Alpha Funnel #25 - Cycles, Throwbacks and the Future
A little bit different.
Today we are going to do a different alpha funnel starting with how I view where we are in the cycle because a lot of people are on edge since alts have been slaughtered over the past weeks. As Crypto Twitter tends to overreact to things that have happened in the past, I think it’s a good time to bring a calmer head here and give an insight into how I view the future. Remember that nothing guarantees that I am right and you should always contextualize your situation with any opinion someone shares with you.
Is the cycle over?
Obsessing about cycle tops if you participate onchain is not helpful considering we have continued to have 2-3 month mini cycles and consolidations in-between while BTC has been in an uptrend. However, for the sake of it, I don’t believe the cycle has topped when we just entered the most crypto-friendly administration ever and the effects of that are yet to be felt.
However, this is the reality for BTC while the truth remains different for alts. Many alts have already topped for the cycle and the problem with people desperate to call cycle top now is that these people are obsessed with intraday action and get chopped up in between. Make no mistake though, we are still very late in the cycle and are in the final innings. However, final innings still lasts months instead of weeks but you should still plan your exit strategy at this stage instead of continuing to go all in every time.
Why this price action has been so torrid for alts is because the second Bitcoin starts to chop around and distribute within a range alts start to bleed as less money is venturing further down the risk curve and people take profits to BTC or stables.
This is what I believe BTC is going through right now and why people have been suffering a lot of pain recently. Wyckoff Accumulation is designed to fleece you out of your money and shake you out if you don’t know what is going on. However, it is ironic that at the most exciting point (which still can be painful), which is Phase D in the SOS (Sign of Strength). Stay patient and pick your alts carefully.
“It’s a trader’s market”
This is starting to get parroted around on the timeline but does not tell the true story. It’s always a “traders market”. Markets will always continue to trade no matter what direction. However, it is true that you have to be diligent and can’t expect to hold any alt position for >1 year and expect to make a significant amount of money due to the market maturing and capital flowing through different market segments quicker.
However, most of your money will be made by “believing in the right things” instead of “believing in something”. This idea of daytraders scalping every move and making significant wealth is a pipe dream that doesn’t happen to most wealthy “traders” in this industry.
The difficult part here is discerning what is actually the right thing to believe in which comes with skill and experience and cannot be faked. You can find wallets that help you identify new tickers and projects and while you can attempt to copytrade them, you can never copytrade conviction which is why at the end of the day, you need to build your own thesis for why something should do well and have clear points of invalidation and success so you don’t end up in financial ruin. The majority lose money in this industry but you don’t see that because the few winners are the ones prevalent on Crypto Twitter.
Moving on.