With an uptick in searches on Google for Bitcoin recently, that increase in interest reflects in the number of new people coming into the cryptocurrency space.
Each has their level of skill in trading and knowledge of the cryptocurrency markets. Often they arrive with dreams of racing sports cars on the moon dancing through their heads but lack a good idea of how to get there.
Those types of returns are possible in crypto. However, for those who lack adequate trading skills and knowledge, the odds are so slim regarding achieving that level of success, their dreams may as well remain a part of the frozen lunar moonscape.
Having heard stories about the alt-season that took place in late 2017 and continued into early 2018, a question firmly on the newcomer's minds is often "When's alt-season?" People who don't see or understand the work & effort that goes into correctly executing trades mistake large profits suddenly made in a volatile market for easy pickings & a fast buck.
Arguably, one of the greatest traders to have ever lived was Jesse Livermore, who put it this way: "People who look for easy money invariable pay for the privilege of proving conclusively that it cannot be found on this earth." The Kid Plunger knew what it takes to make successful trades consistently and understood why so many traders lose their shirts when they should be enjoying their profits.
I participated in the alt season of 2017-2018 and, through that experience, learned some valuable lessons. After reflection, there are about seven lessons from that time that made a deep impression on me, which had and still have a significant influence on my life and trading. Before we discuss them, a little background information is helpful.
After having been aware of Bitcoin's existence for several years, I had become interested in studying trading/investing in cryptocurrency in the spring of 2017 and had, as the saying goes, tumbled down the old rabbit hole, never once looking back.
During the months leading up to December 2017, I had purchased varying amounts of different altcoins, not entirely without a plan but not entirely knowing what I was doing. My thought process had been to "diversify" my crypto portfolio by holding a certain percentage of "the big two" BTC and Ethereum and making up the rest with a variety of altcoins of differing stripes.
I had latched onto the basic concepts of fundamental analysis and began reviewing various altcoin projects to vet their worthiness. I read news articles, looked at websites, registered for Reddit, and combed its pages.
I joined numerous Facebook crypto groups and signed up for Twitter, my crowdsourcing of crypto investment advice was reaching a fever pitch as I daily looked at the price action of altcoins and BTC.
I watched numerous videos by any number of crypto You Tubers, a few of whom knew what they were talking about and whom I still follow; most didn't have much more of a clue than I did about what was going on.
For whatever reasons, I selected a handful of altcoins that I purchased and began sailing the seas of crypto trading, blissfully ignorant of what lay ahead.
One of the coins I purchased was Verge, known by the ticker symbol of XVG. I'm aware of what had attracted me to it: XVG was/is a "privacy" coin, which meshed nicely with my overall political point of view that The G has no business getting involved in the private affairs of its citizens.
I bought XVG at various times and differing prices, dollar cost averaging my way into the position at 120 sats. My records are missing from those days (more on this later), it's fair to say I had bought a fat stack of XVG and was quietly minding my own business when along came Mr. John McAfee.
I'm not taking time here to dissect the nuances regarding what McAfee or anyone said what about XVG or anything else in December of 2017, that is material for another article unto itself. What took place is that just before the middle of the month, McAfee spoke glowingly about several privacy coins, including XVG on Twitter, shortly after which Verge's price skyrocketed from just under a hundred sats per coin to nearly 2000 sats in a matter of about a week and a half.
What ensued in the weeks and months that followed were events that I won't ever forget and which formed the basis for the following lessons.
- Take profits. It's not a coincidence that I selected this for number one. If this was the only thing I'd learned, the experience was worth it for this alone. Instead of selling my position at a profit of around 1860 sats per coin when it was close to the ATH, I wanted more. My desire was an even 20X return at 2400 sats per coin. Now, I shake my head and smile at my naivete. Here lies another issue: the lack of a written trade plan. Without the roadmap that a written trading plan provides, I was adrift, lost as one of the unfortunate travelers in the old TV series The Twilight Zone. This part of the story has a somewhat happy ending: While I missed out on the maximum amount of profits I could have earned, I came to my senses in time to sell off most of my XVG for a substantial return that April when the price spiked again. The fact that much higher rewards slipped through my grasp is the toughest lesson out of all this. It is some of the tuition I have paid to The College of Crypto Trading.
- Dumb luck counts too, aka: Be in the right coin(s). While it was purely a matter of chance that I bought XVG & McAfee tweeted about it, it shows the value of being in the right coins, no matter how you get there. Under the right circumstances, even someone as green as I was then can come out on the profitable side of a trade.
- It's fun while it lasts, but it doesn't last long. While there can be some debate on specifics such as precisely what makes up an alt season, that's a nut to crack on a different day. Looking at the XVG/BTC chart from that time and using the Fibonacci Retracement Tool, my view is that XVG's "alt season" began on December 3rd, 2017, and ended on January 16th, 2018 when the price action had retraced to the .618 level. That's right around six weeks, by anyone's measure, merely a blip in time. Nearly all of the time you spend involved in trading, you will be looking forward to another alt-season, not experiencing one. Plan accordingly. Instead of spending your time speculating with your online pals if another alt-season is here, use that time to study trading or charts. If you believe anything, you can believe this: should the next alt-season be anything like 2017's, there will be no doubt as to what is taking place.
- Dopamine is real. The jury may be out on what role Dopamine plays with pleasure in the human nervous system, but after having lived through the winter of 2017-2018, I'll testify to the fact that something was very different with my brain chemistry in those days. There was an automatic spring in my step; nothing could get me down or stand in my way. I was a genius, cryptocurrency trading was the ticket to a new life, and it was happening sooner rather than later. I do not doubt that Dopamine (or whatever brain chemical it was), along with my inexperience, was a significant component in my not taking profits at or near the ATH as any trader worth his salt would do. The feeling of invincibility, of being "eight-foot-tall and bulletproof," was real and a lot of fun while it lasted, but as I noted above, it is as fleeting as breath into the wind. Dopamine is real; you can take that to the bank.
- It is more fun when you know what you're doing. In the time since then, I've devoted a large part of my life studying cryptocurrency, trading, and market psychology. While I consider myself to have still much left to learn in my development as a trader, I also know that compared to what I knew then, I've traveled a far distance already. Everything that I have learned in regards to trading and crypto over the past couple of years has served to deepen my appreciation for just how complex and nuanced trading can be. The more I learn, I can appreciate trading on an increasingly sophisticated level, in turn enhancing my enjoyment of this business.
- Every moment in the market is unique. I hadn't yet cracked open any of the books by author Mark Douglas when this alt-season was taking place, but the fundamental truth of this quote was plain to see. The explosive growth in cryptocurrency prices that occurred in mid-December of 2017 was unexpected, at least by me. It was a time when, as one crypto You Tuber put it: "a blind monkey could throw darts at a dartboard and pick winners." The influx of new retail money led directly to breathtaking price increases and those who were savvy enough to take profits cleaned up on The Herd.
- Everyone needs a hardware wallet. A small amount of my crypto was on a desktop wallet throughout this entire alt-season, nearly all my crypto was sitting on an exchange. Which exchange was it? Cryptopia. Timing is everything. The Cryptopia hack is why my records from that time are incomplete. Thinking about what might have happened had the hack occurred earlier gives me an unsettled feeling. After I did finally sell off my XVG, I invested in a Nano Ledger S and highly recommend that everyone involved in crypto DYOR and find a quality hardware wallet to purchase.
The alt-season of 2017-2018 was surely notable, and if you were around for it, you probably have war stories to tell your grandkids. It is easy to focus on the phenomenal gains and ignore the darker aspects. One negative effect was the number of inexperienced traders/investors who bought BTC near the all-time high and saw their investment drop off a cliff as the asset plunged to about $3100. Many of those may never be back, and their friends aren't likely to stick their toes in the crypto pool anytime soon, either.
Here's the most important thing I learned from owning XVG in 2017: waiting, wishing, and wondering about the next alt-season is a poor use of one's time and effort. Take that energy and use it to explore aspects of trading that you haven't studied yet. There is an entire lifetime's worth of work ahead of you, what are you waiting on?