XRP Rotates Out and ETH Rotates in, the Pattern Continues

In cryptocurrency which coins are doing well tends to rotate. At the start of the year it was XRP, XLM, ADA, then it went to NEO and ETH, before that it was clearly BTC. Who knows what will be next?!

Whether we are rotating from Verge to Tron, or Litecoin to not Litecoin, we have to remember not to confuse the heat of the moment with the long term.

If a coin is great, if like Ethereum’s Ether, and if you do you research and can justify your investment, you don’t really have to think too much on whether we are in a reaccumulation phase, a pump phase, or another phase.

Unless you are a day trader, it really doesn’t matter what BTC is doing right now, it matters what it will do over the course of years. In the course of years, good coins will generally do well multiple times (historically this has bene true). Likewise, history tells us, they will pull back from their highs as much 50% multiple times as which coins people are flooding to rotates while other coins enter reaccumulation phases.

Sure, sometimes we get extended bear markets, like 2014 to 2016, but the pattern has generally even held in those times (it was just less pronounced).

If you are a long term investor, but you jump on coins at highs and dump coins during reaccumulation phases to “cut losses” you are doing it backwards. In fact, you are doing about the only thing that can lose you money in the market. You are setting yourself up for portfolio erosion (ex. if you buy Verge high, then sell after 50% correction, then use that to buy Tron high, then sell after 50%, you just halved your money twice, your portfolio has eroded).

A long term investor should do their research and then be buying after the 50% corrections waiting for the next wave. Meanwhile, only short term investors should be jumping on a coin in the middle of a wave (unless they have simply been dollar cost averaging over time or are starting a position for the first time now). Meanwhile, those who mistime have a range of options just as long as they didn’t go all-in at the height of the wave (for example, if you did a small buy in at the top, you can do an equal size buy in after the correction and have an average price in the middle, and then you can hold that long).

Or at least, the above would have held true historically.

Today ETH and NEO are doing really well, nothing wrong with buying in with a small buy in long, holding a long position, or buying in and trying to make a quick buck in the short term, but in this cycle those coins have already done well. Like it was with Bitcoin, Ripple, Verge, or Tron, once everyone is focused on a coin, it generally doesn’t have long before it starts to slow and a new coin-o-the-week is set to emerge.

Jump on the wave early, prepare for the wave in advance, or be very cautious jumping in late (where “being cautious” means small buy-ins). Don’t dump all your investable funds in the coin of the week only to pull it out after the correction. It is essentially the only way you can mess up investing in great coins.

Take a moment to understand the rotation, and start to work with the market, not against it. There are countless reasons to buy Ether and NEO, but since this is true in any market, its probably not the best idea to go all-in at their all time highs after they have both just ran for over a week.

TIP: It is easy to get excited about price, and it is important to understand historic trends in price and volume. However, even more important in crypto is investing in a smart technology. Ethereum and NEO are great examples of this, so are XRP, XLM, and ADA. All these coins have reasons for being at the top of the charts, they are all solid projects that one can get excited about at any price. That is what makes a coin over time, the price increases are just icing on the cake. Since this is true, it makes sense to build positions while attention is focused elsewhere, as with attention comes price increases, and with a lack of attention tends to come sales.

WHICH COIN OR SET OF COINS IS NEXT? There is no way to know which coins will be next in the rotation. ETH and NEO could continue, or another set of alts could come along, the attention could swap back to Bitcoin, or the whole market could crash or go up in unison. To avoid having to be psychic, one can simply build positions slowly over time after coins have pulled back or generally stagnated. What looks like stagnation could very well be “reaccumulation.” The reaccumulation phase can look like an extended bear market, but at the end of the day, a long term investor shouldn’t be too concerned about the length of a bear market… it really only gives them more time to build a position in their favorite coin! READ: Wyckoff Power Charting Trading the Reaccumulation.

TIP: Every coin I mentioned is valid. Any might be the right investment for you or they might not. The point of this page is 1. which coins are doing well rotates and 2. if you would sell low, then don’t jump on the current wave after it has already been going for a bit with a big buy-in…. instead, find out which coins you like that have already pulled back 50% and start building your positions there preparing for the next wave. If a coin is good, and if crypto continues, then its a pretty safe bet that there will be another wave.