The mainstream shills are all on the same talking point — the altcoin market always pumps after bitcoin pumps. On the surface, this makes sense. Every time there is new price discovery on bitcoin, adoption increases. These new investors, who are wading deeper into the waters of crypto, are naturally excited by what they see. They are more than happy to take some of their profits from bitcoin into altcoins, because the investment is new and exciting.
I'm not a historical determinist. Just because something happened in the past does not mean it will happen in the present. Doesn't mean it won't, either. The secret is to look at the market conditions surrounding the previous moves. Are they the same, or are they different? Let's do the dive.
Previous Pumps
Previous bitcoin pumps were actually followed by altcoin pumps in the past, so the narrative is legitimate. Investors did not want to take their money back into fiat, so they stayed in crypto. They spread the wealth among the many altcoins they discovered. They did so easily because they were playing with house money (bitcoin profits), and speculation ruled the day.
Because the market cap of the altcoin market was so small, even the slightest bit of new price discovery on a project could be enough to send it to the moon. Some investors enjoyed pumps of 100X or even 1000X before the entire thing eventually came crashing down, with tons of bagholders marking the occasion. Many of them are still here from 2017.
Crypto based projects, however, are not in the same place as they are now. The industry as a whole is far more developed. In the past, a whitepaper was enough to get millions of dollars in investment capital thrown your way. That's not the case in 2020.
2021: A New World
With 2020 almost over and bitcoin reluctant to give up the limelight, we will likely see the next altcoin bull market in 2021. Many top projects like Theta, Utrust and Chainlink are more than just whitepapers. They are fully fledged products with real world use cases and a track record to follow. These are the projects that will likely get the attention first from speculators, because even these huge projects are like penny stocks to traditional investors.
Will we see the money trickle down into more speculative plays like Saffron Finance, Rio Defi Xiot? Those projects either started late or have yet to fully develop their promise, yet they managed to avoid any big missteps and being called a scam. There will be a lot more money than there was in any previous bitcoin pump coming into the market. Institutional investors and even central banks may find their way into the altcoin forest this time. These are institutions that can't really go to investors with stories of pure speculation. They have to put their money into legitimate products.
As a result, I don't think the money will flow as deeply into altcoins as it did before. There will be a selection of creme de la creme projects that get a great deal of attention, and the degens in the degen forest will constitute a different audience entirely. They will also be playing with bitcoin gains, however, so they may form their own market pumps way down in the weeds.
Taking Profits
Here are a few articles on trading philosophy and technique that you can use to benefit from the coming altcoin storm.
- Defining and using asymmetric risk — https://www.publish0x.com/cryptoinvesting/using-asymmetric-risk-to-your-advantage-trading-altcoins-xpjwgvm
- An overall trading philosophy that works no matter your risk tolerance — https://www.publish0x.com/cryptoinvesting/the-easy-3-step-process-for-crypto-profits-borrowfarmlend-xkkmkwm
- A telling description of market activity so you can follow on chain price action — https://www.publish0x.com/cryptoinvesting/why-does-bitcoin-actually-pump-xnlveyp
- How to use all of your talents to multiply your crypto gains — https://www.publish0x.com/cryptoinvesting/how-you-get-rich-in-crypto-in-2021-xwnxgvx
- An easy way to invest in crypto if you don't want to do any more work — https://www.publish0x.com/cryptoinvesting/the-easiest-way-for-noobs-to-invest-in-bitcoin-xkkomdq
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