Date: 30-Nov-2024, Time 8am
Altcoin Price Drivers
- Bitcoin’s price action is a key driver of altcoin movements. [1, 2] While Bitcoin is currently in resistance and showing signs of slowing down, its dominance is decreasing. This means that altcoins are gaining value relative to Bitcoin. [2] However, Bitcoin is expected to experience a significant pullback or “flush out” soon, which will likely impact altcoins as well. [2, 3]
- The total cryptocurrency market capitalization is approaching all-time highs. [3-5] This indicates a strong overall market sentiment, which is contributing to altcoin price increases. However, this market is also approaching a major resistance zone, which could lead to a significant correction. [5, 6]
- “Altcoin season” is underway, meaning many altcoins are catching up to previous price gains. [7-9] This is evident in the recent pumps of Solana and Cardano, and other altcoins are showing signs of following suit. [7, 9, 10] However, this catch-up phase is expected to end with a market correction. [3, 8]
- Short squeezes are contributing to some altcoin pumps. [11] For example, Aave is currently experiencing a short squeeze, leading to rapid price gains. [11]
- Investor sentiment is playing a role in altcoin price movements. [4-6] As the market continues to rally, many investors are becoming increasingly bullish, leading to more buying pressure. However, this sentiment is also creating a risky environment, as a market correction could lead to panic selling. [1, 5, 6]
- The upcoming Bitcoin halving in 2024 is creating anticipation in the market. [This information is not from the provided sources and may need to be independently verified.] Historically, Bitcoin halvings have led to significant price increases in both Bitcoin and altcoins. This anticipation could be contributing to the current altcoin rally, as investors are looking to position themselves ahead of the event.
The Author’s Bearish Outlook: Expecting a Red Weekly Close and a Significant Market Correction
The author anticipates that the upcoming weekly closes will signal a negative turn in the market, leading to a significant correction that presents ideal buying opportunities for their trading strategy. They believe the current market momentum is unsustainable and a sharp reversal is imminent.
Bitcoin’s Dire Weekly Close:
The author emphasizes the significance of the current weekly candle for Bitcoin, noting its unfavorable shape, which suggests a likely red close below the psychologically important $100,000 mark1. This red close would mark a bearish signal, potentially setting the stage for further downward movement in the following week.
The author states, “As it stands right now, this is not the greatest weekly candle… this is still not good“23. They explicitly state their bearish outlook, predicting the subsequent weekly candle will also close red unless Bitcoin experiences a substantial upward surge above $103,000-$106,0002. This prediction underscores their belief that the current upward price action in Bitcoin is weak and unsustainable.
The Inevitable Altcoin Correction:
While acknowledging the recent strength in the altcoin market fueled by a drop in Bitcoin dominance, the author firmly believes this upward trend is a temporary “catch-up” phase34. They suggest that altcoins are simply reaching price levels witnessed in previous market cycles before the inevitable correction sets in.
The author warns that the longer this altcoin rally continues without a significant pullback, the more severe the impending correction will be56. They predict a potential drop in the total altcoin market capitalization (Total3) of 35-40%, drawing parallels to a similar event in a previous market cycle where Total3 experienced a 35% decline6.
The Author’s Patience and Preparation:
Despite their bearish outlook, the author remains calm and collected, emphasizing the importance of patience and discipline in navigating these market conditions789. They are content with their current position, holding a significant portion of their trading portfolio in cash, ready to capitalize on the “massive opportunities” created by the expected correction571011.
The author has set limit orders at 30-35% below current prices for various altcoins, ensuring they can buy into their desired positions at optimal price levels during the dip12. Their focus remains on long-term success throughout the entire bull market cycle, emphasizing that short-term price fluctuations are insignificant in the grand scheme of their trading strategy8913.
A Contrasting Perspective: The “Drunk” Bulls
The author paints a vivid picture of the current market sentiment, describing those who are blindly buying into the current altcoin rally as “drunk” and unprepared for the impending correction4512. They caution against falling into the trap of believing the market will endlessly rise, emphasizing the importance of risk management and capital preservation in the face of potential market turmoil.
The author’s message is clear: the upcoming weekly closes will likely mark a turning point in the market. Their anticipation of a red weekly close for Bitcoin and a significant correction in the altcoin market underscores their strategic positioning, emphasizing patience, discipline, and a focus on capital preservation as key elements for navigating the volatility ahead.
Current Trading Strategy
The author is currently employing a highly cautious trading strategy in anticipation of a significant market correction. This strategy can be summarized in these key points:
- Sitting on Cash: The author emphasizes holding a large portion of their trading portfolio in cash, waiting for buying opportunities during the expected market dip. They believe that this approach will allow them to capitalize on lower prices and avoid potential losses from the anticipated correction. [1-4]
- Identifying Altcoins Poised for Growth: While bearish on Bitcoin in the short term, the author is bullish on specific altcoins that are showing strength and are poised for further growth. They highlight coins like Aave and Rweave, which are breaking out of resistance levels and demonstrating strong price action. [5, 6]
- Focusing on Long-Term Portfolio: The author differentiates between their trading portfolio and long-term portfolio. They are actively managing their trading portfolio, while their long-term portfolio remains largely untouched, allowing those investments to grow over time. [7]
- Waiting for Liquidation Events and Deep Pullbacks: The author’s buying strategy centers around identifying significant market dips. They specifically look for 20-30% drops, liquidation events, and periods of market fear to enter positions. This approach aims to buy low and maximize potential profits. [2, 3, 8]
- Limiting Trading Activity: The author acknowledges the temptation to chase pumps but emphasizes discipline and patience. They are content with their current gains and are willing to wait for optimal buying opportunities. [1, 3, 4, 9]
- Trading a Small Percentage of Capital: The author suggests that those who cannot resist trading during this period should limit their exposure by only using 10% of their trading capital. This risk management strategy helps mitigate potential losses while still allowing for participation in the market. [3]
The author’s strategy reflects a deep understanding of market cycles and a strong emphasis on risk management. By prioritizing capital preservation and waiting for strategic buying opportunities, they aim to maximize profits over the long term.
Promising Altcoins
The sources highlight several altcoins that the author believes are poised for potential growth. Here’s a breakdown:
Altcoins for Long-Term Holding:
Rweave (RWE): The author specifically recommends Rweave for long-term holding, noting that it is currently breaking out of the $25 resistance level and has potential to reach $50. They suggest allocating funds to Rweave now, even considering the possibility of a market correction that could bring the price down to $19.1
Solana (SOL): While Solana has already experienced a significant pump, the author includes it in their long-term portfolio, indicating a belief in its continued growth potential.12
Phantom (FTM): Although not explicitly recommended for immediate buying due to its current price action, Phantom remains a coin the author holds in their long-term portfolio, implying a positive long-term outlook.23
Injective (INJ): Similar to Phantom, Injective is part of the author’s long-term holdings and is mentioned as a coin they are “happy hasn’t pumped yet,” suggesting they expect future price appreciation.2
Nia (NIA): This coin is mentioned alongside Injective as another promising long-term hold that hasn’t yet experienced a significant pump.2
Altcoins Showing Potential for Short-Term Gains:
Aave (AAVE): The author highlights Aave as a coin experiencing a short squeeze, leading to a breakout and potential for immediate gains.14
Celo (CELO): Celo is identified as a strong performer with potential to reach $18, making it an attractive option for short-term trading.3
Altcoins the Author is Waiting to Buy at Lower Prices:
Chainlink (LINK): The author is not currently interested in Chainlink due to its position at a strong resistance level. However, they imply a potential buy opportunity if the price retraces to a lower level.13
Dogecoin (DOGE): The author is not interested in Dogecoin at its current price due to its formation of lower highs, indicating a weakening uptrend.3
Algorand (ALGO): While the author missed Algorand’s recent pump, they believe they will be able to buy it back at lower prices in the early $30s range.13
XRP (XRP): Although XRP is currently performing well, the author anticipates a potential price correction and suggests waiting to buy it around $1.4-1.5.5
Cardano (ADA): The author believes Cardano will reach $3-5, but they might wait for a dip before buying.5
Thorchain (RUNE): The author is still bullish on Thorchain as a potential long-term hold, implying they might buy more at a lower price.12
Avalanche (AVAX): The author is still bullish on Avalanche as a potential long-term hold, implying they might buy more at a lower price.12
Theta Network (THETA): The author is still bullish on Theta Network as a potential long-term hold, implying they might buy more at a lower price.12
Polkadot (DOT): The author is still bullish on Polkadot as a potential long-term hold, implying they might buy more at a lower price.1
ImmutableX (IMX): The author is still bullish on ImmutableX as a potential long-term hold, implying they might buy more at a lower price.13
Altcoins Not Mentioned or Deemed Unattractive:
The author explicitly states they are not entering into trades for Pepe, despite its breakout, and avoids coins facing strong resistance levels, like Chainlink.3 They don’t provide specific comments on many other altcoins, but their emphasis on waiting for a market dip implies that most current prices are considered unattractive for buying.
he Author’s Current Trading Strategy: A Patient Approach Focused on Capital Preservation and Exploiting the Anticipated Market Correction
The author’s current trading strategy centers around a patient and cautious approach, prioritizing capital preservation in anticipation of an expected market correction. They are currently holding a significant portion of their trading portfolio in cash, actively monitoring market movements, and preparing to capitalize on buying opportunities during the dip.
Here’s a breakdown of their key strategic elements:
Market Outlook: The author holds a bearish view of the short-term market outlook, expecting a correction in both Bitcoin and the altcoin market. They anticipate a potential drop of 35-40% in the total altcoin market capitalization based on historical patterns and current market signals.1
Cash is King: The author is currently sitting on a large amount of cash in their trading portfolio.23 This strategy reflects their risk-averse stance and their belief that waiting for the correction will present more favorable entry points. They express contentment with holding cash and acknowledge that missing out on some potential gains is a necessary trade-off for mitigating risk and maximizing profits during the anticipated dip.34
Identifying “Massive Opportunities”: The author’s trading strategy revolves around identifying “massive opportunities” presented by significant market downturns and liquidation events.2 They plan to aggressively deploy capital during these periods of heightened fear and panic selling.56
Targeting Specific Entry Points: The author has set limit orders at 30-35% below current prices for a selection of promising altcoins.6 This tactic allows them to automatically buy into positions when the market reaches their desired price levels, ensuring they don’t miss out on the buying opportunity during a fast-moving correction.
Trading with Limited Capital: The author acknowledges the temptation to chase pumps in the current market environment but emphasizes the importance of risk management. They recommend trading with only 10% of the trading portfolio during periods of heightened market risk, keeping the remaining 90% safe and available for buying opportunities when the correction occurs.3
Focusing on Altcoins with Upside Potential: The author has identified specific altcoins they believe are poised for potential growth, including Rweave, Aave, Celo, Phantom, Injective, and Nia.478 They will likely focus their buying efforts on these coins during the correction.
Disciplined Approach and Patience: The author emphasizes the importance of sticking to their trading plan and remaining patient, even when the market appears to be moving against their expectations.2910 They highlight that their strategy is designed for long-term success throughout the entire bull market cycle, not just short-term gains.6
Key Takeaway: The author’s current trading strategy is a disciplined and patient approach that prioritizes capital preservation and risk management. They are strategically positioned to capitalize on the anticipated market correction, waiting for “massive opportunities” to deploy their cash reserves into carefully selected altcoins.