Original author: CryptoAmsterdam
Original translation: TechFlow
Is the altcoin bull market coming? This article will express my views from the following two aspects.
There are different stages of a bull market, and I think the altcoin bull market has not yet begun.
Why I think a lot of people miss out and how I do it.
cycle
All assets, on any time frame, will show similar cyclical structures. Focus on the weekly cycle, which is what we usually refer to as a bull market on the higher time frames.
Bull Market
Bear Market
Consolidation period
Doubt period
(1) Bull Market
Phases 4 and 5 are where the parabolic rise takes place.
The cycle structure applies to BTC, and you can find market structure in the fluctuations at each cycle stage.
Bull Market = Higher Highs / Higher Lows
Bear Market = Lower Highs / Lower Lows
Sideways = Equal Highs / Lows
Doubt Period = Initial Higher High (milliseconds / Trend Breakout)
Bull Market = Higher Highs / Higher Lows
Although you can already identify trends, market structure, and cycle phases, you can make it clearer by adding a range.
Stage 4 is the breakout of the initial high, a trend turn, and stage 5 is where the bull market takes a parabolic rise.
Range lows regained
To identify stage 4, you can use the range low recapture setup to catch price rebounding from a downtrend and reentering the previous trading range. After price breaks out of the range (stage 3), it moves back above the range low (stage 4), and then price typically moves closer to the range high again (stage 5), and we want to trade as close to the range low as possible.
Combining cycle structure, market structure, and range reoccupation setups, you get a blueprint:
Understanding where we are in the cycle
Find your entry/exit point/target
Understand the current situation and expectations
As you can see, BTC has hit the range high after retaking the range low.
This pattern allowed us to enter the market after BTC reclaimed the range low in 2023 and entered the doubt period.
What would you think if I told you that, in my opinion, altcoins are now in a very similar position to BTC?
(Source of tweet)
In the first stage of the bull market, it is mainly BTC, while in the second stage, it is the time for altcoins to chase the rise. The high price of BTC attracts people's attention, and profit and greed will later lead them to pay attention to altcoins. This shift always happens after BTC reaches a new high.
Reasons why altcoins are likely to start or be about to experience a significant rally:
Historically, when BTC has surged and set new highs, this has marked the apex of its dominance. While BTC may move higher first, the fact that it has been in an uptrend so far this cycle suggests that altcoins have yet to go through their bull cycle.
ETH/BTC is entering the range lows and is in phase 4, which is the reversal zone. In the last cycle, ETH has been trading in doubt against BTC. Imagine what this cycle will be like if she enters phase 5: the parabolic rise. The reversal means a rise in altcoins, which will extend to the broader market.
ETH/USD
When ETHBTC rebounds, I expect ETH/USD to reoccupy the middle range and form a false middle range breakout.
Trigger conditions: Reoccupation of the middle range and break of the lower timeframe market structure and trendlines.
ETH ETF
Excited about the ETH ETF decision next week, expected to be delayed but who knows, regardless I think the market has already priced it in, a potential bearish outcome that may have been anticipated and priced in by market participants, moving into macro reversal territory, which is very exciting. Meme sell-off, perhaps in anticipation of a trend shift?
Anyway, back to the altcoin cycle thesis.
We are already halfway through the cryptocurrency cycle;
The first stage was mainly dominated by Bitcoin, with some individual currencies performing outstandingly;
In the second stage, altcoins will rebound;
The altcoin market will reduce PvP (player versus player) competition.
So how would I proceed, and why do I think the majority will be marginalized again?
It is important to understand that if you are betting on a bull run in altcoins based on the reasons listed above (range lows recapture, crypto and AI bull cycle structures, etc.), you are actually just betting on a trade setup/structure to occur.
If we simplify this, it is a recapture of the range low on the higher timeframe.
Trigger condition: Recapture of range low
Target 1: Range High Area
Cycle-based Goal 2: Eventually surpass the range high
Failure Condition: Another acceptance below the range low (indicating a falling market structure)
Entry: As close to the range low as possible
This structure should be manipulated in the same manner on any time frame it appears in, regardless of its duration. And that’s where the difficulty lies.
Imagine this setup is a 1 minute chart, it re-enters the range and you enter. Now, within the next 15 minutes (that’s 15 bars), it retraces to the range low, which is totally normal and does not invalidate the setup.
Everyone is able to hold on, and most people may be mentally prepared to add to their positions if prices pull back to the lows of the range.
This is how you should trade this setup; the problem is that this is not a 1 min candlestick chart, it is a weekly chart.
A bigger drop
It takes longer
The problem is that:
People have no patience;
They want action;
When it takes longer, it can lead to poor execution;
Can’t stand falling;
Try to do small things within this larger setup;
Overall, the altcoin market cap chart is not an asset you can buy, but it is the basis of my thesis about the arrival of the altcoin bull cycle and the setup/trade I am operating.
Buy altcoins on retest of range lows
Sell altcoins at range highs and above
How did I do it?
I have been buying on dips. My first buy was based on a retest of this 0.25 level. In a bull market (after a breakout and recapture of the range low), the 0.25 level usually acts as a continuation of the rally into the 5th phase.
But it could also fail and go lower. The 0.25 setup would be invalidated, but remember: I am operating off the initial macro range low recapture setup, which is still very much alive. We could just be retesting the range low, providing a perfect opportunity.
Take FET as an example.
This may be painful as it means another 30% (or more) pullback in the overall market and more choppy trading and time consuming trading, but again: this does not invalidate our primary setup.
Range Low: My second buy pullback zone.
BTC has failed to flip the 0.25 level in 2021 and has retested the range lows. (Just like the COVID pullbacks in history)
