Just dug into my TradingView watchlist.
Honestly, I’m a bit (naively) shocked by the state of the altcoin market.
When I'm on vacation in Europe, I mainly check my favorites list (since I don't trade much), which mainly includes the coins I actively trade. Naturally, these tend to be relatively strong.
Mainly memes, RWA, some select narrative drama, and so on.
If you just scanned CMC, things look pretty good ($BTC over $60,000 - $ETH over $3,000). All is good, right?
Well, that’s not the case.
Despite BTC currently being priced around 64k, many altcoins have revisited their July lows (from the day $BTC rallied to 54k).
Other currencies barely rallied in the subsequent recovery and gave up all of their gains at the first sign of weakness in BTC.
I put it down to three factors:
1. Altcoin fragmentation remains a big issue (as I’ve discussed at length in the past), and it’s extremely difficult to keep an actively diluting market functioning amid weak inflows.
2. A lot of the money we get is flowing into spot ETFs. This is the case with both BTC and ETH right now. Obviously, this has a price advantage, but it is not the liquidity advantage we have had in previous cycles (which is one of the reasons why the rotation is completely different this cycle).
3. Existing liquidity is leaning more towards memecoins than ever before. Recent data shows that relative meme coin awareness is now at its highest level. Obviously, this is bullish for those who participate in and are familiar with these circles. This is bearish for those who dislike memes that mainly stay in the practical field. Thousands of new memes are launched every day, which undoubtedly helps point 1 (altcoin decentralization).
You might ask – what’s the solution?
For the markets, then: a break above $BTC all-time highs should paper over the cracks for now, as it could lead to renewed retail interest.
But if you really want to succeed in this cycle, I would be very picky about asset selection.
• Only hold high-quality assets. By high-quality, we mean currencies with strong teams, communities, and important stories.
• Focus on tokens with lower dilution (or at least no major unlocking in the next few months).
• Treat every rotation as an opportunity to profit and most importantly take profits. This is likely to be a cycle of sporadic outperformance by a few sectors rather than a one-off cycle as in past cycles. So when a strong rotation occurs, use it to take some short-term profits and increase your stablecoin weighting.
I must say that this cycle has not been easy (at least relative to 2017 and 2021). There are certainly opportunities - but due to the fact that many players are experienced and there is a lack of newcomers, it has become more like PvP and requires higher skills.
Keep learning, hone your skills, adapt, and most importantly – don’t give up. Perseverance will be richly rewarded.