BTC USD and BTC Dominance - rough strategy/idea for Alts in 2021
explaining this to a couple of people I know. It's public so others can take advantage if they see fit.
Switching between BTC/Altcoin trash/USD
When to get in and out of Alts / BTC / USD. There is a cycle to BTC and Alts. Like understanding anything at a macro level, an idea of money flow is important - This gives a general overview hackernoon.com/the-2020-crypto-money-flow-cycle-ht1b3eaj - Based on that you can use very basic technicals on BTC Dominance and BTC USD technical charts to know when to switch and out. Looking at this these charts Buy BTC when BTC dominance on the Stoch RSI goes from sub 20 to above and then buy alts when BTC dominance goes from plus 80 to below.
Set up alerts on Trading View to tell you when to do this :-)
How much can alts go up?
In the last cycle, we dropped from the current level of about 70% in Ap 2017 to just over 35% over a few months, which is how long this rally will last I think. Total Crypto market cap went from £20B to £80B of which alt coins moved £2B to about £40B. This shows alts performed about 20x when BTC moved up by a factor of two. Given we are about halfway from the top of BTC's top for market cap and price, I suspect the same will happen in this cycle.
I am very confident the 3rd Jan 2021 was the cycle high for BTC dominance.
Knowing what Alts to Buy
Alts are clearly on the up. A simple trends.google.com/trends/explore?q=altcoins
Work out which alts are good. You want to get alts that go up over time in price compared to BTC, so have an upward trend on Coinmarket cap on the orange line, especially when BTC dominance percentage is going down. Good alts either need to be a decent market cap (ADA, XLM) or be new and upcoming with a useful edge, so Defi tokens like FTT/BAND/RUNE/LINK). Ideally, pick Alts that have good cycles to them, and it goes without saying, use the volatility/cycles for each coin to work out appropriate limit buy/sell points in advance, along with technicals of choice (Stoch RSI / MACD despite their basicness work nicely). If you see that Stoch RSI for BTC.D is going to cross over 20 in the next few days maybe it's a good idea to have those sell limits in place and vice versa :-)
My Not researched this much, but I would be bullish on LINK, LSM, RUNE, RSR, THETA, XTZ, BAND, STX, UNI, FTT, SOL, LTO, ORN. ... That is until they all crash at the end of the year lol.
Do bear in mind most altcoins are a load of effing trash., With this in mind and the fact this bubble market getting in and getting out is important. This isn't like stock investing where you can leave you cash to go up for a few years, but at the same time, it's probably pointless day trading. This leads me to my next point...
Timing the market top
Bitcoin seems to run a clear cycle. This is probably driven by the fact it is hardcoded on the supply side. The fact Central Banks pursue the opposite policy on the other side also helps the cause, along with the timing bitcoin difficulty halving for miners.
tradingview.com/chart/BTCUSD/UuzUBUTa-Bitcoin-4-Year-Cycle/
I found this following chart from 2 years ago 2 weeks ago. It's holding up like a charm, given trend charts over this long period of time generally tend to break down
rektcapital.co/articles/4-year-cycle
This article is another spin on the above but looks at it with nice big fat candles.
This is another interesting alternative bit of technical/trend analysis. It looks at ATH (All time highs) of BTC. Generally, the big ATH points happen a few months (typically 6) before the market is high. When you consider there is a year or two of accumulation etc, this makes sense. Once the big ATH comes in we go into bubble territory and speculators move into altcoins
buybitcoinworldwide.com/bitcoin-days-since-high/
buybitcoinworldwide.com/mayer-multiple/
This is another perspective. This will get to >3.5 when things start to break down
Another more wishy-washy way to look at things could be BTCXAU. Each macro bubble cycle seems to push crypto (so Alt and BTC) an order of magnitude closer to Gold's Market cap. I'm sure Bimboberg will be making a huge song and dance as it gets closer to parity, possibly towards the end of the year. I'm not sure how true this will be, or if it will hold up.
I'm sure we will get some warning signs as the top reaches. Exchange downtime, hacks and liquidity issues were a common theme at the end of the last bubble. This has stuck in my mind over the years:
investopedia.com/news/bitcoins-2017-rise-was-market-manipulation-tether-study/
Likewise, before that was the Famous MT Gox crash. Probably worth moving your cash into several exchanges as a result of this in case one goes down.
Everyone is calling a top at $100K and Deribit has options strikes at just over $100K on 24th Sept... coindesk.com/deribit-adding-options-to-allow-bitcoin-traders-to-bet-on-rally-to-120k-and-beyond - So my guess is that psychology will say everyone will cash out just below $100K. Position yourself to move into Tether/USDT about $80K a good part of your holdings and gradually move the rest as it goes higher.
Switching between BTC/Altcoin trash/USD
When to get in and out of Alts / BTC / USD. There is a cycle to BTC and Alts. Like understanding anything at a macro level, an idea of money flow is important - This gives a general overview hackernoon.com/the-2020-crypto-money-flow-cycle-ht1b3eaj - Based on that you can use very basic technicals on BTC Dominance and BTC USD technical charts to know when to switch and out. Looking at this these charts Buy BTC when BTC dominance on the Stoch RSI goes from sub 20 to above and then buy alts when BTC dominance goes from plus 80 to below.
Set up alerts on Trading View to tell you when to do this :-)
How much can alts go up?
In the last cycle, we dropped from the current level of about 70% in Ap 2017 to just over 35% over a few months, which is how long this rally will last I think. Total Crypto market cap went from £20B to £80B of which alt coins moved £2B to about £40B. This shows alts performed about 20x when BTC moved up by a factor of two. Given we are about halfway from the top of BTC's top for market cap and price, I suspect the same will happen in this cycle.
I am very confident the 3rd Jan 2021 was the cycle high for BTC dominance.
Knowing what Alts to Buy
Alts are clearly on the up. A simple trends.google.com/trends/explore?q=altcoins
Work out which alts are good. You want to get alts that go up over time in price compared to BTC, so have an upward trend on Coinmarket cap on the orange line, especially when BTC dominance percentage is going down. Good alts either need to be a decent market cap (ADA, XLM) or be new and upcoming with a useful edge, so Defi tokens like FTT/BAND/RUNE/LINK). Ideally, pick Alts that have good cycles to them, and it goes without saying, use the volatility/cycles for each coin to work out appropriate limit buy/sell points in advance, along with technicals of choice (Stoch RSI / MACD despite their basicness work nicely). If you see that Stoch RSI for BTC.D is going to cross over 20 in the next few days maybe it's a good idea to have those sell limits in place and vice versa :-)
My Not researched this much, but I would be bullish on LINK, LSM, RUNE, RSR, THETA, XTZ, BAND, STX, UNI, FTT, SOL, LTO, ORN. ... That is until they all crash at the end of the year lol.
Do bear in mind most altcoins are a load of effing trash., With this in mind and the fact this bubble market getting in and getting out is important. This isn't like stock investing where you can leave you cash to go up for a few years, but at the same time, it's probably pointless day trading. This leads me to my next point...
Timing the market top
Bitcoin seems to run a clear cycle. This is probably driven by the fact it is hardcoded on the supply side. The fact Central Banks pursue the opposite policy on the other side also helps the cause, along with the timing bitcoin difficulty halving for miners.
tradingview.com/chart/BTCUSD/UuzUBUTa-Bitcoin-4-Year-Cycle/
I found this following chart from 2 years ago 2 weeks ago. It's holding up like a charm, given trend charts over this long period of time generally tend to break down
rektcapital.co/articles/4-year-cycle
This article is another spin on the above but looks at it with nice big fat candles.
This is another interesting alternative bit of technical/trend analysis. It looks at ATH (All time highs) of BTC. Generally, the big ATH points happen a few months (typically 6) before the market is high. When you consider there is a year or two of accumulation etc, this makes sense. Once the big ATH comes in we go into bubble territory and speculators move into altcoins
buybitcoinworldwide.com/bitcoin-days-since-high/
buybitcoinworldwide.com/mayer-multiple/
This is another perspective. This will get to >3.5 when things start to break down
Another more wishy-washy way to look at things could be BTCXAU. Each macro bubble cycle seems to push crypto (so Alt and BTC) an order of magnitude closer to Gold's Market cap. I'm sure Bimboberg will be making a huge song and dance as it gets closer to parity, possibly towards the end of the year. I'm not sure how true this will be, or if it will hold up.
I'm sure we will get some warning signs as the top reaches. Exchange downtime, hacks and liquidity issues were a common theme at the end of the last bubble. This has stuck in my mind over the years:
investopedia.com/news/bitcoins-2017-rise-was-market-manipulation-tether-study/
Likewise, before that was the Famous MT Gox crash. Probably worth moving your cash into several exchanges as a result of this in case one goes down.
Everyone is calling a top at $100K and Deribit has options strikes at just over $100K on 24th Sept... coindesk.com/deribit-adding-options-to-allow-bitcoin-traders-to-bet-on-rally-to-120k-and-beyond - So my guess is that psychology will say everyone will cash out just below $100K. Position yourself to move into Tether/USDT about $80K a good part of your holdings and gradually move the rest as it goes higher.
