Yesterday, I fiddled around on $FOGO and ultimately decided to take profits. The process was quite interesting.

The root of the issue was the big drop at 5 PM. I looked into it and it was mostly participants in the Pre financing doing hedging. The clever part is that the cost of pre-market hedging is lowest before trading opens. However, this also attracted a group of short-sellers betting on the expectation that this hedging would push the price down. The hedgers weren’t worried; with only a 2-day window, even if the project team later doubles the price, they wouldn’t lose. Increasing positions at high levels could even yield more profit.

My judgment at the time was: after the Pre financing ends at 6 PM, the retail short-sellers will inevitably close their positions to cut losses, which could naturally trigger a price rally. So, I went long near 6 PM.

Being an L1 public chain, I was more tolerant of its valuation, plus a slight hope that the project team might pump the price, so I continued holding. The original plan was to take profits before the launch at 8 PM tomorrow night. Although I didn’t make a big profit this time, I gained a more intuitive understanding of the interaction between hedging and expectation gaps.