DEFENDING ALTSEASON - SHITCOIN MANIFESTO
In this post I will explain why there will be another alt season and alts will perform well at some point against Bitcoin.
1. Shitcoins piggy back on Bitcoin's success. For as long as Bitcoin is doing well, people will try to find the next Bitcoin. Many newcomers will feel they missed the boat or they will simply believe Bitcoin is outdated tech. Most people don't understand what Bitcoin is about, so the moment someone pitches to them Bitcoin 2.0 / 3.0 etc they start believing him. This is mainly based on greed as they think the'll get much better returns by betting on these shitcoins. At the same time whales and everyone here, wants to either increase their Bitcoin stash or USD stash in one way or another... and altcoins are on of the best ways to do so. People can't easily manipulate Bitcoin that is so big and liquid, but they can easily manipulate shitcoins. This is still the wild west! People can form groups to pump and dump these little shits, so they will keep on doing it. Doesn't matter who these people are or who these people will be, for as long as it possible for somebody to do it.
Remember that maximum opportunity comes at the point of maximum pain, not before that. Getting a 10-20-30x isn't easy as you have to get in when everyone else wants to get out. You have to be a contrarian and ready to feel pain for some time before you get the big returns. Do you think that all the people that made money in before haven't put or won't put some money back in? When something is down 90-99%, that means that the people that sold high can buy a lot more than what they had for much less, while they don't really feel pressure to sell if it goes up or down a bit as they have already made good money. That's part of the reason these cycles in all markets and not just crypto. Not everyone has lost money and not everyone has lost faith forever.
On the other hand it is funny to see people say that nobody could had seen this massive collapse coming. Since mid April I was calling for Bitcoin dominance to 70-77% and for now I am not convinced alts have bottomed. To me their bubble still hasn't completely popped yet and I find it amazing how altcoins are still holding this well. Notice however that I believe we are very close to the bottom... Based on several time analysis I've done and have put it on twitter both price wise and time wise we are getting there. The bottom should have already come and some other analysis says we are 50-120 days away. At the moment I can't see them dropping more than 25-50% from here, so maybe waiting for them to go lower is me being greedy, but I'd like to see them reclaim certain levels before I get in.
*Fun fact: Some alts topped in late 2013 - early 2014 and it took them 1100-1200 days to bottom. Just think about that...
2. Fundamentals in the space are complicated and there is no real model to evaluate shitcoins as an asset class. Simplistic models and explanations don't work and should be instantly dismissed. Nothing is as simple as finding one narrative and sticking with it. What I know for sure though is that shitcoins in 2012-2017 had way worse fundamentals in all aspects. Less exchanges, shady exchanges, no funding, worse technology, more pure scams, no regulatory clarity and no fiat on ramps. However they all pumped to insane highs... if you don't believe me go have a look at how several coins survived 2012-2017 on CoinMarketCap, check how much they had dropped, for how long they were falling and despite all that so many of them pumped more than 40x from their bottoms in a 2-3 months. Seriously zoom in and try to imagine how these people felt like.
I was in the Bitshares community for quite some time in 2016. That thing was going down forever... Seriously I thought it was dead. As I was growing and I was studying the technicals of Bitcoin, Bitshares and various other projects, I started realizing how flawed alts really were. The claims they were making were insane, unsubstantiated and relied on attracting money to the project. At that time the serial scammer Daniel Larimer left the project, people were having constant fights and all the proposals for improvements were awful. The Chinese community was blocking funding for several proposals and the whole thing was in death spiral. Yet it survived and had one of the biggest bubbles in Q2 2017.
Most people that claim shitcoins are dead haven't been there and haven't experienced what several of us have. Looking at charts and fundamentals along is irrelevant. If you don't get the feeling, if you don't see things happening live... You will never understand. Experience can't be substituted with knowledge. I've made and lost money on shitcoins and ICOs, and my biggest mistake was being emotional and saying that: I DON'T INVEST IN SCAMS, THESE PEOPLE ARE FRAUDS, i DON'T WANT TO MAKE MONEY LIKE THIS. I WILL ONLY TRADE BITCOIN AND THAT'S IT. THE CLAIMS THEY ARE MAKING ARE INSANE, THESE PEOPLE ARE JUST GREEDY LIARS, NOBODY WILL BELIEVE THEM! THESE CHAINS WILL BE ATTACKED AND GET WRECKED. This was literally how I was thinking and then they all took off. I seriously got suicidal at the time as people around me where making money off scams and I wasn't. May and June were awful... Every morning I'd wake up with Bitcoin going up and I wanted to die because I missed one of the biggest opportunities of our lifetime. Imagine how you'd feel looking at something going up and up, 50-100-200x in BTC terms from the bottom. Now why would you wanna feel that again? Personally I don't plan to feel this way.
3. Now let's look at some of the fundamentals of shitcoins compared to normal companies: Shitcoins don't have to pay taxes, they don't have specific investors whom they have to satisfy immediately, they can't go bankrupt, they don't have to do buybacks, they could technically survive without employees (Dogecoin), they can print and they have printed their own money which they can use to *bribe* people and they have the incentive to pump the price to make more money from the money they have printed (Ripple). Most aren't promising something right now, but something in the future. They claim they are building the infrastructure and technically this isn't false. They can cut down costs and keep on operating to an extend, until they they both run out of money and they keep getting delisted from exchanges. What they have that Bitcoin doesn't is money for advertising and insane bag holders that will shill their shitcoins to anyone just so that they can be able to get their money back.
It has to be understood that there will be more delistings and there will be several alts that will never recover. Having an alt season doesn't mean that everything goes up... Even before 2018 there were many shitcoins that died and are not around anymore. I estimate that until now there have been about more than 3000 altcoins, tokens, ICOs, projects that have died and more than half of the coins on Coinmarketcap are essentially dead or simply listed only on scammy illiquid exchanges that nobody uses.
You might think this is bad, but in my opinion it isn't. It is a good thing for the rest of the coins, not bad. The more useless and less liquid alts give their place to new, more 'interesting' assets, the bigger the potential they will have for big pumps. Initially everyone feels the pain as everything is interconnected in this space (as people hold several shitcoins along with Bitcoin), however once more awfully managed / scammy / illiquid projects are gone, the more money can be focused on 'good' shitcoins. The reality is that not everything will pump and the average Bitcoin returns will not be as high as 2017. Larger market caps, more coins now and more coming in, most highly inflationary, fractured liquidity on exchanges, Bitcoin being more scarce, the success of derivatives on Bitcoin and the current infrastructure for institutional investors favoring Bitcoin alone, all mean that alts won't give such great returns and will most likely never reach their old highs again. Yet this doesn't mean they are dead either for reasons I will explain below.
4. The lower alts go the more smart money and whales can buy while there are less sellers. Altcoins can create short term narratives that can fuel demand, they can give incentives for people to hold them (BNB) and staking is a new component that in my opinion will play an instrumental role in this new bull run. The more and more people hold and stake long term, the less supply there is on exchanges making pumps easier as there are less sellers. The current extremely low yield environment globally will make people chase both returns and yields and this is making altcoins extremely attractive. Bitcoin doesn't offer extra returns by holding it, altcoins do. Yes they are scammy and PoS is trash, but most people don't get why.
With most other assets being already too high, assets that are down significantly are extremely attractive. There are bubbles and antibubbles. Altcoins are an antibubble while real estate for example is a bubble in many places. Buying assets with inherently high risk at extremely low valuations helps you increase your potential returns substantially. The risk remains the same, but risk to reward x probabilities of success is the formula every investor should look at before making decisitions.
It has to be noted that most traditional investors don't believe in Bitcoin, but in Blockchain and Cryptocurrency. Not only that, but their goal is to maximize returns for themselves or their customers, so they are ready to buy anything. They don't care about feelings, revolutions and at a time where making money is really really hard altcoins will most likely be an oasis for them. Most people can't distinguish between Bitcoin and Shitcoins, so people in this space need to separate themselves from the masses. What you know isn't what the market knows, and you need to trade based on both.That's how I fucked up in early 2017, as I thought that the market knew what I knew. This means: manage risk very well, study your picks well, always use TA to get in and out and don't marry your bags.
What I find interesting is how people think Coinbase is irrelevant and that there will be no institutional money in shitcoins. Coinbase is extremely important as it holds ~5% of all Bitcoins and is one of the most important fiat gateways. Them listing new shitcoins is very important and Kraken has been following slowly too. What do you think people will do when Bitcoin goes up a lot and they also see these other things next to it go up even more? They will diversify of course...
Something that can't go unnoticed is how most big exchanges have been building infrastructure for big players. Creating OTC desks, custodial solutions, indices and even normal fiat on ramps / stablecoins. These aren't just for Bitcoin, but for shitcoins too. It is important to note that none of these existed in before 2018 for shitcoins. Exchanges have a much larger incentive that anyone else to make these things pump and succeed. The higher they go, the more people trade on their platform, the more money they make. These markets run on incentives and exchanges are the most powerful players off all in this ecosystem. A few years ago all shitcoins traded only against Bitcoin on a few illiquid exchanges, but now there are fiat pairs, altcoin pairs, more bitcoin pairs and more established shitcoin exchanges. Not relying 100% of Bitcoin or Poloniex is really important.
6. One of my followers mentioned something about current investors being wiser and avoiding altcoins, which I think is completely irrelevant for several reasons.
First of all most of them are already burned out and they don't have much money to put in. Most retail investors in the space are cumulatively worth ~50-100B which in the grand scheme of things is nothing. I am seeing this asset class growing to 20-30T before alts have their final bubble. I can't see why we can't get to the size of the Dot Com x5. Here we are reinventing money, there is a lot more fiat now than back then (thanks Central Banks), it is global, it is easily accessible and it has come at a time where fiat money is dying. No better place to have a mega bubble. So what matters more than anything is new investors coming in and with deeper pockets. The real 'flippening' is when old investors capitulate and new investors, smart money and whales take over. If you haven't noticed already, lots of people from before 2017 are gone because they lost pretty much most of their money or they are simply holding Bitcoin. That's why you don't hear from many people from back then. Burned investors usually don't come back until much later and usually near the top, like all the people that got burned in 2017-2019.
The reality is that most people here are doing this to make more money and don't really know what is going on here. Be that Bitcoin or altcoins... Even old investors will eventually start buying them once they start trending. These things trend for a while (be that up or down), and that's why they have these constant cycles. Study the cycles and understand why they occur. Understand why you shouldn't be betting on what is the biggest sin in trading: *this time is different*. This doesn't mean that you should fool yourself and see them as long term investments. Once you do your homework you will understand how this game is being played.
At the bottom smart money gets in (smart traders, whales, founders etc) and then they start pumping the shit out of these coins. Then retail money starts following and you get a bubble. This whole thing is about supply demand imbalances, it is all about strong hands taking over and weak hands slowly getting getting shaken out completely. 'Pumpers' need to do specific things to take over and pump the price to a level that they have sufficient liquidity to exit. So first they need a good entry and then they need a good exit as they can't keep pumping shit forever or they'll start losing money. 90% of the people don't like buying things that go down, but they like buying things that go up and this will never change. Most old investors might be able to avoid being the fool at the top, but this doesn't mean that there will be no new entrants.
7. Finally let's get into market caps, potential valuations and how Bitcoin fits in. I'd like to start by saying that shitcoins are very illiquid and these market caps are not real. What matters most is liquidity and who controls the supply. For a shitcoin to go from 10M to 1B you don't need to put 1B in. If you bought most of the supply for 5-10M during depression/capitulation, then with 50-100M you can take that asset to 1B. These market caps are an illusion that will eventually face reality and come crashing down. Markets are irrational most of the time and on the long run they oscillating around a mean/fair/rational valuation. We have seen such things again and again on exchanges like Huobi, where the worst of the worst shitcoins have pulled 10-60x over the last year. 1-10M USD shitcoins being in accumulation for several months, then pumping like crazy and then coming down like crazy
Part of the reason why alt seasons last 1-3 months and the down trends much longer, is because people need to chase the market, they must not have enough time to think, they must feel urge to FOMO and then only time and despair can wash them out for a new cycle to begin. When the price go up it doesn't mean that this money has come in the market. All it means is that there is an illusion of wealth being created and the new money that comes in near the top is going straight into the pockets of the smart money. The people that buy afterwards are playing a game of hot potato that is essentially redistributing the losses that don't occur at the bottom, but at the top.
During the main phase of the Bitcoin bull run, alts are being used to accumulate more Bitcoin and at the end to accumulate more USD. They serve as an exit for big players. By initially pumping Bitcoin you force people to chase Bitcoin and dump their altcoins, making it a lot easier for you to buy them cheaply. That's why after an altseason Bitcoin is going up stronger and alts go down hard. Bitcoin becomes more scarce and accumulated by strong hands, whereas alts are held by weak hands. So to me smart money either already has or will soon start accumulating altcoins. Big players can't simply buy the top or the bottom, so they always need some time to enter and exit positions, while they might even be sitting on big losses while they are trying to build their position.
My initial idea was that we'd first see new ATHs and a big increase in Bitcoin like we did in early and late 2017, but with alts bleeding so much this doesn't seem like a bad place for big boys to enter. They most likely will want to accumulate Bitcoin before the 2020 halving and this doesn't seem like a bad place to do so. We don't have much data on pre-halving alt seasons, but getting an alt season like the one in early 2016 seems pretty logical to me.
1. Shitcoins piggy back on Bitcoin's success. For as long as Bitcoin is doing well, people will try to find the next Bitcoin. Many newcomers will feel they missed the boat or they will simply believe Bitcoin is outdated tech. Most people don't understand what Bitcoin is about, so the moment someone pitches to them Bitcoin 2.0 / 3.0 etc they start believing him. This is mainly based on greed as they think the'll get much better returns by betting on these shitcoins. At the same time whales and everyone here, wants to either increase their Bitcoin stash or USD stash in one way or another... and altcoins are on of the best ways to do so. People can't easily manipulate Bitcoin that is so big and liquid, but they can easily manipulate shitcoins. This is still the wild west! People can form groups to pump and dump these little shits, so they will keep on doing it. Doesn't matter who these people are or who these people will be, for as long as it possible for somebody to do it.
Remember that maximum opportunity comes at the point of maximum pain, not before that. Getting a 10-20-30x isn't easy as you have to get in when everyone else wants to get out. You have to be a contrarian and ready to feel pain for some time before you get the big returns. Do you think that all the people that made money in before haven't put or won't put some money back in? When something is down 90-99%, that means that the people that sold high can buy a lot more than what they had for much less, while they don't really feel pressure to sell if it goes up or down a bit as they have already made good money. That's part of the reason these cycles in all markets and not just crypto. Not everyone has lost money and not everyone has lost faith forever.
On the other hand it is funny to see people say that nobody could had seen this massive collapse coming. Since mid April I was calling for Bitcoin dominance to 70-77% and for now I am not convinced alts have bottomed. To me their bubble still hasn't completely popped yet and I find it amazing how altcoins are still holding this well. Notice however that I believe we are very close to the bottom... Based on several time analysis I've done and have put it on twitter both price wise and time wise we are getting there. The bottom should have already come and some other analysis says we are 50-120 days away. At the moment I can't see them dropping more than 25-50% from here, so maybe waiting for them to go lower is me being greedy, but I'd like to see them reclaim certain levels before I get in.
*Fun fact: Some alts topped in late 2013 - early 2014 and it took them 1100-1200 days to bottom. Just think about that...
2. Fundamentals in the space are complicated and there is no real model to evaluate shitcoins as an asset class. Simplistic models and explanations don't work and should be instantly dismissed. Nothing is as simple as finding one narrative and sticking with it. What I know for sure though is that shitcoins in 2012-2017 had way worse fundamentals in all aspects. Less exchanges, shady exchanges, no funding, worse technology, more pure scams, no regulatory clarity and no fiat on ramps. However they all pumped to insane highs... if you don't believe me go have a look at how several coins survived 2012-2017 on CoinMarketCap, check how much they had dropped, for how long they were falling and despite all that so many of them pumped more than 40x from their bottoms in a 2-3 months. Seriously zoom in and try to imagine how these people felt like.
I was in the Bitshares community for quite some time in 2016. That thing was going down forever... Seriously I thought it was dead. As I was growing and I was studying the technicals of Bitcoin, Bitshares and various other projects, I started realizing how flawed alts really were. The claims they were making were insane, unsubstantiated and relied on attracting money to the project. At that time the serial scammer Daniel Larimer left the project, people were having constant fights and all the proposals for improvements were awful. The Chinese community was blocking funding for several proposals and the whole thing was in death spiral. Yet it survived and had one of the biggest bubbles in Q2 2017.
Most people that claim shitcoins are dead haven't been there and haven't experienced what several of us have. Looking at charts and fundamentals along is irrelevant. If you don't get the feeling, if you don't see things happening live... You will never understand. Experience can't be substituted with knowledge. I've made and lost money on shitcoins and ICOs, and my biggest mistake was being emotional and saying that: I DON'T INVEST IN SCAMS, THESE PEOPLE ARE FRAUDS, i DON'T WANT TO MAKE MONEY LIKE THIS. I WILL ONLY TRADE BITCOIN AND THAT'S IT. THE CLAIMS THEY ARE MAKING ARE INSANE, THESE PEOPLE ARE JUST GREEDY LIARS, NOBODY WILL BELIEVE THEM! THESE CHAINS WILL BE ATTACKED AND GET WRECKED. This was literally how I was thinking and then they all took off. I seriously got suicidal at the time as people around me where making money off scams and I wasn't. May and June were awful... Every morning I'd wake up with Bitcoin going up and I wanted to die because I missed one of the biggest opportunities of our lifetime. Imagine how you'd feel looking at something going up and up, 50-100-200x in BTC terms from the bottom. Now why would you wanna feel that again? Personally I don't plan to feel this way.
3. Now let's look at some of the fundamentals of shitcoins compared to normal companies: Shitcoins don't have to pay taxes, they don't have specific investors whom they have to satisfy immediately, they can't go bankrupt, they don't have to do buybacks, they could technically survive without employees (Dogecoin), they can print and they have printed their own money which they can use to *bribe* people and they have the incentive to pump the price to make more money from the money they have printed (Ripple). Most aren't promising something right now, but something in the future. They claim they are building the infrastructure and technically this isn't false. They can cut down costs and keep on operating to an extend, until they they both run out of money and they keep getting delisted from exchanges. What they have that Bitcoin doesn't is money for advertising and insane bag holders that will shill their shitcoins to anyone just so that they can be able to get their money back.
It has to be understood that there will be more delistings and there will be several alts that will never recover. Having an alt season doesn't mean that everything goes up... Even before 2018 there were many shitcoins that died and are not around anymore. I estimate that until now there have been about more than 3000 altcoins, tokens, ICOs, projects that have died and more than half of the coins on Coinmarketcap are essentially dead or simply listed only on scammy illiquid exchanges that nobody uses.
You might think this is bad, but in my opinion it isn't. It is a good thing for the rest of the coins, not bad. The more useless and less liquid alts give their place to new, more 'interesting' assets, the bigger the potential they will have for big pumps. Initially everyone feels the pain as everything is interconnected in this space (as people hold several shitcoins along with Bitcoin), however once more awfully managed / scammy / illiquid projects are gone, the more money can be focused on 'good' shitcoins. The reality is that not everything will pump and the average Bitcoin returns will not be as high as 2017. Larger market caps, more coins now and more coming in, most highly inflationary, fractured liquidity on exchanges, Bitcoin being more scarce, the success of derivatives on Bitcoin and the current infrastructure for institutional investors favoring Bitcoin alone, all mean that alts won't give such great returns and will most likely never reach their old highs again. Yet this doesn't mean they are dead either for reasons I will explain below.
4. The lower alts go the more smart money and whales can buy while there are less sellers. Altcoins can create short term narratives that can fuel demand, they can give incentives for people to hold them (BNB) and staking is a new component that in my opinion will play an instrumental role in this new bull run. The more and more people hold and stake long term, the less supply there is on exchanges making pumps easier as there are less sellers. The current extremely low yield environment globally will make people chase both returns and yields and this is making altcoins extremely attractive. Bitcoin doesn't offer extra returns by holding it, altcoins do. Yes they are scammy and PoS is trash, but most people don't get why.
With most other assets being already too high, assets that are down significantly are extremely attractive. There are bubbles and antibubbles. Altcoins are an antibubble while real estate for example is a bubble in many places. Buying assets with inherently high risk at extremely low valuations helps you increase your potential returns substantially. The risk remains the same, but risk to reward x probabilities of success is the formula every investor should look at before making decisitions.
It has to be noted that most traditional investors don't believe in Bitcoin, but in Blockchain and Cryptocurrency. Not only that, but their goal is to maximize returns for themselves or their customers, so they are ready to buy anything. They don't care about feelings, revolutions and at a time where making money is really really hard altcoins will most likely be an oasis for them. Most people can't distinguish between Bitcoin and Shitcoins, so people in this space need to separate themselves from the masses. What you know isn't what the market knows, and you need to trade based on both.That's how I fucked up in early 2017, as I thought that the market knew what I knew. This means: manage risk very well, study your picks well, always use TA to get in and out and don't marry your bags.
What I find interesting is how people think Coinbase is irrelevant and that there will be no institutional money in shitcoins. Coinbase is extremely important as it holds ~5% of all Bitcoins and is one of the most important fiat gateways. Them listing new shitcoins is very important and Kraken has been following slowly too. What do you think people will do when Bitcoin goes up a lot and they also see these other things next to it go up even more? They will diversify of course...
Something that can't go unnoticed is how most big exchanges have been building infrastructure for big players. Creating OTC desks, custodial solutions, indices and even normal fiat on ramps / stablecoins. These aren't just for Bitcoin, but for shitcoins too. It is important to note that none of these existed in before 2018 for shitcoins. Exchanges have a much larger incentive that anyone else to make these things pump and succeed. The higher they go, the more people trade on their platform, the more money they make. These markets run on incentives and exchanges are the most powerful players off all in this ecosystem. A few years ago all shitcoins traded only against Bitcoin on a few illiquid exchanges, but now there are fiat pairs, altcoin pairs, more bitcoin pairs and more established shitcoin exchanges. Not relying 100% of Bitcoin or Poloniex is really important.
6. One of my followers mentioned something about current investors being wiser and avoiding altcoins, which I think is completely irrelevant for several reasons.
First of all most of them are already burned out and they don't have much money to put in. Most retail investors in the space are cumulatively worth ~50-100B which in the grand scheme of things is nothing. I am seeing this asset class growing to 20-30T before alts have their final bubble. I can't see why we can't get to the size of the Dot Com x5. Here we are reinventing money, there is a lot more fiat now than back then (thanks Central Banks), it is global, it is easily accessible and it has come at a time where fiat money is dying. No better place to have a mega bubble. So what matters more than anything is new investors coming in and with deeper pockets. The real 'flippening' is when old investors capitulate and new investors, smart money and whales take over. If you haven't noticed already, lots of people from before 2017 are gone because they lost pretty much most of their money or they are simply holding Bitcoin. That's why you don't hear from many people from back then. Burned investors usually don't come back until much later and usually near the top, like all the people that got burned in 2017-2019.
The reality is that most people here are doing this to make more money and don't really know what is going on here. Be that Bitcoin or altcoins... Even old investors will eventually start buying them once they start trending. These things trend for a while (be that up or down), and that's why they have these constant cycles. Study the cycles and understand why they occur. Understand why you shouldn't be betting on what is the biggest sin in trading: *this time is different*. This doesn't mean that you should fool yourself and see them as long term investments. Once you do your homework you will understand how this game is being played.
At the bottom smart money gets in (smart traders, whales, founders etc) and then they start pumping the shit out of these coins. Then retail money starts following and you get a bubble. This whole thing is about supply demand imbalances, it is all about strong hands taking over and weak hands slowly getting getting shaken out completely. 'Pumpers' need to do specific things to take over and pump the price to a level that they have sufficient liquidity to exit. So first they need a good entry and then they need a good exit as they can't keep pumping shit forever or they'll start losing money. 90% of the people don't like buying things that go down, but they like buying things that go up and this will never change. Most old investors might be able to avoid being the fool at the top, but this doesn't mean that there will be no new entrants.
7. Finally let's get into market caps, potential valuations and how Bitcoin fits in. I'd like to start by saying that shitcoins are very illiquid and these market caps are not real. What matters most is liquidity and who controls the supply. For a shitcoin to go from 10M to 1B you don't need to put 1B in. If you bought most of the supply for 5-10M during depression/capitulation, then with 50-100M you can take that asset to 1B. These market caps are an illusion that will eventually face reality and come crashing down. Markets are irrational most of the time and on the long run they oscillating around a mean/fair/rational valuation. We have seen such things again and again on exchanges like Huobi, where the worst of the worst shitcoins have pulled 10-60x over the last year. 1-10M USD shitcoins being in accumulation for several months, then pumping like crazy and then coming down like crazy
Part of the reason why alt seasons last 1-3 months and the down trends much longer, is because people need to chase the market, they must not have enough time to think, they must feel urge to FOMO and then only time and despair can wash them out for a new cycle to begin. When the price go up it doesn't mean that this money has come in the market. All it means is that there is an illusion of wealth being created and the new money that comes in near the top is going straight into the pockets of the smart money. The people that buy afterwards are playing a game of hot potato that is essentially redistributing the losses that don't occur at the bottom, but at the top.
During the main phase of the Bitcoin bull run, alts are being used to accumulate more Bitcoin and at the end to accumulate more USD. They serve as an exit for big players. By initially pumping Bitcoin you force people to chase Bitcoin and dump their altcoins, making it a lot easier for you to buy them cheaply. That's why after an altseason Bitcoin is going up stronger and alts go down hard. Bitcoin becomes more scarce and accumulated by strong hands, whereas alts are held by weak hands. So to me smart money either already has or will soon start accumulating altcoins. Big players can't simply buy the top or the bottom, so they always need some time to enter and exit positions, while they might even be sitting on big losses while they are trying to build their position.
My initial idea was that we'd first see new ATHs and a big increase in Bitcoin like we did in early and late 2017, but with alts bleeding so much this doesn't seem like a bad place for big boys to enter. They most likely will want to accumulate Bitcoin before the 2020 halving and this doesn't seem like a bad place to do so. We don't have much data on pre-halving alt seasons, but getting an alt season like the one in early 2016 seems pretty logical to me.
A. People still trade penny stocks, they are betting on horse and go to the casino. Someone would have thought these things would have gone away as people got smarter, yet they haven't. Plenty of people know that they are most likely going to lose money, yet they still do it. Why not trade shitcoins where you could get much better returns than going to the casino? Most people trading shitcoins know what they trade and they keep doing it (myself included).
B. There are still plenty of scams all over the world. People will come up with clever tricks to defraud others. When it comes to technology people are more susceptible as they don't wanna miss out on something with high potential. Human nature doesn't change and that's why we've had more than 7 alt seasons in the past. Most people don't even check what they buy. They see green, they like the name... THEY BUY!
C. Even during this down trend alts a few months that they did relatively well. Like I mentioned in the 'manifesto', shitcoiners form communities / armies / bots and they shill their bags. The founders are especially incentivized to do so to sell them higher. Funny real story: a guy that I know and who is a friend of a friend, called me to ask me how to buy Bitcoin with his card on Coinbase to send it to Binance to buy IOTA. FUCKING IOTA, IN 2019. Reason? Other people told him it is going to do well and he was going to buy it.
d. For the last time: no matter how high Bitcoin goes, altcoins will do well occasionally. They could be going down 90% oi the time and up 10%, doing 5-10-20x. That's what they've been doing over the last few years anyways. 1-3 month up, 6-12 months down. Look at Peercoin which is the best example out there. beaten to death, been around for 5 years, does nothing, is insecure and it still has a community of people doing things. It is down 99% against Bitcoin.