Altcoin Market Outlook
I wasn’t sure in what form should I write this, so I decided to divide it by specific questions/comments I’ve heard or seen around CT in the last weeks. It’s a long read so if you don’t want to read everything, go by the titles to see if there is anything that might interest you specifically. Hope you enjoy the read and that this perspective will make you understand the current market state a bit better.
When should I buy alts?
Or maybe even — should I buy them at all? This is not a yes/no question as is depends on your goals. The most important thing is to first find out was it the current correlation between BTC movements and alts. There have been times in the past where they were able to move together but the general rule is that a volatile BTC in any direction usually means a lot of bleeding for the rest of the market. The current correlation has been pretty steady for the past couple of weeks or even months — bullish BTC = bearish alts. The small rallies across the board that we had were in in times of soft retracements from BTC or simply consolidation, but the general trend has been very steady, and I am not exactly sure why everyone is trying to counter trade it so hard by exposing yourself to longer holds on alts. As long as that correlation still works, I personally see only one way of playing the current market:
- Buy alts for quick scalps/swings or if you are accumulating coins from the lesser known markets that are not as heavily corelated with BTC
- Sell alts the moment they fail to reclaim previous support or experience a sudden pump without having a HTF trend established.
And now in bit more normie language — if you are going to buy regular Binance alts, make sure you do not hold them too long. Most of them are in negative price discovery/with no clear uptrend established, so with no signs of BTC-ALT correlation changing anytime soon, it’s foolish for you to bet on alts suddenly decoupling from it. Do not expose yourself to illiquid coins with low volume as you’ve seen how quickly alts can die during even a 2–3% BTC jump. This is not a place to play a hero trying to catch generational bottoms, this is you playing against the trend on some stupid alt season promises which make you get stopped out time after time in alts which should be sold and compounded for 5–10% gains. It doesn’t matter where the huge green candle is coming from — a scam pump or some bullish announcement — if your alt is still in a clear downtrend, that candle is meant to be sold.
As for the coins outside of Binance, there are 2 types of them — those with momentum and those that will be probably connected to some sort of opportunity cost if not chosen wisely. Just because an alt does not die the moment BTC moves doesn’t mean it’s instantly a good buy. There are a lot of dead alts on smaller exchanges that won’t move unless McAfee decides to become an advisor for them. However, from the alts on more unknown markets the last weeks were nothing short of spectacular — I am still surprised how few people were aware of the runs that were happening on Huobi during that period. The current market, despite what many say, still has a lot of opportunities, it’s just a matter on knowing where to look for them.
Which alts should I buy?
Those who follow me for some time now know what my take on this is —
Over the course of last 5/6 months the trend has been very clear — the market clearly favors the newer coins, especially the current IEO mania, leaving the majority of older coins far behind. This applies not only to the potential gains in a prolonged alt movement phases but also when it comes to recoveries after they get smashed. With the overall alt market being extremely oversaturated with coins, the most action is happening on those that are capable of gathering the attention which in most cases end up being with the recently released projects. They recover the quickest and have the most upside due to being in a constant price discovery with no resistance above them. It doesn’t matter that those 2017 alts are right now much better developed than before or that the new stuff has barely anything to show product-wise — what matters is that with so many coins around there is not enough volume yet or market participants to spread that attention further onto more forgotten alts.
Of course, just because the flavor of the months is the new stuff doesn’t mean that the old will remain dead forever. What I wrote above applies to the current alt market outlook which simply does not perform based on pure FA (it never really did but that’s a different topic). With the switch in the alt market sentiment, the strongest coins are likely to regain solid uptrend as well, but I am not really a fan of betting on this happening anytime soon. Instead these are the simple rules by which I would be selecting my alts as long as the current BTC-ALT correlation works:
- Choose alts with a strong ongoing HTF trend. Best example here — LINK. While majority of alts kept on reaching new lows or were hovering around their accumulation zones stuck between tight S/R, LINK has been on a steady uptrend since July 2018, consistently reaching new high on increased volume. Instead of betting on a reversal when buying incomplete Adam & Eve patterns, focus more on coins that are already out of the woods — within the current market outlook there won’t be many of them, so you can count that they will get more attention as they are actually somewhat tradeable.
- Choose alts with strong upcoming catalysts. In a typical “Buy the rumor, sell the news” kind of play, a strong catalyst can spark some movements on certain alts. The strength of the event is important here — conference attendance, an AMA with the team or some tiny product release that nobody cares about won’t make your alt flinch. Even the bigger ones in the current market state doesn’t give much room to pump — to ride the event you will have to catch the earliest parts of it when the news are not completely out as they are getting very quickly priced-in (LTC halving or some recent mainnets that were basically the only things people talked about are not bullish if they are the only plays on the market right now). Having some announcements incoming are a tool of being noticed in the crowd but don’t treat this anyway different than a simple scalp/swing opportunity — not getting out quickly here even on massive news will make you join the bagholders club with the rest of them (STRAT and VET are good recent examples, will come back to them later).
- Follow the current trends. IEOs are an obvious example here but every now and then there some additional trends developing, making couple of coins follow each other. Spotting something like this early gives an excellent edge on where the market is going switch to next. There is no exact secret to how to do it outside of being up to date with the market and aware of the existing coins. A couple of other examples:
MimbleWimble coins (BEAM and GRIN going full ham)
IDEX/Huobi alts (will touch on that later but Huobi basically had its own altseason disregarding BTC moves completely)
Certain coin chains (there are few coins that often pump collectively e.g. ICX is often followed by WAN & AION pumps and vice versa, security tokens as well)
- Use the volume tools. Going by one of the basic TA rules, volume precedes the price, the volume measuring tools are a good way of spotting the first signs of incoming pumps early. Simply go into the lower TFs and see which coins are starting to get a higher % volume flowing in with the price still being relatively stable. Experiment with this for some time until you start seeing the pattern and how price develops — combined with a good setup this let’s you pick the alts ready to pop quicker than the majority.
“Are you ready for the incoming alt season :D ?”
Let’s get this out of the way — I think it’s been literally like 14 months now of calling for alt season DAILY. Over 3 months ago I’ve written my reasoning why we won’t be getting a full-blown alt season and nothing changed since then — the reasoning behind previous rallies remains the same today.
Some people, however, seem like they cannot play this market unless literally everything pumps simultaneously which I believe honestly did hurt a lot of followers who kept on getting exposed to alts when they should’ve waited it out on the sidelines. This isn’t an official part of the alt outlook, it’s more of a warning to not get influenced by anything you see from other traders as they either:
- Larp to get more interactions on their social accounts (I recommend checking other big accounts as well)
- Don’t really understand how the market works. At one moment you will finally nail that “alt season next month” call but when it’s being said since mid 2018 it kinda loses its magic tbh.
Sorry for the rough type of response to this question but I’ve always been a big enemy of selling fake hope to unexperienced traders. Remember that a lot of big accounts here make a living from their following, whether it’s by gathering more clients to their paid services or by undisclosed shilling of crap projects. If you would ask any of them for the reasoning why would alts start their rallies across the board, I doubt you would get anything outside of “well, it happened before so…”.
Will we ever have an alt season again?
Yes and no. Yes, if by alt season you mean big rallies on a nice number of alts; no, if you want the whole market to simultaneously pump 2/5/10x. People turn “this time it’s different” into a meme, but in this case, it actually is different, at least to some degree.
The oversaturation of the market with coins (and exchanges too tbh, most have no reason to exist and they just steal parts of volume) is visible every time alts are trying to make a comeback. Comparing the current market with Jan 2018, while we only have a scrap of retail attention we had back then is imo wrong. I could argue that we are in 14th bad month for alts in a row and in that period we had basically all possible PA from BTC — from strong downtrend, capitulation through boring consolidation and now uptrend. During none of these periods we had anything that even slightly resembles previous alt season (which btw most of those people shouting ALTSZN have never seen before). The market won’t just magically triple itself just before it had strong rallies in the past — right now it’s much harder to move established markets which can be seen by the reaction on some really strong news which almost instantly fully retrace (VET and Walmart, STRAT and Cirrus Sidechain Masternodes as mentioned before).
People joke that in 2017 a new website design equaled almost an instant 5x and tbh that’s true. In a market moving as quickly as crypto I do not think that comparing those periods makes sense anymore. It’s up to the older traders to adapt to the new conditions.
When the greed strikes again (notice the usage of “when” and not “if”) I believe traders are going to experience huge gains on alts once more, but this time in a much different manner. Instead of spreading yourself thin across the whole market with mediocre recoveries on all alts, I believe we will see heavy runs on several selected alts and failed HTF uptrends on others.
Not every rekt alt is in accumulation and not all alts will have to go through a new cycle, reaching new highs. That doesn’t however mean, that when the whole market hits euphoria, we won’t see some ridiculous pumps again — until this time tho, you have to be more selective in your alt picks, which can still make you a lifechanging money, especially when compounded.
“Alts can fall another 90% here”
Alts can also jump 100% from here — that’s just a guessing game for anybody. At this point after so much downside in many quality projects I would much rather lean to the buyers side even if that means averaging down a bit (I am talking here ONLY about coins that I would hold longterm, the future 50x kind of stuff). Those kinds of statements are no different than “this could easily go to 50k” when BTC was at 18k — an extreme emotion and a drastic change of sentiment, which is exactly how the market usually reverses. Could some alts with majors included still drop a significant amount now that they are breaking their final supports? Sure. That’s why you either bet on alts that are not that heavily corelated with BTC or you wait for them to show some strength.
There is this stupid pressure on CT to play the alts all the time — have some patience. In most cases, even if you miss the absolute bottom, you will still have better entries than the alt season dudes which won’t get on breakeven for a good while.
Trading the USD pairs
As long as we are in a clear BTC uptrend — just don’t. Here is a quick rule — during a BTC bull run you care about BTC, during a BTC downtrend you care about USD. The point in trading alts is to always outperform BTC:
- If the altcoin that you are holding is appreciating in USD value but losing in BTC one it means you would perform better if you never bought it and just stayed in spot BTC. This is what majority of CT should’ve done.
- If the altcoin that you are holding is appreciating in BTC value but losing in USD one it means you would perform better staying in stablecoins or that your alt is not appreciating in BTC quick enough. It’s a situation where a 10% pump on a shitcoin is not exactly a good play if BTC dropped 20% in the same period. Always preserve your capital first.
I’ve seen dozens of ALT/USD charts flying around twitter cheering the pumps that were happening without realizing that they are actually missing out on gains. It doesn’t matter if your altcoin is up 5% in USD value if BTC did 10% during the same period. It’s an opportunity cost so if you want to start outperforming the market, make sure you win on the BTC pairings.
“Alts were a bad buy for weeks/months now”
Unless you are a long-term investor and trade only very high TFs, this is simply not true. Even with all the drops on alts, there have been big runners in the past weeks as well, both when BTC consolidates and keeps on pushing to new highs. Just because all your popular alts are not popping 50% daily doesn’t mean the alt market lacks opportunities. Some examples:
Binance:
MATIC — 10x in 12 days
LINK — almost 5x in 46 days on a highly liquid coin
RVN — 6x in a month
Huobi:
RSR — 2x in day on a listing
SHE — something like 35x in 20 days
BOX/YCC — 4x in 8 days
Miblewimble:
GRIN — 2.5x in 14 days
BEAM — almost 5x in 16 days
The nature of crypto in 2018 and beyond kinda requires more effort when it comes to finding big winners, but it doesn’t mean we should generalize for the whole alt market. Stick your nose outside of Binance and top 20 to see that people are making bank here daily. You either get out of the popular playground or you are left complaining/buying what’s another person’s 5x on a Binance listing. That also applies to “waiting for confirmation” where on many coins on higher TFs it means missing out sometimes on a good 2/3x before the price would reclaim previous ranges.
“I have heard that alts are dead many times before, they always come back”
Alongside the current “alt season will never happen” narration we also the other side of the argument saying this time is no different than how alt rallies looked in the past. And as much as I would like to agree with it, I only do it partly.
The current alts death is the effect of all the market changes that I mentioned before, mainly oversaturation. There simply isn’t enough retail buying pressure on the market to make alt market move like they did in the past but it doesn’t mean that it won’t happen in the future. The Dec/Jan alt rally in 2017/2018 was the effect of the peak interest from BTC flowing into the rest of the market with an already strong ICO trend ongoing on it. There is no reason to think why we won’t get similar inflow this time when BTC reaches retail attention levels again (surprisingly we are nowhere near the highs yet), especially with the current IEO trend and incoming STOs providing additional opportunities for investors.
To think that we will get a full-blown alt season out of nowhere now is, again, larping, but if you believe there are no bigger people out here that plan to still milk this market, you are in for a cool surprise.
“Some alts will actually die during this move”
No crypto coin dies unless it’s delisted from all possible exchanges — even Bitconnect was still tradeable after it exit scammed. “Dying” in this meaning would be becoming the next LBC — coins that will bounce a bit with everything else but outside of occasional scam pumps they will be vastly outperformed by other alts. Focus on the type of coins mentioned before and reassess where your underwater capital might recover quicker, as sitting and waiting for breakeven in obsolete coins might cost you participation in better looking market opportunities. In simpler words — if you were 30% underwater on your random Binance alts, would you rather wait for it to bottom out and then recover or would you sell it for a very strong LINK trend and recover the losses there? Cutting the losers might be hard but it often saves you from another 50% drop when you are stuck with that long-term perspective in a market, where some coins never recover. Just don’t make it led to overtrading — if you are about to switch your position, make sure it’s worth it. The feeling of “starting clean” even on lower balance often leads to selling the bottom. Every trade should have a very strong reasoning behind taking it, both for buying and selling.
My course of action
I personally am focusing now on accumulating some midterm plays — coin that are relatively stable against BTC now but which I expect to be the biggest runners once the market momentum shifts. In the following days I will release a small list of coins I am going through right now that went through my initial dyor positively.
As for the swing trades I plan to shift my focus more onto Huobi and Idex, leaving only tiny bit on Binance to play the quick recoveries on the newest listings. I am in no rush to expose myself to alts too much as BTC might go for new highs here — my portfolio will feel much better sitting in simple spot BTC then praying that the local alt support is going to hold through another jump.
Hope you guys enjoyed the outlook — if you got any questions about it, please try reaching out to me on Discord — my telegram and CT are too flooded already, it might get lost there. Hope you all have a good trading week and in the meantime see you soon with more Jungle content 🐵
Thanks for reading my article. If you want to find more of my work follow me on the following channels and if you are interested in learning more about crypto — check out my book on trading cryptocurrencies. Cheers!
