I've only been trading crypto for around a year, but I've noticed the same patterns repeating over and over again.
- Bitcoin takes off and alts are slaughtered
- Bitcoin retreats, and money flow into alts and alts take off.
- The entire crypto market consolidates, and both Bitcoin and alts fall
- Crypto market recovers and both Bitcoin and alts recover together (This phase also happens when new money flows into the entire crypto space)
What do you think? Does that adequately reflect the crypto cycle?
At the moment, unfortunately we are in phase 1 and most alts are getting slaughtered. But be prepared for phase 2!
Great observation - I definitely agree with this at a high level.
The one wrinkle I'd add is that for folks hoping to invest on this thesis is I've been tracking the beta of cryptocurrencies against the S&P 500 (US-centric view so take this with a grain of salt), but the beta of BTC and ETH have grown closer to 1 meaning that they're increasingly correlated to the market. I think because of the size of the investments in crypto now, when equities fall, investors are also pulling some money out of blockchain to cover their margin calls, etc. This is preventing some of the new money flows, but we will likely see this reset a bit too when Robinhood fully opens up BTC and ETH investments. Great analysis!
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I assume it's one of those "boom and bust" cycles since you can't exchange alt coins directly with fiat currency.
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