Article reprint source: TechFlow
Be sure to do your own research and don’t blindly follow the opinions of others.
Author: Altcoin Sherpa
Compiled by: TechFlow
I was originally going to write this as one long tweet, but decided to wrap it up as a post to see if that format would work.
Next few weeks:
(Here are some random thoughts in no particular order)
Your spot positions may face a sharp retracement, and whether to avoid risks in advance is entirely up to you. This period may be very painful.
If you can hold on (hodl, the act of holding crypto assets for the long term) through this painful period, I think the next wave of gains will be very beneficial to some key currencies and may even completely offset the previous pullback.
The market is not "over" and I expect a new uptrend in the next 4-8 weeks. Reasons include high Bitcoin Dominance (BTC.D), seasonality, Ethereum/Bitcoin (ETHBTC) may rise, and market capital rotation. In addition, the government's more positive attitude towards cryptocurrencies and less resistance in the macroeconomic environment, these factors theoretically create a good environment for the market.
In the next wave of rise, you need to gradually become a complete seller. If you choose to continue holding at the trough, I can understand, but the next selling plan should gradually shift to safer assets.
Safer assets include Bitcoin (BTC) and stablecoins.
As the market cycle progresses, you need to gradually reduce risk, reduce the size of your positions, and gradually exit the market through dollar cost averaging (DCA) rather than clearing out your positions all at once.
I don't have a clear prediction about the next market rotation. From now on, I think the market will mainly belong to traders rather than long-term holders (hodlers). That is, some coins may attract a lot of buying, while others may rise slowly (such as XRP's performance compared to TIA).
It is difficult to tell in advance which coins or sectors will be the market leaders. From a rotation perspective, it seems that all coins will rise, but at the same time there is no overall rise. What I mean is: ordinary AI coins will eventually have a big rise, but it may only be reflected in 1-2 coins (for example, TAO's increase may be very exaggerated, while AKT may only rise by 50%).
Don't hold on to your coins to achieve unrealistic price targets. It's very likely that many coins will never reach their all-time highs (ATHs) again. Sure, some major coins might, but a bull market doesn't mean that all coins will return to ATH levels. While everything is possible, I think 80% of coins (or even more) will find it difficult to achieve this. It's wise to follow the market trend and take profits in time.
If your portfolio is very diversified, I suggest selling more than 50-75% of your holdings when the rotation ends in the next wave of gains. For example, if you hold FET when the AI sector rises, you can choose to sell; or if you hold RWA (real asset tokenization) type currencies, you can stop profits in time when ONDO rises well.
I have sold many of my lower confidence coins during the recent rally; I will reallocate funds to other higher quality coins later.
In the next period of time, you should try to consolidate your investments, reduce the number of new positions opened, and reduce the types of overall holdings.
I am not sure when the next big pullback like the one in the summer of 2024 will come. I speculate that there is still 3-6 months before the market gets really bad and another pullback comes. Whether this pullback will be driven primarily by time factors rather than price factors like the 2022 pullback, I cannot tell yet.
This summer, altcoins experienced a massive 75% retracement, which was mainly caused by capitulation caused by falling prices rather than a prolonged shock. Although those 6 months seem extremely long to us, compared with the 1.5-year sideways periods of altcoins in 2018-2019 and 2022-2023, this adjustment is actually relatively fast.
The market may be entering a so-called "super cycle" as some say "this time it's different". But I have my reservations about this, so I would still choose to proceed with caution.
My ideal goal is to keep the maximum drawdown from the All-Time High (ATH) to around 30%. I know my risk tolerance, and 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 the data each week and constantly re-evaluate the top and end of the market cycle. When the market starts to turn, the situation may become very complicated. Even if the bull market ends, there will be many people still shouting "the bull market is still there". This situation is always difficult to predict, but you need to stay vigilant. Don't try to predict too far into the future, accept market information and adjust your strategy according to actual conditions.
Finally, always do your own research (DYOR), don't blindly follow the opinions of others, analyze and operate your own portfolio independently. Everyone's trading strategy is different, don't rely entirely on the exit strategy of your favorite KOL. Some people may operate well, but most people may suffer serious losses. If you can exit the market with a considerable profit, you are already a winner. Good luck!
