As soon as May began, market sentiment cooled down significantly, and the greed index dropped from 67 to 43. As a result, the price of BTC fell to around $57,000 in the past two days. Then, it seems that some friends began to panic. Those who vowed to increase their positions as long as BTC fell to 5 are no longer adding positions because they have found many new reasons, such as CZ's 4-month sentence as the main reason for the market's decline in the past two days, and believe that BTC will continue to fall.
If we look at the retracement, BTC has fallen from its highest price of around $74,000 to its current price, a 23% retracement. I personally don’t think this is a big drop. If we further compare it with the first two typical bull markets in history, the previous bull markets also experienced two 20–30% retracements.
Although the US ETF has experienced new outflows in recent days, leveraged longs seem to be suppressed to a certain extent, and the inflow of Hong Kong ETF is far below expectations, coupled with the macro-level US liquidity tightening and inflation data are also the main factors leading to market fluctuations. But even so, we still believe that Bitcoin at $70,000 is definitely not the peak of this bull market, and this market is still worth looking forward to in the next six months to a year.
Although history will not repeat itself, it often rhymes. Next, the biggest expectations of this market are mainly two, one is the approval of the Ethereum ETF, and the other is the interest rate cut by the Federal Reserve. I think these two things will definitely happen, it is just a matter of time, and every current pullback is still an opportunity for you to increase your position in batches.
So which specific point is suitable for adding positions?
If you are more emotional, then as long as the price falls below your personal psychological price, you can consider adding to your position.
If you are more rational, then the simplest operation method is to look at VP (volume distribution) and Fibonacci retracement. This has been introduced in detail in Li Huawai's previous article. For example, the $60,000 a few days ago and the current $57,000 are both suitable ranges for adding positions. Of course, because the high-level oscillation structure formed by Bitcoin since March now seems to have broken down, it is not ruled out that there will be further adjustments in the future. If the market continues to pull back, then the next $53,000 position (0.618 position) is still an opportunity to add positions. Or to be more exaggerated, assuming that the price really pulls back to the 53,000 range later, but the market expectations are still not good at that time, then it is not ruled out that extreme situations will continue to occur, that is, continue to pull back to the $47,000 position (but I personally think that the probability is relatively small in the short term). As shown in the figure below.
But don't panic, I still say that it's just a matter of time. If you also believe that the bull market is still there, then each callback range above is an opportunity for you to add positions in batches. In addition to the expectations based on the Ethereum ETF and the Fed's interest rate cut, and the reference based on technical indicators, the main data we need to focus on in the next market include:
First, the inflow/outflow of funds in US ETFs
Although Hong Kong has also passed ETFs, in terms of actual impact at this stage, US ETFs are one of the most important factors affecting the market, and have even become a new sentiment indicator. From the performance in the past few months, we can basically see that when ETFs continue to have net inflows and generate large inflows, the market will perform well, but when ETFs begin to turn to net outflows or generate large outflows, the market may fluctuate or fall.
The second is the stock of BTC on the exchange
Before there was a spot ETF, the exchange inventory was a very important reference data, because the higher the exchange's BTC inventory, the greater the potential selling pressure. Although the current ETF has further complicated the on-site participation, that is, the BTC held by institutions may not be counted in the exchange address. But this data is still one of the data we should focus on, and it can be combined with the above ETF inflow and outflow data.
In short, at this stage of the market, if you are already fully invested, the best thing to do is to do nothing and just keep your cake. If you still have positions, then according to your specific position and risk preference, combined with some important indicators I gave above, you can add positions in batches appropriately. Of course, the above is just my personal subjective opinion, and personal opinions are not intended as any investment advice. Investment is risky, please DYOR before making any decision.
Theoretically, when there is fear or low spirits in the market, it is actually a golden opportunity for us to buy, but this advice is easier said than done.
If you only trade BTC or Ethereum, then it is relatively easy to say, just buy on dips, and as long as you can hold on to them, there will be basically no problem in the long run. But many people (especially newcomers) don’t like to buy BTC and Ethereum, firstly because they think their prices are too high (actually it is more of a psychological perception), and secondly because they think their gains may be limited. Therefore, many people will choose those Altcoin that may have a greater increase (on the other hand, it actually means a greater decline).
As for the question of which specific Altcoin to buy to make a fortune, I don’t know, but I can continue to sort out some methodologies for you on such issues.
In fact, in the "Project Research Template" compiled for you in the previous article, we have listed almost all aspects of a project. As long as you can fill in the research form completely, you can basically understand the specific project. However, some partners also gave feedback on some issues with this form. For example, some people said that it takes at least several hours to fully research a project, and they usually don’t have that much time to fill in the form. Is there a faster way to understand or select potential projects?
Then, let's continue to give you a simple idea of project selection:
The first step is to make a list of alternative currencies
Many people hope to find those low-market-cap tokens with great potential, and they think that such tokens will have a relatively large increase. So let's take such tokens as an example. First, filter them through CoinMarketCap or CoinGecko. For example, you can select tokens ranked between 100-500, that is, tokens with a market value of 70 million to 700 million US dollars. This depends on your personal risk appetite. If your risk appetite is relatively high, you can expand the selection range as needed. As shown in the figure below.
Of course, if you are still lazy, there is a more convenient option, such as using the DropsTab tool to directly focus on the tokens that are currently in the accumulation phase, because tokens in the accumulation phase may represent that larger players (whales) are building their positions. As shown in the figure below.
The second step is to match the track you are interested in
It is impossible for you to learn about hundreds of projects at the same time, let alone buy dozens of projects at the same time, so we need to further filter out the projects in the track that we are most optimistic about from the list of alternative currencies. If you are only optimistic about AI, RWA, and GameFi, then you only need to select the currencies that meet these three tracks, and delete other currencies from the alternative list.
If you don’t know what track you should focus on, or even what the current hot tracks are, it is recommended that you use some on-chain tools to do some homework in this regard, as shown in the figure below. The figure below is the Dune dashboard made by cryptokooryo, which can help you track the latest narratives in the crypto field.
Step 3: Check the project’s financing status
This step is mainly to understand how much money a project has raised through VC and which VC institutions are optimistic about it. Currently, there are many on-chain tools for querying financing, such as crunchbase, Crypto Fundraising, Cypher Hunter, icoanalytics, etc. As shown in the figure below.
Step 4: Query the project’s token economy
Token economics is one of the important factors that affect the price of a project's token. Huali Huawai has previously written several articles to introduce this aspect in detail. Interested parties can search for historical articles to learn more. In short, for a project's token, we need to understand at least the following aspects of it:
- The proportion of tokens held by the team and investors
- The proportion of tokens allocated to the community (i.e. users)
- Proportion of tokens used for marketing
At the same time, we need to understand the supply and actual circulation of tokens, and more importantly, the unlocking of tokens, as shown in the figure below.
Step 5: Check the latest developments of the project
After the above four steps, you should have eliminated a lot of items from your shortlist, so the remaining items on the list are the ones you can focus on. Next, you have two options:
One way is to analyze based on technical aspects (K-line). If you think some projects are suitable to buy now, then you can consider adding to your position.
One is to analyze based on news (good news), such as using platforms such as Twitter and CoinMarketCal to discover the latest developments of the project. If there are relatively large potential positive factors in the future, you can also consider buying appropriately. As shown in the figure below.
In general, after the above five steps, from establishing a list of candidate projects to further filtering based on narrative, financing, token economics, and news, theoretically you should have a list of Altcoin transactions that are worth paying attention to. Then what you have to do is to make specific operations based on your position allocation and risk preference. Of course, if you have the energy, it is recommended to fill out the full version of the "Project Research Template" form.
Another point that needs to be reminded is that if you are doing short-term trading, it is recommended that you make a profit-taking and stop-loss plan before officially buying.
At the end of the article, let's briefly talk about the topic of safety. Because in recent days I have received several messages about safety, asking me what to do?
One of the partners lost all the assets in his wallet due to improper storage of the seed phrase, and the other one authorized a fake website, which resulted in the transfer of assets in his airdrop wallet.
As for the problem of lost seed phrase, if only 1-2 seed phrase are missing, then some tools can be used to retrieve them. This was specifically introduced in Li Huawai’s article last year (June 28, 2023). If more than 3 seed phrase are lost, then there is basically no way to recover them. As shown in the figure below.
As for the loss of wallet property caused by authorizing a fraudulent website, this problem is basically unsolvable, and I don’t have any solution. You can only regard it as a safety lesson for yourself.
It can be said that in this field, making money or losing money through trading is one thing, but if your assets are lost just because of your own negligence or question answering, it is even more depressing. I remember seeing a report before that about $4 billion worth of cryptocurrency was stolen or hacked in 2023 alone, and this year the number may be higher.
So, how can you improve the security of your assets? Let us briefly review some precautions for you:
- Do not set a password that is too simple, and try not to enable automatic saving of your password in the browser.
- Do not download any apps from unknown sources. There are still many fake wallets or scam exchanges.
- For those with larger assets, it is recommended to use a hardware wallet to store assets (such as Trezor, Ledger, or directly use your old iPhone to make a cold wallet).
- For those who like various interactions (such as airdrops, data queries), it is recommended to use different independent wallets or temporary wallets, and do not store too much funds in them.
- Be sure to back up your seed phrase and do not store them casually on your computer or cloud drive. Alternatively, you can shuffle or modify them according to rules that only you understand.
- Never share or tell your seed phrase to others, even if the other party claims to be an official of a certain wallet or exchange.
- Do not click on links sent by others on Twitter or Discord. There may also be fake websites if you visit them through Google search. Make sure that the website you are visiting is a real wallet or exchange website before clicking. It is recommended that you add the official website of the crypto websites you frequently visit to your favorites.
- Regularly use security tools such as Revoke Cash to check your main wallet authorization records, and cancel risky contract authorizations in a timely manner.
- Be sure to enable 2FA (two-factor authentication) on important websites. It is recommended to use an authentication application (such as Google Authenticator) at the same time.
- Do not click on any unknown links in your mailbox. For example, since I made my Gmail mailbox public, I often receive phishing emails. Also, do not store your important information (such as seed phrase) in your mailbox.
- Nowadays, everyone will install some browser extensions. Make sure that you install regular plug-ins. Don’t just look at the installation volume and comments (those with hundreds of positive reviews may also be malicious plug-ins). It is best to use the official website link to the corresponding plug-in address.
- Do not connect your mobile phone (a mobile phone with exchange wallet and other applications installed) to unknown WiFi, and do not perform transactions on unknown WiFi networks. Do not share your mobile phone hotspot with strangers. Do not lend your mobile phone to others.
- For most people, VPN is an indispensable thing to enter this field, so I won’t say much about such sensitive topics. Here I just want to mention that you should try to avoid using free VPNs and give priority to those VPNs with privacy.
- When sending large amounts of money, it is recommended to send a small amount first for testing, and then make a large transfer after confirming that it is correct.
- Try not to directly copy the wallet address on the picture to transfer money, sometimes the conversion from picture to text may not be correct. This is also a small mistake I made today. My friend sent me a screenshot of a wallet in WeChat. I directly opened the picture and copied the wallet address on it and transferred some SOL. As a result, my friend said that it has not been credited, but I checked it on the chain and it showed that it was successful. Finally, I compared the wallet address and found that there was an error in one letter in the address copied from the picture, which caused the SOL to be transferred to the wrong address (the correct letter on the picture is j, but it became i after copying and pasting). As shown in the figure below.
Okay, we will share the content of this issue here for now. This is the 449th article updated by Huali Huawai. We will continue to bring you more related sharing in the future. Those who are interested can check and learn more content through Huali Huawai.
Note: The above content is only personal opinion and analysis, and is only for popular science learning and communication purposes. All projects mentioned in the title or text have no interest relationship with Hualihuawai and do not constitute any investment advice.
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