The end.
Or... is it?
Is this Alt Season? Are we sure? What does it look like? How would we really even know?
It's hard to call the ceiling on something that is so outside of bounds, that no one, including experts, truly knows what happens if 'this' or 'that' were to occur.
I'd say that there is a general exhilarated sense of euphoria spreading across the altcoin landscape that has everyone believing that each new coin breaking the top of the charts is going to change the evil world of fiat finance forever, and that our new libertopia is SO gonna kick the butt of your grandad's old fiat fiasco. Maybe every single person is correct. If that is the case, and there is the potential for a new level of wealth and prosperity that the likes of life on earth have never seen, then we are all in for a whole new paradigm that even the U.N. hasn't figured out how to turn it into a new cry for justice. Truly, if alt season is the big score that every single die-hard cryptomegolomaniac is certain about, then we have to seriously wonder what it looks like from there.
First of all, there are so many people that are so die hard for crypto, that they push the narrative that the goal is not to leave crypto with more wealth, but to remain in crypto 100% never to return to fiat. Is it true, and possible, that if enough people in crypto use that same mindset that we will shift economics towards our new paradigm? I would have to say that it is not. "What a bummer, Gordon dude. Get with the party, wouldja?"
Like I said, these possibilities are so outside of bounds, no one truly knows. So, I'll observe a few things that I do believe are true, and some of them are pure optimism, and some of them are, I believe, a fair observation of the powers that be.
So, be optimistic, but don't do so with hopeless abandon. Faith is ideal and in fact necessary for a perfect religion, but these tokens and their creators have not done anything worthy of your worship, so never stop challenging them and expecting them to follow through with whatever inspired you to put your real, tangible imaginary fiat money into their hands.
Emotion drives market movement, and market movement drives emotion.
You will often hear experienced traders instruct, if not beg, for people to not be emotional traders. But, in crypto, almost everyone who is die hard is emotionally caught up in their favorite projects. They genuinely believe 'their' coin will be THE one to set the captive world free, and unleash a new era of digital prosperity. This coin fixes everything... few understand this... etc.
While I firmly believe in what crypto is solving, I also understand that markets move how they move, and there are billions of dollars in assets flying around circulation at massive speed. People are making 100X and people are getting liquidated. Speculation runs wild, at the same time interesting things like staking, harvesting, funding, lending pools and group-voting rewards are all adding an interesting element to DeFi. In some ways, it is everything that was already there before, but more, and in other ways, it is a whole new experiment.
The point here, is that people are going "all in" on irrational, inspired moves that may prove right or wrong, but their certainty that things are optimistic, and their project is so fantastic, that it is logical, even a 'no-brainer' to go all in. It simply isn't the case.
I am not doom/gloom on the market, I just have found that I 've become increasingly successful at doing one thing and doing it well, by reducing risk and sharpening my focus.
I cannot honestly say that trading has become infinitely less emotional. I am fully aware larger sums of money are at stake every time I place a bid. But, I sense at least a minimum stability in trusting projects that honestly, if they do fail, bigger bridges will burn than my imaginary wallet. The financial world may not recover if Bitcoin breaks, and I don't just mean for the billions invested, but I mean the whole new concept of being able to hedge against radical inflation is quickly becoming a move of desperation from the smartest top down, and if they are wrong, we could all be in big trouble.
So, be optimistic, but don't do so with hopeless abandon. Faith is ideal and in fact necessary for a perfect religion, but these tokens and their creators have not done anything worthy of your worship, so never stop challenging them and expecting them to follow through with whatever inspired you to put your real, tangible imaginary fiat money into their hands.
Next, we have to look at what propels the market.
Why did it go up, and why are so many projects soaring?
Some things are new, and some things never change.
The pump and dump.
Sometimes when people just want to believe the top will never end, and everything they touch will turn gold, they choose to intentionally ignore things they should be researching. That is the difference between blind optimism and well-researched expectation. Trust, but verify. In that search, any informed person will find that pump and dump groups are an incredibly common thing in crypto. It is rarely, rarelllllllllllllllly ever true that a spike happened because of the news that people scatter to go seek out as a correlation. Perhaps when PayPal announces going crypto, it moved the market, but did you know that kind of news picked up when the volume picked up? It scaled over weeks and weeks, and in many ways months later is just now really showing where it brought the price action.
Pump and dump groups are active on discord and telegram, and members are given a countdown when the coin will be announced, and are given fake articles about that coin to post everywhere online, in order to help pump the price longer and more steadily. There's a saying that a fool's born every minute, and that is the nature of P&D's, that the new folks haven't yet been burned by the extreme pace of the pump, and the massive drop of the dump, or the shill news that accompanies. Later, crypto news sites will tell us that some politician somewhere announced they would ban crypto around the same time and attempt to show the correlation for the sudden drop, or someone else will post that "x" Ether was just dumped from an exchange as a guess towards where the volume came from for the pump. In the end, the real story, is that there was a group that pumped the coin, and that is the reason.
On a larger scale, Bitcoin, Ether and Litecoin are highly correlative, are driven by connections to the stock market, tech world, big investors, and also whale-sized pump and dumps. Patterns develop that a trader can see if they watch the market round the clock. You almost get a sense for the personalities involved and can recognize ghostly neighbors on the other side of the order book plotting out their sell points. Whales are taking large risks at market. We're not alone in this. When they dump, they dump hard. When they pump, they have to wait until the volume is low enough to cost as little as possible.
So, markets move by emotion and by pump and dumps. Longer patterns happen based on a build-up of pessimism and optimism. The higher that assets go, people start to notice that it is becoming irrational and they become worried that there's will be the next trade to get stuck at the top. This develops pull backs from peaks, but the question is whether numerous smaller, but important, coin projects are easy enough to pump, that either the founders, their market makers, or the stirred community see every dip as an opportunity to buy more. If yes, then the lack of rationality can continue to create new peaks over and over again. That is what I believe I see happening here.
Keep in mind, every single new coin project goes sky high when it first lists. It will immediately start to dive, and unless you have razor sharp software, fast internet and nerves of steel, you are best to wait about 2 months for any new listing to die down and find its first real average before even contemplating going in. Most coins settle less than -90% their initial listing price, and if they do pump again, it is sometimes as long as 13 months later. That is not pessimism, that is almost the entire market movement.
Is this an alt season?
I do believe we are seeing something of an alt season. In some ways, it is even bigger and more severe than the 2017 moves that created the expectation for a return to a bull market.
It is incredibly important to observe, though, that Bitcoin, having made historical climbs the past 6 months, has been stuck in a $51,000 to $59,000 sideways squeeze for 3 weeks or more. It will break up or down, and this will not last forever, but part of this comes from the fact that there is a finite amount of funds dancing around, and while some are losing it, others are gaining. It is technically possible for the majority to be earning more and more value, believe it or not, but that is not what happens in most cases. So, while some money is sitting in staking pools, it is providing funding and liquidity, but it is not pumping any prices up, and that means that some of this action absolutely must die down. It will happen. Unless there is a constant flood of new millions of crypto people and all of them are going to go in blindly on all of these alts, the truth is that most money will always start pouring back in to the most reliable top coins. This happens over and over. At least $100B or more is flowing out of Bitcoin into small cap coins, and at some point when people start to fear the top has come and gone, that will flood back in to Bitcoin.
To summarize all of this 'stuff', one has to look at a cumulative that is much larger than any of us are measuring, to fully grasp WHY the bull runs happen, and what causes the emotions to support insane investments. But, from the extremes that can make people rich, to the massive dives that turn their hearts cold, there are periods of averaging from the massive gains and losses that establish exactly how much money is actually available to spread around. That somewhat infinitely changing finite-ness, is a driving force in what happens next.
A few words of advice
My advice for many, is to believe in what you research, and always be willing to take practical profits. Don't chase after moon surge tokens without having a rational reasoning for WHY it is THE one that is going to change everything. If you, and your community, keep believing and believing, and the price keeps falling flat, it is okay to re-evaluate whether rescuing some funds is better than losing them all. If you have a game plan and it makes sense, stick to it even when you feel you left some profit on the table. The truth is, we don't know. None of us know. We think we know, but until the future happens, it is all a huge guess.
I can tell you very truthfully, that I have done tens of thousands of successful trades now. I can hardly remember the dozens where I made a good call, took profit, and then it mooned right after and I was kicking myself not to get a bigger chunk of the action. It is a passing emotion. But, I remember vividly the dozens of times that I was right at clearing a position and it ran out of volume and took a dive, and that dive continued for almost 2 years. If I DID have a stop loss, it would have cleared out that negative so fast it would have been stunning, but I would not have regretted it once I saw how much deeper that drop could actually go. It burns badly to guess wrong, but to keep believing the hype, to keep hoping on a coin when it sure sounded like the next big thing, and then the founders are posting nothing in telegram or on twitter, the community is constantly talking about price and not tech, and the volume is dropping at the speed of light, one can only see the writing on the wall if they are willing to look with eyes open. Getting out of bad projects that may or may not pump super massively again, is a relief and a smart move, and once done you should not look back. But even better, avoid getting there as much as possible.
If the giants of crypto fail, then we're ALL wrong, and yes it could actually happen. But, if they don't, it will be because numerous factors that all matter, from timing to capital to maintaining reliability, and despite a few irrational things like transaction fees, congestion and not even knowing the founders.
Be smart, be careful, and be willing to consistently evaluate the reasons that you do the things you do. Only change course or adapt your plan when there is strong evidence that it is the right thing to do, and in doing so, stand behind those choices.
And on that note, Gordon Freeman... out.
