The Hitchhiker’s Guide To Alt Winter

If it wasn’t completely obvious to a trader by now (maybe you live under a rock or don’t follow me on my famous Twitter account), the crypto sphere has been subject to a rather tumultuous series of changes and evolutions affecting the overall market as a whole. While things couldn’t be healthier (judging by things like number of transactions per day and total global market cap), the infamous altcoins (or shitcoins if you prefer) have been on a one way trip to 0 for the past few months. This all started back around January of course, when almost every single alt with the perception of a working dev team (and even some with no devs at all) increased in price tenfold. It was quite the legendary run, all things considered, and things kept moving up for months on end. Buy high, sell higher was the motto, and a trader could be forgiven his terrible entry, provided he simply sat patiently and waited for the market to move up again in his favor.

That all stopped abruptly in June, where fears of the looming Segwit/UASF hard fork news began to feel palpable, and many traders sold off their positions and started hedging more strongly into Bitcoin. Luckily for you, dear reader, I managed to see it all coming and exited the markets with minimal loss compared to most. (Holding DGB from 2000 satoshi, anyone?). Alt traders as a whole began to feel massive aftershocks of the huge moves upwards earlier in the year, with corrections and downtrends aplenty, signaling the end of the alt bull cycle. Many people would go onto lose 20, 30, 40, even up to 90% of their account values on the coming months, hopeful that the alt bull run wasn’t really over, and that things would pick up eventually. Only, it didn’t.

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Great advice, terrible timing.

The Bitcoin Bull

Bitcoin’s been on a tear all of 2017, but things haven’t really been as explosive as they have since the SegWit business – While BTC did do a 3x on its price over the course of 6 months in the first half of the year, we’ve already done a 2.5x with 2 months remaining in this year for the last 6 months. That’s parabolic. This means that poor alts simply can’t keep up, and while many are managing to struggle by and maintain their USD value, to anyone that is trading to gain more BTC (that is you, dear reader) has simply given all of their gains back to the markets by attempting to “HODL” instead of selling when in some very obvious profit.

The Bitcoin Bull looks to be continuing, and by all accounts, has not much reason to stop barring any FUD or black swan event from the upcoming 2x fork shenanigans. Should this continue, experienced traders are setting sights on 8-10k USD per BTC, and that’s a mighty high level – Bitcoin dominance has also been coming back forcefully, with Bitcoin now representing over 60% of the total crypto market cap. Bringing dominance back baby.

So what is an alts trader to do? Well, I’ve compiled a small set of To Do’s depending on the type of trader you are.

Short Term

Short term traders have an increasingly difficult job when it comes to making small gains. These can be trades that take less than a day, and ultimately your risk is reduced due to the small amount of time you’re spending in the markets. The problem, however, is the sheer amount of false starts and pattern break downs that we get in this kind of market.

You could buy an ascending triangle pattern a few months ago and with some degree of expectancy, realizing some profit a day later. With things as they are now though, many more traders are willing to cut off their larger profits in favor of safety in the ever-accelerating Bitcoin. A wise short term crypto trader knows the limits of the markets around him and will be much more willing to pass up on even premium charts and patterns if he doesn’t feel the move will work out. Tight stop losses and less ambitious targets, folks.

Mid Term

Mid term traders arguably have it the toughest out of the lot here. We’re clearly on a macro downtrend with regards to alts, and there’s absolutely no way that you can expect to come out alive at a gain in 1-3 months if you’re checking your Blockfolio daily and see that your total portfolio is down by 50%. For a mid term trader, these are extremely dangerous waters, because for every day that you spend invested in an altcoin, is another day that Bitcoin has to continue its run up, thus causing more massive selling pressure on the investment of choice.

My advice to a mid term trader is to be extremely cautious, and that you’ll likely not come out of alts winter at any profit at all. Expect to merely survive, or even switch to trading solely Bitcoin while the markets recover and allow a bedrock of buying support for your new investments.

Long Term

HODLing is a double edged sword. On one hand, if you held your coins from rock bottom prices of 2016(or earlier), you’re still likely up several times your initial buy-in, both in USD and in BTC denominations. However, you did definitely miss a large opportunity to sell off some of your position (if you really held everything) during the alts pump of this year. Long term traders definitely have the advantage when it comes to the alts winter. This is where money is made on the buy, and continuous alt sales means that a long term trader has all the time in the world to lazily enter a position and put their holdings in the freezer for half a year or more while their investments mature.

My advice for long term traders is to truly evaluate what prices they actually want to buy a coin at – every week alts seem to be making new lows, and this means a long term trader will best be served by buying slowly over time as opposed to locking in their entry at a certain price. Buy slowly, buy sparingly, but buy comfortably, safe in the knowledge that the next alt bull run will pay off on those long term investments handsomely.

Alts On A Macro Level

Psychology-of-Market-Cycles

In the grand scheme of things, we’ve all seen this before. Taking a look at the charts of the most popular altcoins shows the signs of an incoming depression/capitulation and bottoming out of prices across the board. Expect there to be some period of accumulation, followed by some major bounces & ATH breaks on the large caps (Monero, DASH, etc.) and USD breaks on others (Ethereum breaking 400$ convincingly). Signals like these are the markets that alts are truly back, and you’ll want to make sure you have some picks ready and bought before that happens. This next bull run might be the last, but it is coming. Proper preparation and planning will lead you to survive the alt winter, and to truly take advantage of the absolutely gargantuan bull run that we are setting the stage for in 2018.

Halo out.

5 thoughts on “The Hitchhiker’s Guide To Alt Winter

  1. What are your thoughts around some of the recent, better ICOs just been such as Red Pulse, Icon and Wanchain – some of which yet to hit exchanges. These entering in the darkness of ALT winter depending how things go, however good time to accumulate ready for the ALT season?

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    1. Depends on the performance of the coin once they release to exchanges, but if they’re on a clear upward trajectory they’re an easy buy. I’m looking at things like REQ myself for coins that are worth accumulating at low prices.

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