Bitcoin is currently consolidating around the $100,000 mark. We’ve seen the first signs of ETH outperformance and there have been a few days already where alts have popped. OG whales have had ample opportunity and liquidity to offload holdings at and around the $100k figure. There has been a strong consistent bid in place and I still don’t believe it’s just Saylor as he tends to dip in and out of the market as quickly as possible, or at least he has in the past. The market looks like it might get another leg up and if that happens it could be prime time for an alt play.
The idea is Bitcoin puts in a big move up of around 5-15%, then as it levels off and consolidates around a new price range everything else plays catch up. Ethereum outperforms with a larger move which brings a lot of the alts with it. This is partly due to a lot of alt/eth liquidity for governance tokens and NFTs on Ethereum. If something is priced in ETH or a token has a liquidity pool using ETH as the base asset then it goes up with ETH against the USD. This creates confidence in the markets and greed kicks in.
We all start fomoing into riskier and riskier alts, memes, nfts and vapourware. These assets have less liquidity and lower market caps than the major cryptocurrencies so the rotation makes them “pop” and it’s not unusual to see 100%+ moves in a single trading day. Combine that with leverage and you have the opportunity to create generation wealth. You also have the more likely scenario of creating generational trauma when leveraged traders get wiped out as the market seeks liquidity from liquidations, which is what happened on December 5th. No one knows what Mr Market will do next but it’s clear where we are currently, a period of peak opportunity and peak risk. Which Altcoins?I would suggest that it’s too late to be looking at alts from a fundamental perspective with long term holding periods in mind. You don’t want to become a community member when the bottom falls out of the market. If you allocated capital over the last few years, then congratulations you now have a PhD in patience and possibly PTSD from holding through a bear market, the mindset should be “when to rotate back to base assets”. For short term speculation it’s an entirely different ball game. It doesn’t matter if it’s a memecoin with no fundamentals. Momentum, narrative and attention are king. Find out where the trending coins are trading, monitor volumes and price action, then jump in and out of positions like a cat chasing a laser pointer at a disco. I’ve spoken previously about how unsuitable decentralized infrastructure is for machine learning. That does not mean I’d turn my nose up at an “AI on the blockchain” project during this period. If that asset is trading at multiples of it’s usual volume and price is accelerating…
Bitcoin is consolidating at $100k and looks good. ETH is currently trading at $3900 roughly 25% away from it’s previous all time high. The most important chart for what I’ve been talking about above is the BTC.D Bitcoin dominance chart which has broken market structure and looks like it could come back down to 50% or even retest the 40% level if the bull market continues.
Keep an eye on that and ETH/BTC. If Bitcoin gets another leg up it might outpeform for that short period but then I expect everything else will play catch up and more. In this scenario BTC.D falls off a cliff as alts rally which is best case scenario for traders looking to catch big moves on questionable assets. Social links are below and if you enjoyed this newsletter I would appreciate it if you could share this content
This content is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions.
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