When playing with altcoins or meme coins, there are several challenges to catching trends:
1. Initial momentum is hard to detect
At the beginning, the price increase and volatility of such coins often hide within the fluctuations of other boards. By the time one notices, leading coins may have already multiplied in value. Emerging altcoins' initial price movements are easily obscured by the price fluctuations of mainstream coins like Bitcoin, making it difficult for investors to recognize their potential.
2. Many imitation coins disrupt the market
When a leading coin appears, numerous imitation or concept coins emerge. The increase in quantity makes it hard for investors to scrutinize closely. For example, after a certain hot meme coin becomes popular, many similar coins flood the market, making it difficult for investors to distinguish between quality and fakes.
3. Influx of capital causes chaos
Large amounts of capital flood in, especially from those who have missed opportunities with leading coins, blindly chasing after imitation coins. This disordered influx leads to market chaos, concealing true potential. For instance, after missing out on a star altcoin's rise, investors may pour capital into imitation coins, leading to distorted prices, making it hard for them to assess coin value and direction based on price trends.
4. Momentum does not progress smoothly
Momentum does not increase in a straight line; it often corrects, even causing investors to feel that the market is about to crash. For example, after a rapid rise of a certain altcoin, a significant correction may occur, with declines reaching over 30%, causing investors to doubt previous bullish judgments, disrupting investment decisions, or fearing they will miss out on future gains after selling.
5. Market makers create confusion
Market makers, such as WinterMute, often lead investors to doubt their own judgments, causing an imbalance in mindset. Their buying and selling or price fluctuations may not align with the fundamentals of the coin or market trends. Investors, relying on distorted signals, can easily fall into traps, doubting their analyses and struggling to stick to strategies.
6. Timing risks are significant
Not every emerging concept coin quickly gains market favor or waits long to enter the mainstream. If one misjudges too early, they may suffer significant drawdowns. For instance, while some innovative altcoins have potential, they may be perceived as undervalued by the market or have little capital backing, delaying their price appreciation. Early investors may face pressure and encounter adverse market conditions or losses.
7. Market conditions are mixed
When the market is hot, many tracks are in motion, with overlapping waves, making it hard for investors to discern true momentum. Different track coins may fluctuate together due to speculation or mutual interests, causing the market to become very volatile. Investors easily get confused by surface appearances, mistaking local short-term waves for overall trends and misplacing their investments.
8. Strong momentum is hard to control
Even if one captures momentum, or experiences weak short-term trends, the returns may be minimal, leading to fatigue. For example, some altcoins may have short-term upward momentum; however, due to small market influence, narrow capital support, or lack of holding advantages, the growth is limited and brief. Investors may end up working hard for little gain, or may incur losses due to trading costs, making it difficult to invest further and feeling frustrated.