I see a lot of newcomers heading for the same mistakes many made last cycle. Before the end of this bull market you’re probably going to want to hold your favorite altcoin for life. Historically that’s a bad move. The music will stop one day, and you don’t want to be left holding the bags that nobody will buy.
All of this has happened before, and it will all happen again.
Your favorite altcoin has a small chance of being a top-10 coin in the next market cycle, it’s true. But the odds you picked the 1 in 1000 that don’t drop -90% in a 3 year bear market are astronomically low.
Here are some points to consider:
- Bitcoin goes through 4-year cycles where it can fall -80% from it’s peak and then rally to new all-time-highs
- Altcoins can be used to make more bitcoin
- Many altcoins completely die over a full 4 year cycle. I’m talking -99% loss.
- Very few altcoins ever reclaim their all-time high vs. BTC over a 4 year cycle
You might think I’m being pessimistic but think about the hundreds of new coins that are being launched every week during a bull market.
My Top-level strategy:
(I also like Ethereum, depending on how you feel about it, wherever you see “Bitcoin” feel free to substitute it for Bitcoin+Ethereum)
- Buy the bottom of the Bitcoin 4 year cycle
- [Optional] Put aside some of that Bitcoin in cold storage to “never” sell. Don’t track it’s value day to day. Almost forget this exists.
- [Optional] When alt-season comes, use a small % of your Bitcoin to make more Bitcoin by flipping altcoins
- Sell most of your bitcoin into fiat/stable-coins when we are close to the cycle-top. Live off the profits or use the stable-coins to farm through the bear market.
- Return to Step 1
This strategy is still probably riskier than just hodling Bitcoin through multiple 4-year cycles but it’s the strategy I use. Below I cover some resources I will use for picking bitcoin tops and bottoms.
Buying the bottom of bitcoin
The 200 Week Moving Average is historically good at picking the bottom for bitcoin. Using this indicator could give you several months to dollar-cost-average (DCA) into bitcoin close to the bottom.
June 2022 edit: Bob Loukas is starting to buy for the next 4-year cycle. Copying his buys would have worked out well in 2018.
Selling the top of bitcoin
There are tons of indicators to use for this. Selling close to the top is a lot harder than buying close to the bottom of bitcoin. We may stay close to the top for only a few hours. If I sell within 30% of the top I will consider it a success. Some of these resources also apply to buying the bottom but given the current market timing I’m assuming most people want to use these to find the top.
Bob Loukas and his 4-Year Journey
I consider Bob a legend. I have been following his video series on the 4-Year Journey since it began and it has sustained me through dark times. This is essential viewing for anyone new to crypto. I will also be watching Bob closely when it comes time to buy the bottom again in 2022/2023.
The 4-Year Journey videos are released for free to everyone but I have also signed up for bitcoin.live membership where Bob posts more regularly.
Regular YouTube videos from Josh Olszewicz a.k.a. “CarpeNoctom”
These videos give a nice summary of reasons to be bullish / bearish. He covers most of the important price-action and on-chain indicators in a concise manner. What I like about Josh is that he doesn’t get caught up in the mania of a bull run.
Cryptopathic on Twitter (https://twitter.com/Cryptopathic)
Author of the cursed chart and the Blessed Chart. He called the December 2017 top around $19k weeks before it happened. Follow his tradingview and set up alerts on it: https://www.tradingview.com/u/Path/
DonAlt (https://twitter.com/CryptoDonAlt) and CryptoCred (https://twitter.com/CryptoCred)
These guys called the May 2021 crash while most people were euphoric
They run the Technical Roundup YouTube channel and newsletter: https://www.youtube.com/channel/UCYStZ8mMNGOVTj-Z4AbbSrQ
https://twitter.com/CryptoCred
https://twitter.com/CryptoDonAlt
NUPL (Net Unrealized Profit/Loss)
I’m not sure on this one. It could be over-optimized for previous cycles. But it is still one I watch.
Bitcoin: Number of new addresses
The day will come when everyone and their hairdresser is buying bitcoin and setting up wallets. In December 2017 this metric got very heated in the weeks leading up to the peak.
I’m not sure if this will be as relevant this cycle because of the growth of non-custodial platforms.
Bitcoin: Stock-to-Flow Ratio
Created by PlanB (https://twitter.com/100trillionUSD) in 2019 using backtested data.
Widely mocked for being a back-tested unproven model. But if enough people believe in something it can become reality.
June 2022 edit: Keep mocking it because it’s obviously bullshit now
Bitcoin Wallets over 1000 BTC
Using the May 2021 crash as an example, we can see where these whales were dumping on retail mania as Bitcoin went sideways.
Twitter: https://twitter.com/Sig0O
