Market Outlook for the Next Month: Pain and Opportunities Coexisting, Learn to Profit in Rotation

In the market outlook for the next month, the author believes that investors are facing a situation where pain and opportunities coexist. Readers are reminded to respond cautiously to potential pullbacks while seizing profit opportunities brought by market rotations. This article is based on a piece by Altcoin Sherpa, organized and translated by ShenChao TechFlow. (Background: This Friday, the 'largest scale ever' $14 billion Bitcoin options expiration is approaching, be cautious of market volatility) (Supplementary background: Psychological barriers in cryptocurrency trading: How fear and greed affect the market?) Be sure to do your own research and do not blindly follow others' opinions. I originally intended to write these thoughts as a long tweet, but ultimately decided to organize them into an article to see if this format is suitable. In the coming weeks: (Here are some random thoughts in no particular order) Your spot positions may face significant pullbacks, and whether to avoid risks in advance is entirely up to you. This period may be very painful. If you can hold on (hodl, meaning to hold crypto assets for the long term) through this painful time, I believe the next wave of rises will be very favorable for some key coins, potentially even fully reversing previous pullbacks. The market has not 'ended'; I expect a new uptrend within the next 4-8 weeks. Reasons include Bitcoin's dominance (btc.d) being at a high level, seasonal factors, Ethereum/Bitcoin (ethbtc) potentially rising, and market capital rotation, among others. Additionally, the government's attitude toward cryptocurrencies is relatively positive, and there is less resistance in the macroeconomic environment, all of which theoretically create a good environment for the market. In the next wave of rises, you need to gradually become a complete seller. If you choose to continue holding during the trough, I can understand, but your subsequent selling plans should gradually shift towards safer assets. Safer assets include Bitcoin (BTC) and stablecoins. As the market cycle progresses, you need to gradually reduce risks, decrease position sizes, and exit the market gradually through dollar-cost averaging (DCA), rather than liquidating all at once. Regarding the upcoming market rotation, I do not have a clear prediction. From now on, I believe the market will mainly belong to traders rather than long-term holders (hodlers). This means that certain coins may attract a large amount of buying, while others may rise slowly (for example, XRP versus TIA's performance). It is difficult to predict in advance which coins or sectors will become market leaders. From a rotation perspective, it seems that all coins will rise, but there is no overall upward trend. What I mean is: ordinary AI coins will eventually see a significant rise, but it may only be reflected in 1-2 coins (for instance, TAO's gains could be very exaggerated, while AKT might only rise by 50%). Do not hold onto your coins just to achieve unrealistic target prices. It is highly likely that many coins will not reach their historical highs (ATH) again. Of course, some mainstream coins may, but a bull market does not mean all coins will return to ATH levels. While anything is possible, I believe that 80% of coins (or even more) will find this difficult to achieve. Adapting to market conditions and taking profits in a timely manner is the wise choice. If your portfolio is very diversified, I recommend selling more than 50-75% of your holdings when the rotation ends in the next wave of rises. For example, when the AI sector rises, if you hold FET, you can choose to sell; or if you hold RWA (real asset tokenization) coins, you should take profits promptly when ONDO performs well. In the recent wave of rises, I have sold off many coins I had less confidence in; I will later reallocate funds to other higher-quality coins. In the next period, you should try to consolidate your investments, reducing the number of new positions opened and lowering the overall variety of holdings. I am not sure when the next significant pullback, like that of the summer of 2024, will occur. I speculate that there are still 3-6 months left before the market may become very bad and face another round of pullback. As for whether this pullback will be primarily driven by time factors rather than price factors like in 2022, I cannot yet determine. This summer, altcoins experienced a significant 75% pullback, mainly driven by the surrender sentiment caused by falling prices, rather than the prolonged time leading to volatility. Although those 6 months seemed incredibly long for us, compared to the altcoin consolidation periods of 1.5 years from 2018-2019 and 2022-2023, this adjustment has actually been relatively fast. The market may enter a so-called 'super cycle,' as some say 'this time it's different.' But I remain cautious about this, so I will choose to proceed with caution. My ideal goal is to control my portfolio's maximum drawdown from the historical peak (ATH) to around 30%. I understand my risk tolerance; if the maximum drawdown reaches 50%, I can accept it, but 30-40% would be a more ideal range. Your task is to continuously analyze data weekly and constantly reassess the market cycle's peaks and endpoints. When the market starts to turn, the situation can become very complicated. Even when a bull market ends, many will still shout 'the bull market is still on.' This situation is always difficult to predict, but you need to stay alert. Do not attempt to predict the distant future, accept market information, and adjust your strategies based on actual conditions. Finally, be sure to do your own research (DYOR), do not blindly follow others' opinions, and independently analyze and operate your investment portfolio. Everyone's trading strategy is different; do not rely entirely on the exit strategies of your favorite KOLs. Some may perform well, but most may suffer severe losses. If you can exit the market with significant profits, then you are already a winner. Good luck! 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