and finance, also got into oil trading just as the Russia-Ukraine crisis began, which provided his investments with an external shock. additional cost that pushed up commodity prices. In the end, he claims to have seen a 380% return.

Szemeszki’s opportunistic bitcoin selloff is part of a larger strategy of tracking the correlation between

It’s not just a matter of lucky timing, however. Szemeszki’s primary investment strategy is based on tracking the correlation between the S&P 500, bitcoin, and altcoins, which typically move in tandem as risky assets. When he spots a dislocation, he makes an exchange.

“There are really rare cases and they open up opportunities, which means something is wrong with market prices in the short term,” Szemeszki explained on the March 7 episode of The Contrarian Investor podcast.

When it comes to altcoins, it usually focuses on those with a small to medium market capitalization, usually between $100-200 million. He also prefers to consider specific macroeconomic indicators rather than focusing on the fundamental and technical factors of a cryptocurrency, as he does not believe strongly in the logic of decentralized finance or specific coins. “My honest opinion is that 99% of cryptocurrencies are useless,” he added.

Some of the macro indicators Szemeszki focuses on include the performance of gold, the US dollar index, and the CBOE Volatility Index, or VIX, a volatility gauge to properly position trades for the long term. For example, if an altcoin rises 200% to 300% while Szemeszki’s macro indicators predict a recession, that’s when he knows the new altcoin price isn’t sustainable.

“I always try to position it so that while in the short term I might not be right, in the long term I will be right eventually,” he explained.

Switching to cash in the face of the recession

With inflation persisting at higher rates, solid wage growth and an inverted yield curve, Szemeszki’s macro indicators now show that a recession is more likely to occur in the near future than a soft landing.

The Federal Reserve’s rate hike cycle, the ongoing Russia-Ukraine crisis and the reopening and expansion of the Chinese economy also added to the heightened market volatility.

Given the heightened macro uncertainty and the fact that his metrics are not currently pointing to a clear direction, Szemeszki is sitting 100% in cash for now. For him to change his stance would require a significant shift in general bitcoin market sentiment, whether through a change in likely liquidations, futures prices, or order flow. A significant transition to a more recessive environment could also mean significant returns for investors.

“Shorting these altcoins is a pretty good strategy if I think we’re going to have a recession and the Fed won’t cut rates,” Szemeszki said. But while he doesn’t necessarily believe in crypto, he wouldn’t short bitcoin in the long run either, as he doesn’t believe its value will ever drop to zero.

“Humans are drawn to stories that this herd effect can sometimes generate such momentum,” he explained. “Most definitely, I think bitcoin is going to have a very tough time, but it could go quite high knowing that stories can drive people.”

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