80% of profits are realized in the last 20% of the cycle 💵
How to identify a "copycat season" and maximize profits?
It's not $BTC 's return percentage that triggers "copy season", but its wealth effect. Bitcoin’s market capitalization has grown by $941 billion since September 2023, approaching $1 trillion.
What is the concept of one trillion US dollars:
👉 $1 trillion is roughly the size of the entire economies of Saudi Arabia, the Netherlands, or Switzerland.
👉$1 trillion is 2.89% of the total U.S. national debt.
👉$1 trillion is 2.5% of the total market cap of the S&P 500.
👉$1 trillion is larger than almost all sovereign wealth funds.
Most altcoins are relatively small and it doesn’t take much wealth within them to significantly increase their price.
Currently, the market cap of altcoins as a whole, excluding $ETH and major stablecoins, is $588 billion.
So, when does copycat season come?
Probably when the prices of $IBIT, $FBTC, $ARKB, and all other Bitcoin ETFs reach over 100% of their issue price.
In the past, traditional financial investors rarely had the opportunity to double their investment in just a few months.
The huge profits from Bitcoin will boost their self-confidence and push them to start exploring other currencies. Like making money at a big company and then taking a risk investing in a small startup.
• Wealth effect: When people experience increased wealth, they are likely to feel more financial security and confidence. This increased sense of wealth may lead to a greater willingness to take more risks and pursue higher returns.
• Overconfidence Bias : When investors are successful in a certain area of the market, they may become overconfident in their ability to predict future market movements or identify profitable investment opportunities.
• Recency bias: If investors have experienced significant gains recently, they may extend that success to other areas of the market or investment opportunities without fully considering the inherent risks or differences between asset classes.
Whether it’s the wealth effect, these biases, or all of the above, we will soon see a bigger flywheel than in previous cycles. The percentage growth may be smaller this time around, but the dollar size is growing exponentially.
It took 57 days for the ETF to rise 50% from its launch. At $93,000, first-day buyers would have made a 100% profit.
At $72,900 and $97,100, the huge inflows ($7.16 billion) between February 8 and 16 would have increased by 50% and 100% respectively.
At $85,700 and $114,600, those entering the market between February 26 and 28 ($1.77 billion in inflows) would have seen increases of 50% and 100% respectively.
It's good to use them as a reference because there's the wealth effect, which leads to more risk taking.
What we need to pay close attention to is the inflow/outflow of CEX. Inflows to the three most popular CEXs since January 11:
• OKX - $1 billion in inflows
• Robinhood – $263 million in inflows
• Binance – $247 million in inflows
— Data from Defillama —
Meanwhile, cumulative inflows into ETFs have reached more than $10 billion.
It’s clear that ETFs are the new preferred way to buy and hold Bitcoin.
Altcoins, on the other hand, do not have ETFs. First came CEX, then DeFi, these are the two ways to acquire altcoins.
Increased inflows into CEX = investors looking to buy altcoins.
Another way to look at it is to compare the growth of stablecoin market cap and TOTAL2.
April 2021 - April 2022
• Stablecoin market cap: increased by $125 billion
• TOTAL2 Market Cap: Increased by $430 billion
October 2023 - March 2024
• Stablecoin market cap: increased by $21 billion
• TOTAL2 Market Cap: Increased by $707 billion
Money is not coming into the market like it was in previous years.
Is this cycle different from previous ones?
Not really. Simply put, this cycle adds one more step to the market.
We go from CEXs → DEXs to ETFs → CEXs → DEXs
This additional step will result in hundreds of billions of dollars flowing into CEXs.
We just need some patience.
Where are we heading?
If we have the same pattern as the last cycle, we will see altcoins (excluding BTC - ETH - USDT - USDC - DAI) having a market share of around 38% at the peak.
With an overall cryptocurrency market capitalization of $7.8 trillion, the market capitalization of altcoins will be approximately $2.96 trillion, or 5.1 times the current value.
The final phase will come when inflows into CEXs/DeFi equal or exceed those in ETFs.
This article is reprinted from the Internet. The main reason is that I agree with the data in the article, so I share it with you! ! !
Keep faith, the bull is on the way
