How to Trade the Bitcoin Cycle for Profit

in #bitcoin2 years ago (edited)

Bitcoin dominance has finally eclipsed 40%, a milestone it hasn't achieved since the beginning of the year as altcoins had killer returns in December and the very beginning of January. Bitcoin has been testing that 40% level for the past week or so now and finally broke above it and is sitting close to 41% now at the time of writing this.

If you're holding altcoins right now, you've probably been getting hammered still despite the market recovering fairly well from its monsterous drop. If you're in this position, it might be tempting to continue holding your altcoins, but I still suspect that Bitcoin is overall favored to continue rising in relation to altcoins now that we have broken past 40% dominance.

If you recall from my video where I discussed why Bitcoin is a superior investment to altcoins, I talked about 3 groups:

  1. Group #1 shifts their portfolio in ANTICIPATION for a cycle shift from altcoins to Bitcoin (or vice versa)

  2. Group #2 shifts their portfolio AFTER momentum starts moving in favor of a new cycle, or in other words once altcoins start to shift into Bitcoin (or vice versa)

  3. Group #3 waits a while, then convinces themselves they're part of Group #2 and jumps on board last - completing the cycle and usually end up being the bag holders.

Sometimes Group #1 profits more (depends on how early they were - too early can dampen profits), sometimes Group #2 profits more - but either way, usually Group #3 comes in dead last. Don't be part of Group #3. We are starting to see the beginnings of Group #2 - the boat has sailed on being part of Group #1.

However, despite believing Bitcoin to be superior, we are seeing some interesting price levels in certain altcoins on the market. For instance, Cardano - which admittedly has limited trading history - is trading close to previous support and might be a decent pick-up even though I still suspect the cryptoasset is overvalued.

For trading DURING the Bitcoin cycle, I am watching very closely certain cryptocurrencies like Monero and Steem which I view as strong holds and would like to acquire more for lower prices (Monero just hasn't been dipping though sadly).

The point is that during a Bitcoin cycle, you should start looking at altcoins that start trading near support or around their 100 - 200 day moving averages (and even below them). In other words, buy low. The time to sell (for either BTC or USD) is when the next altcoin cycle begins, similar to how we are looking to trade our BTC for alts as its value increases in proportion to them.

What are your thoughts on the market? Do you think we are moving into a Bitcoin cycle? Perhaps you think the volume is too low to say for certain? That's a topic I'll probably discuss in anotehr video here soon - but I'd love to hear your thoughts. Thank you for watching / reading.

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You will have a great opportunity with the steem price because of the current problems with the poloniex wallets. Check @transisto's post on the matter: https://steemit.com/bitcoin/@transisto/circle-buying-poloniex-and-why-it-s-making-steem-price-go-down-temporarily

Yeah Poloniex has not been fun (at least in my opinion), but if it provides an opportunity for Steem then I'm happy. I tend to think it's also just general market correction too though, but either way - an opportunity is an opportunity.

Hello @cryptovestor, I usually don't drop links around, but you are one of the people on the cryptoverse that i truly respect, because your opinions are well fundamented, and you don't talk bullshit only to appease your audience.

So, i would like your opinion on something i wrote about value and price of steem, specially the last part, where i talk about the STEEM and SBD price.

I see a lot of people using the pair STEEM/USD to define if the value of the coin is increasing or not, but i quickly noticed that STEEM and SBD isn't being traded for USD on any significant exchange, so i would like to know if what i wrote about it makes sense or not.

BTW, i like the new thumbnails on your videos.

I think that we are definitely entering a Bitcoin cycle , and if such an uptrend does occur is it not the case that many of the altcoins will hitch a ride and also go up in value ?

They will go up in USD value but down in BTC satoshi value

From what I've seen, each cycle seems to reveal more and more coins with non-correlating charts. But in (logical) theory, when trading against BTC, Bitcoin's rise inherently causes the alts to drop satoshis.

Even so, what Mr. CI says here still holds true - look to exit weaker alts while watching for the exceptions.

See what devinrose said.

(Sorry, i wrote some bullshit here. You do vote people that comment your posts. Just was looking at the wrong page)

What are youre opinions on Request Network (REQ)? Have you ever looked into it?

OK you want thoughts, here goes. I hold some of all 3 bitcoins. I don't try and trade back and forth, i buy and hold. I hold a dozen alts lean heavily toward litecoin, and bought several ICO's. Made a killing on a couple and took profits to see them drop 50% later. I say always take profits when you hit something that does 1000% or more. I have bought 6 ICO's year to date and will pick up another this month and hold for 5-6 months. I believe in a diversified portfolio and don't like to put all my eggs in one basket....as always thanks for your opinions, you put it all out there.

Thanks for sharing jimbo - Taking profits in hype markets is one of the hardest, but best things you can do, at least in my opinion.

This is the most unsurprising video you have ever made for anyone who has been following you for any real length of time. LOL. I almost feel like the title of this video should be "I told y'all bitches, but nobody wants to listen"

You made no reference to the fact that your prediction (about a month ago or so) that BTC dominance will rise and for which you were doubted by many, came true. To your credit, you never mentioned this once. My hat’s off to you sir.

Your sarcasm was pretty evident, the irony and the punchline was on those who didn't catch it. Was a great video btw. I see BTC continue to go sideways with little pump and dumps here and there. Not a confidence booster for trading alts. Random select alts pumping and dumping as other alts dip compared to BTC. People will continue to pile into BTC like you say. Bad news are starting to be in the rear view mirror now, but still think that we're one bad news away from sinking more. I'm excited for platforms like Cardano and EOS to launch, I think it's going to create a new perspective on how blockchain tech will be adopted and what's possible, make shitcoins look like what they really are, and re-igniting enthusiasm and the next hype cycle.

Thanks for your thoughts hors, glad you enjoyed the last video.

I think that Bitcoin and some of the larger, established assets will outperform for the next cycle. Given the recent news of the SEC subpoenas, I would think that there will be hesitation to allocate more into projects still in development given the uncertainty of the cost (and time) needed to attend to regulators. However, I cannot see how dominance will go over 50% given the amount of assets now in the market and some of the upcoming assets making moves in their technology in the short/medium term.

Indeed, because even if the major cycle is leaning towards bitcoin right now, the longer that this market exists for, the more aware of other assests people will be. Plus, there is no denial that the BTC system is not as good as newer ones (which IS NOT bad).

But for the next couple of days maybe yeah, the price is probably going to go up a little

Thanks for sharing newageinv - I understand your hesitation on 50% or higher, but Bitcoin has been surprisingly resilient.

I already watch some of your videos on The YouTubes, but @inertia sent me this one after I asked him a couple questions.

Just to give you a real life example of how someone can be involved in crypto even to the point of being a Steemit user, watching videos, and reading about it and still have no idea what is going on; my takeaway was, buy altcoins or buy bitcoins.

So what did I do? I bought my first ETH of course. Why? Because now I can watch four different coins go up and down for fun.

Now, to be fair to myself, I do not have any liquid cash and am not really an investor. I simply take the paltry sums of Steem Dollars I get and convert them into other coins. I really do not have anything "invested" from the perspective of fiat currency.

Still, at the end of the day, I somehow enjoy watching the videos and reading the posts even though I end up more confused half the time than when I started.

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Good old Michael Scott... As long as you're getting involved, you're far ahead of most people.

The market is going to be very interesting when Ethereum implements some of it's upgrades (Hopefully) this year. I do not think the 'Flippening' will occur but I believe Ethereum's price will be less influenced by BitCoin post sharding upgrade.

It'll be tough to shake the rule of thumb that Bitcoin dictates the market direction.

Interesting, that a lot of Steemit comments get posted on YouTube as well ;)

Thanks, this is pretty helpful for a crypto newcomer like me to get to know more about how things work here!

@cryptovestor besides the altcoins mentioned in your video are there any other coins that you're looking into?

You are pumping the videos out like you needing money. Hope you didnt got burned with the cycles. Great video, thank you!

Who doesn't need money right? I'm fine, don't worry.

What's the fastest and cheapest exchange for selling BTC for USD?

I use GDAX personally.

Be cautious, volumes are still fairly low and any sizable dump could erase all of the gains.

Are there any disadvantages of selling your altcoins at a 70% dip (from its all time high in Dec) to buy in at bitcoin right now (temporarily) if you are currently bullish on bitcoin. Then when the altcoins start to rise, to sell the bitcoin and go in to altcoins? for maximum profit. Does this question make sense?

No there aren't any disadvantages except your altcoin might be one of the ones that is beat up more than others in which case it might be fine to hold - it all depends on the scale of its fall and if there is any sizable support nearby. You don't want to fall victim to sunk cost fallacy - only make decisions based on what you personally expect to have happen moving forward. Although I'll caution you and say that selling low to buy into momentum is a fairly decent way to get burned, which is why I prefer being part of Group 1 than Group 2.

I tried getting into trading and making some money, but its just not for me. I love the tech way to much and do not get into the hype of ALT coins, Unlike others in the space I love transacting in my BTC, LTC and XMR.

As for you wanting to let Monero dip down a bit more, I am happy that its a bit stable in this price range! Makes it perfect for transacting and messing around with the tech.

Am I crazy to want and love the stability?

Hope you don't mind me dropping a Polymath question here given your recent video on them. Apparently today at Polycon they announced a partnership, pending shareholder approval, with the Barbados stock exchange to list security tokens. More significantly there is news floating around about possibly working with the Canadian stock exchange. You recommended buying Poly anyway, but does this news make you think the project is more legitimate? Thanks

I saw this... Not too much since there isn't much liquidity on that exchange and evidently the market was hyped up over the Canadian stock exchange potential hence the market sell off, although the recent news is interesting.

Really excited about the Monero video! Thanks for the insights. A Bitcoin cycle seems to be the logical next move of the market, although some alt's will follow this movement.

Your thumbnails are cool now. :) Did you hire someone or learn yourself?

I have someone else doing them - they are indeed excellent!

The worst habit I developed in this last bullish period was to never get out of a bad trade but rather ride it out relying on the volatility and seemingly never-ending uptrends to keep a clean green 'realized P/L' column.

What do you think about finecoin?What i like about it is that i am slowly but steadily making compounding profits regardless the volatility in the crypto markets.On their internal exchange the price per coin has always been above 1$.I thought about investing in the top 10 cryptos but they seem to be going nowhere fast so at least this way i am making a little profit every day.I'd love to hear what you think.Keep up the good work.

I share similar thoughts about XMR, however it's one of those coins that everyone agrees they like the fundamentals, maybe it won't ever come down in BTC price? Even Andreas mentioned it in a video the other day as an altcoin he likes. On the Bitcoin Price Equivlance it's about half the price of similarly ranked Cardano/Litecoin/Neo and almost 1/6th the price of Stellar.

It may never come down and that's fine - It's my largest altcoin holding, so will benefit either way. It's one of the only ones I invest in periodically almost regardless of price.

Hey, just got a steemit account today. I will start following you on steemit. I have been watching your YouTube videos for a while. Good information. At what price levels would you suggest to purchase additional Monero. I have some holdings in it and I want to build them up. Thanks.

What are you thoughts on Substratum?

Great vid as always. Picked up some ADA yesterday.

Cutting losers is one of the most difficult skills to master in trading. HODLing extremely volatile altcoins is just silly. An investment strategy which accepts 60% drops in a two months period is utter garbage. To be honest, BTC is the only coin where I swallow that to avoid the tax man, stay clear of USD Tether in-transparency, and because it is the boss. I am sitting on some altcoin bags and this will be the last time, I swear :-)

What I see in the market now is that there is no new money coming in, yet. BTC exclusively profits from altcoin slaughter. Looking at the charts of some larger ones (ADA, XEM, XLM, XRP, ETH...) there is still money left to be sucked from them (careful with ADA btw, it sits on top of empty space!).

In the past (beginning of Dec, for instance), the alts only got their chance once BTC was fat and bored. We are still far from that. New money enters through BTC mostly. Thus, besides some random pumps, I do not expect lucky times for the alts over the next weeks unless a lot of fresh money comes flooding in and BTC does not rocket. How high is the probability of that?

A quick reversal of the cycle is extremely unlikely. It has just begun.

I expect that XEM for example will give away all its gains since Dec (only 25% left!). And it will not be the only one. When some eventually will start off from the floor there is no need to FOMO, as they have a lot to pick up.

I think the market cycles are driven by the fiat on and offramping potentials. You have seen a huge capital flight from the market through BTC and ETH (i do firmly beleive this was due to the Asian markets cashing out buying shiny stuff for their digital money due to chinese new year) depressing the prices.

Some ppl took that opportunity to buy back in maintaining top 5 prices roughly within 40% of their previous value).

The current BTC rally is due to ppl who previously cashed out and took profits are driving their cash back into the market buying BTC. Eventually they will be riding this wave until BTC volumes run out of "steem" (pun intended) and will switch to altcoins.

As they switch to altcoins BTC price will not change significantly since they won't be sold for Fiat but exchanged into alts driving the price of alts higher not really affecting the price of BTC itself.

More ppl with fresh cash who FOMO into the market will buy BTC or Ether to fly onto some of the "undervalued" alts maintaining the equilibrium in BTC/ETH price throughout the cycle, but Dominance is going to drop again "shifting the cycle".

I am still flabberghasted by the fact that some ppl still value their altcoins in fiat value. These are not tradable for fiat yet. Therefore their fiat price is irrelevant for a trading decision.

Sorry for my rambling I hope the above makes sense.

i like the content keep up the good work:)

I have just found out something interesting. The market cap of the altcoin market is on the level of the 16th of Dec. Now guess where the next support level for ADA is? Right on the 16th! This thing is really on the edge right now and it does not show any signs of bottoming out just yet. XEM has just reached the 16th price level. It may be done for now - although it doesn't show any signs of stopping.