Altcoins are currently in a mode where they go down when BTC goes down and down when BTC goes up. That is never a fun part of the cycle for many traders and hodlers.

That said, understanding the current conditions can be a helpful learning experience.

Right now BTC is bullish, ETH is still a wet noodle, and only specific alts are popping off.

That is great if you are in BTC or those very specific alts, but right now it isn’t great to just be in a bunch of alts… luckily, things change quickly in crypto, and at some point ETH and alts will likely be great again.

Understanding the current conditions and the potential for a change of conditions requires understanding the nature of the crypto markets.

The better you understand the nature of these markets, the quicker you can detect when a change has taken place and calibrate, and the more confident and less confused you will be when the market changes.

Let’s quickly cover a few points.

  1. There are some historic crypto trends that tend to repeat. One is that outside of “alt season” (periods of times when alts are bullish), alts tend to either underperform BTC as a whole or to track it generally (meaning most of the time alts are as good or worse than BTC). The problem is when alts don’t track BTC’s upward movement well enough and then over-exaggerate the downside, it can get very painful for alt holders. Often alt holders will be “up in USD, down in BTC’…. but on the bad days they will just be “down in USD, down in BTC.” Check out some information on historic cycles or see a page on “Why Do Altcoin Prices Often Follow Bitcoinโ€™s Price?
  2. The Bitcoin dominance chart is important to understand. When BTC dominance is in an uptrend, alt season is likely on hold. When BTC dominance is in a downtrend, people tend to pile into alts.
  3. Market cycles are generally important to understand here. Are we in the part of the cycle where everyone is piling into BTC because it is about to break a key threshold (like a golden cross is about to form for example)? Or, are we in a part of a cycle where BTC just went to the moon and now alts are starting to catch up? Or, are we in a part of a cycle where everything is dropping or jumping together? It is really important to understand “the mood of the current market” and what if any coins are “in rotation.”

Now let’s quickly cover the ideal.

Ideally in crypto you want to be in fiat when the market is dying across the board, BTC when BTC dominance is trending up (but not taking alts and ETH with it), and in ETH and alts when BTC is steady and alts are playing catch up.

But more than anything, you want to be heavy into alts during alt season (as that is where the biggest money can be made) and then far away from alts in a bear market.

Of course, that is all a big problem, because alt season is rare, BTC is steady, and crypto downtrends are common and can be harsh.

So while the ideal is ideal, in practice many people tend to just HODL bags and take losses.

There are two ways to play things given the above. Either you get smart, get good at detecting cycles, and trade trends… or you invest and deal with it.

To trade, you are using position sizing, risk management, and charts to make educated choices.

To invest and deal with it, you might do something like try to average into coins that are out of rotation (AKA buying low).

So if we are in market wide-downtrend, you might be trying to find the bottom and average into BTC and alts. If we are in a BTC uptrend, you might be either averaging into alts or scaling out of BTC to fiat…. if we are in alt season, you might be scaling out of alts to BTC.

Sure, you’ll underperform a good trader as an investor / longer term trader, but the longer term style is also easier and less of a time commitment.

However you deal with it is up to you, but it is important to understand that crypto cycles repeat. The current cycle will make you feel like a fool for sitting in ETH and alts, but a future cycle will make you feel equally as foolish for sitting in BTC and not throwing everything into high supply low cost coins.

Then of course there will be that cycle where everyone in crypto looks like idiots…

It isn’t a simple thing, but it is a thing.

TIP: Even in a market where alts are underperforming, they are still likely to have some green days here and there where you can “play the bounces.” Then of course, at some point alts will turn around and offer face melting returns. Never fool yourself into thinking alts are dead, they never are, each part of the cycle is only one part of a grand cycle of ups and downs.

TIP: After everyone FOMO’s into a coin, there will always be people who then buy in and HODL it all the way down. If you are planning to make long term plays, it can help to look for coins that are beaten down, not ones that have already had a solid run. If you are looking for short term plays, then it is the opposite, then maybe jump into the FOMO with a tight stop and have fun.

TIP: Check both the /USD and /BTC charts. Just because an alt looks like death on its BTC pair chart, doesn’t mean its USD pair chart looks bad. Sometimes coins will be in a minor uptrend or steady in USD, but Bitcoin will be going up so the BTC pair chart looks bad. It isn’t a good position for a coin to be in, but it is important to check both charts when making an investment / trade. An alt that is oversold in BTC prices, but at the bottom of an uptrend channel in USD prices may just be an epically good buy soon.

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