Author: Altcoin Sherpa
Compiled by: TechFlow
I originally planned to write this as a long Twitter thread, but ultimately decided to organize it into an article to see if this format is more suitable.
The next few weeks:
(Here are some random thoughts without a specific order)
Your spot holdings may face a significant pullback, whether to hedge the risk in advance is entirely up to you. This period may be very painful.
If you can persist in holding (hodl, the behavior of long-term holding of crypto assets) through this painful period, I believe the next wave of uptrend will be very favorable to some key cryptocurrencies, and may even completely offset the previous pullback.
The market has not "ended", and I expect a new uptrend phase within the next 4-8 weeks. The reasons include the high Bitcoin dominance (btc.d), seasonal factors, the potential rise of Ethereum/Bitcoin (ethbtc), and the rotation of market funds. In addition, the government's attitude towards cryptocurrencies is relatively positive, and there are fewer obstacles in the macroeconomic environment, which theoretically creates a good environment for the market.
In the next wave of uptrend, you need to gradually become a complete seller. If you choose to continue holding during the trough, I can understand, but your subsequent selling plan should gradually shift towards safer assets.
Safer assets include Bitcoin (BTC) and stablecoins.
As the market cycle progresses, you need to gradually reduce risk, scale down your positions, and gradually exit the market through dollar cost averaging (DCA) instead of a one-time liquidation.
I don't have a clear prediction about the upcoming market rotation. From now on, I think the market will mainly belong to traders, rather than long-term holders (hodlers). That is to say, some cryptocurrencies may attract a large amount of buying pressure, while others may rise slowly (such as the performance of XRP compared to TIA).
It is difficult to predict in advance which cryptocurrencies or sectors will become the market leaders. From the perspective of rotation, it seems that all cryptocurrencies will rise, but there is no overall upward trend. What I mean is: ordinary AI-related cryptocurrencies will eventually see a big rally, but it may only be reflected in 1-2 cryptocurrencies (for example, the surge in TAO may be very exaggerated, while AKT may only rise by 50%).
Do not hold your coins to unrealistic target prices. Many cryptocurrencies may not reach their all-time highs (ATHs) again. Of course, some mainstream cryptocurrencies may reach them, but a bull market does not mean that all cryptocurrencies will return to ATH levels. Although anything is possible, I believe that 80% or even more of the cryptocurrencies will find it difficult to achieve this. It is wise to follow the market trend and take profits in a timely manner.
If your investment portfolio is highly diversified, I suggest that you sell 50-75% or more of your holdings when the rotation ends in the next wave of uptrend. For example, when the AI sector is rallying, if you hold FET, you can choose to sell; or if you hold RWA (tokenized real assets) cryptocurrencies, you can take profits when ONDO performs well.
In the recent wave of uptrend, I have sold many cryptocurrencies that I have low confidence in; I will later reallocate the funds to other higher-quality cryptocurrencies.
In the coming period, you should try to consolidate your investments, reduce the number of new positions you open, and lower the overall variety of your holdings.
I'm not sure when the next major pullback similar to the summer of 2024 will come. I estimate that it may still take 3-6 months, and the market may become very bad and experience another round of pullback. As for whether this pullback will be driven mainly by time factors rather than price factors, as in 2022, I cannot judge yet.
Last summer, Altcoins experienced a 75% major pullback, which was mainly driven by the capitulation sentiment triggered by price declines, rather than prolonged time factors. Although those 6 months seemed endless to us, compared to the 1.5-year sideways period of Altcoins in 2018-2019 and 2022-2023, this adjustment is actually relatively fast.
The market may enter a so-called "super cycle," as some have said, "this time is different." But I remain cautious about this, so I will still choose to act prudently.
My ideal goal is to keep the drawdown of my investment portfolio from the all-time high (ATH) around 30%. I understand my risk tolerance, and I can also accept a maximum drawdown of 50%, but 30-40% would be a more ideal range.
Your task is to continuously analyze the data weekly and constantly re-evaluate the top and end point of the market cycle. When the market starts to turn, the situation may become very complex. Even when the bull market ends, there will still be many people shouting "the bull market is still on." This situation is always difficult to predict, but you need to stay alert. Don't try to predict the distant future, accept market information and adjust your strategy based on actual conditions.
Finally, you must do your own research (DYOR) and not blindly follow the opinions of others. Analyze and operate your investment portfolio independently. Everyone's trading strategy is different, don't rely entirely on the exit strategy of the KOLs you like. Some people may do very well, but most people may suffer serious losses. If you can exit the market with considerable profits, you are already a winner. Good luck!
