Have you heard? Crypto's going all nuts again.
People will very likely spend an entire alt season asking "is it alt season?" or "how do I know?" or "how long does a bull run last?" and all of that crazy stuff. It's logical when everything in a market that is happening is illogical. People who have been around as long as I have and longer, compare this to 2017. Personally, I think 2017 has been blown out of the water. My advice: be cautious! The better things appear, the more cautious you should be.
Let me break a few things down so the dangers are clear, and then you can get back to Crypto Twitter, Telegram, Discord, Reddit and pump those alts and NFT's.
First, there are old and new whales. They work alone, and they coordinate in groups. They are disenfranchised people who got filthy rich mining in the early days, lucky kids who bought in 2013/4/5/6 and either didn't lose it trading, or HODL'd. There are whales who have been buying into crypto in the tens of millions of dollars, some with bots trading for them, others doing it manually. There are whales trading OTC working out a good deal for big blocks of coin, that the broker or exchange resolves end of day.
There are whales who know exactly how to move the market in daily, weekly, monthly singular moves that almost always work because they are the few with the volume to make a fast market change happen. More often, though, there are whales taking the exact same kinds of crazy risks that we are. In many cases, they are just as hungry for the risk and the possibility of a small cap coin going parabolic as the small guy. The same mentality that makes wealthy people gamble crazy hands at the casino can affect their lust after a huge pump in a ridiculous coin that has no credibility.
Now that I have laid the groundwork regarding whales, realize, that there are thousands of coins, and the oldie-but-goodie alts are established teams, many who have weathered countless dry spells where people ask whether 'x' coin is dead, only to see them steadily outperform others, and often for the sole reason that they didn't get rekt like 50 others.
These euphoric waves of amazing market movement are assumed by almost everyone in crypto, but it does not make them easy to navigate. Many personalities who buy more and more on the way up and then say 'x' coin is never going to stop, often are saying that for you to hear. Some say it because they mean it. Others still, say it because they are desperate for it to be the truth and they have been stuck at the last peak for 3 years. Every variation is out there.
The obvious 'newbie' advice regarding caution is dyor and do not believe the hype. If something is randomly pumping, it does not mean it is for any good reason. More importantly, if it is a small project and has been around a few months, the fact that it is pumping may be due to nothing other than the fact that it is easy to pump small cap coins, and this is what pump groups do.
Sure, there are legit projects, and some of them won't be known for certain until long after the best spikes are behind them. When something is assumed legit and less scary, it loses volatility and gains long term believers.
All of these and a few dozen more, are the reasons that the best traders learn to ignore the noise and focus hard on what they can predict.
If you are a market speculator and have plenty of cash to throw around, and don't mind the risk, then chasing gems may work for you just fine. If you are a whale that does nothing but crypto, you may take pleasure in pumping those gems left and right on social media.
Is this alt season? Is this a bull run? Well, the optimism is at an all time high, the marketcap is at an all time high, the real crypto news is coming in daily, and I'll write a separate post about this, but it seems to me that traditional markets and their government agencies have been doing some covert attacks against crypto to help prop up the U.S. dollar, which happened just at the moment that Bitcoin dropped 7%, so I don't believe they were separate events.
The market is huge, and even if you feel like you are dancing around trying to catch every raindrop of prosperity pumping that falls, you are still only seeing the micro picture. The macro is simply massive! MASSIVEEEEE!!! Everyone, say it with me: "maaaaaaasivvvvveeeee"! Good job.
So, here's the thing;
Even if I kept listing all of the factors that define the amazing, crazy things happening at market right now, I promise you there is some bad correction coming. My hope is that people follow enough reference points in their trading process not to get fooled by what seems like never-ending optimism. When we're in the trenches, things look bleak, and even worse than a full-on bear, those long lulls where things are just slow, boring, and low volume, everything seems like it can be solved by a great alt season. But, once we're in the midst of it, it is important to remember that from the market standpoint, this is just about acquiring wealth. Incredibly important, yes! And, throw in the tech and the huge advances that will come from this. Yes. Goodness yes!
But, people get jaded by the good news just as much as the bad. We adapt quickly, which is a good thing with a purpose, but it also means that people go in multiple directions once things set in. For some, they get bored of alt season, assume 'up' is the only direction because it just seems logical. It's crypto, right? Then, it's gonna pump! But, crypto is relentless, and is famous for the dump even more, and the dump-and-run has happened so many times it's hard to keep up. The next 'thing' is on its way. I promise.
Just around the corner somewhere, lurks another orchestrated event from the SEC designed to look like capturing the bad players, but makes such an unfair impact at market, there needs to be an SEC for the SEC, right? Someone is going to hack an exchange and it won't go well. A wave of other people will say 'not your keys, not your coins' and people will get depressed. The blame game will pass around and a few tens of millions of dollars will disappear from the market, people will get scared, and then start buying up those dips. Some of those efforts will be in vain, as the small caps that got hit may not recover, while others see prime time all over again.
These things happen in cycles because they have to, because we make that happen, and because neither bad news nor good news happen forever.
So, I am optimistic. I believe that if the governments don't blow it up, we will see the crazy numbers experts claim from the likes of Bitcoin and pals. I think the longest living alts will see good correlations to Bitcoin over the months and years. I think the best newer alt projects will stay in the market for some time, but I think the dazey hazey thrills of their ridiculous pumps will not sustain the present market expectations. I won't mention specifics, but if it is a Binance launch pad project, first and foremost it is designed to pump, secondarily, it is designed not to be a fraud. But, by the nature of thousands of coins now, every single one of them goes parabolic when they first list. It takes months for them to prove a bottom can be formed, and it is loooowwwwwwww. Then, there eventually is a second pump, usually 3 months or so later, usually 2/3 the value of the first at best, usually 1/3 of the first peak more often than not. The third peak is one of desperation that comes as long as 3 years later, and for many projects that is where we are right now! All of that fun 2018 noise is just now getting a chance for new people to bail out those who were desperate to get out... they thank you!
So, join me in the optimistic realism that is crypto. Realize that if it does not have a financial model that is as strong as its use-case or market interest, eventually the pump is the only thing propping it up at market. There is simply too much activity spread too wide among too many coins for this not to thin out and start making some people very, very broke. It will happen. The question, is whether you can distinguish the right places to HODL if you are lucky, with a measure of skill, to hit the right pumps at the right times and get out safely to somewhere worth the HODL.
In the end, it is my opinion there is a reason that long term money has remained in BTC, ETH, LTC and a circulating door of a few others. None of this is guaranteed at all. But, every time there is a scare, people are going to run to USD, USDT, BTC, ETH and LTC. That has been the story for a while, and continues to be the case.
Now, have fun, go grab those bargains, pump those bags, risk those pumps, but don't say I didn't warn 'ya, and do not trade or buy what you cannot afford to lose.
And on that note, a cautiously optimistic 'trusting but verifying' Crypto Gordon Freeman, protector of the HODLer at heart... out.