The market has reset again and people are looking for bargains. Yet, just because your favorite coin has come down in price doesn't mean it's cheap yet.
To separate myth from reality, we'll use a very simple tool. We're going to measure the distance a coin's price is from its 200-day moving average.
Larger coins tend to follow the 20/40 rule, which states that if the coin is 20% above its SMA 200, then it's not worth buying into, and if it's above 40% you're looking at a top.
Smaller coins use 30% and 60%, respectively.
Myth #1: $SOL has risen too much too fast!
This is the myth for our large cap category.
The data do not suggest that $SOL is a particularly good buy at the moment since it is some 24% above its moving average (red line). But it's also not egregiously far above that marker. Recent intra-day mania reached some 40%+ above before the price retreated.
... That's $XRP.
I know that everyone is buying the hype that Garlinghouse will get $XRP included in the digital asset strategic reserve.
I'll believe that when I see World Liberty Financial take a position in $XRP. Until then, the coin is some 60% above its SMA 200, which is spectacularly too high for a large cap (on a historical basis).
Myth #2: $virtual is cheap now!
Yes, I too made a bundle on $virtual but unlike many I sold and repeatedly announced that I was doing so because we had reached a peak of some 87% above the SMA 200.
This is a smaller cap coin, so it uses the 30/60 rule, but it is still some 52% above its average. I wouldn't be surprised to see it chug sideways for another 30 days and drop a bit.
I still love the project though.
... That's $TAO or $AIOZ.
There are better AI coins you can pick up for cheap. Currently, $TAO sits some 5.95% above its SMA 200. If you want something smaller, $AIOZ sits some 10.66% above its SMA 200.
On a technical basis, both are better valued.
Myth #3: $ondo is a good buy.
We're beyond the token unlock. It is integral to World Liberty Financial's plans (unlike $XRP). I understand the hype.
If you're in, then fine. If not, buying now may not be the best use of your capital. It's some 35% above its SMA 200. It can rise more, but, on a technical basis, you're late.
... That's $FXS.
If you want a coin that's in the DeFi + RWA space, and which is well established, then look at $FXS. It's just barely above the SMA 200 and its stablecoin didn't implode with $Luna or even lose its peg with the Silicon Valley Bank implosion.
Its recent high had the price at some 44% above the SMA 200, so you are certainly not late.
Concluding Thoughts
None of this is financial advice. All cryptocurrencies are gambling and your family will laugh at you when you lose all your money buying these dumb things.
I'm trying to entertain you and educate you about some of the rules that could be useful when you trade bubbles.
I hope this helps you find better entry points. The idea would be to sell if the coin drops below the SMA 200, so your downside is limited with this approach.
Happy Trading!
-Sebastian Purcell, PhD
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This post is provided for educational and entertainment purposes only and should not be relied upon for business, investment, taxation, or legal advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by 1.2 Capital Management. (An offering to invest in a 1.2 Capital Management fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation--all of which should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by 1.2 Capital Management, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
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