A sign of a great trader is one who can adjust to any market atmosphere/cycle, and still be successful. Crypto currently moves through market cycles much faster than traditional markets, so crypto traders must be able to adjust quickly by identifying changing market conditions. There are many different market scenarios in crypto. However, given that the bearish crypto market may possibly soon see a reversal, there are two bullish sentiment types that are worth noting:
1 – Bitcoin Exuberance
Bitcoin exuberance can occur for several reasons and refers to when the entire market seems to be solely concerned with Bitcoin’s price. Bitcoin dominance rises, and altcoins bleed out, likely the result of people selling their alts for Bitcoin. In this scenario, buying alts may not be the best approach.
Bitcoin exuberance can occur for many reasons. Last December, Bitcoin was put in the spotlight when Bitcoin futures (CME) were announced. All excitement was put into Bitcoin, until the date of the futures trading launch, with little attention to alts until after the launch.
One event coming up that could cause a similar sort of Bitcoin exuberance is when the SEC finally approves a Bitcoin ETF. Signs of Bitcoin exuberance would include things like a continued Bitcoin price rise, frequent news headlines about Bitcoin in mainstream media, and the continued rise of Bitcoin’s dominance percentage. Although, it’s important to note that future situations often play out differently to those in the past. “History does not repeat itself, but it rhymes” (Mark Twain).
2 – Alt Season
Ah yes. The famed “Alt Season”. Alt Season is when the Bitcoin price stays relatively stable, and the altcoins see absurd price gains. 200%-1000% gains are not uncommon during a true Alt Season. Alt Season is the result of a perfect storm of events, leading to altcoin prices decoupling from Bitcoin’s price action, with altcoins seeing price gains on a more individual basis.
During Alt Season, altcoin news has a much more amplified effect. Money and percent gains move from a focus on the top 10 list (market cap value), all the way down to a focus on microcaps as Alt Season progresses. In past altcoin seasons, some coins such as Dogecoin are usually the trigger to a new upcoming season. Just last weekend Doge rose by nearly 60%. Just saying.
Alt season is often mentioned on Twitter but occurs far less often. It’s important to be cautious of the Twitter crowd who continuously yell “Alt Season is here!” after 10-20% gains across the board. One potential event that may trigger Alt Season could be the recent news that CBOE might launch ETH futures by the end of 2018. However, it is unknown whether this will have a significant effect this time around when Bitcoin futures have already paved the way.
As mentioned above, repeated events do not often cause the same results. But similar events may. A Bitcoin ETF is similar in its potential to move the market. But an ETF is a very different product, which is why it may still have the potential to cause Bitcoin exuberance. If you can adjust to market circumstances, and refrain from emotional attachment to trades or investments, then you are likely on your way to making the odds in your favor of success better.
These are the writer’s opinions and should not be considered investment or financial advice. Readers should do their own research.
Cryptocurrency charts by TradingView.