In the FOMO market, should you chase after gains? You should pay attention to these 7 trading tips.

Don't Miss Out on the FOMO Market 7 Essential Trading Tips for Chasing Gains

Original Author | 0xAnn

Original Translation | Bai Ze Research Institute

1. Rapid Rise – Really Too Fast

When altcoins begin to rise sharply, Bitcoin hasn’t even stabilized in its new price range. It started with popular altcoins like Chainlink (LINK) and Solana (SOL). But within a week, we saw low-cap and memecoins also bouncing back – which usually happens towards the end of a bull market. My Binance homepage and DEX filtering list are filled with names like ORDI, MEME, and TIA.

Some say bull markets are becoming shorter and shorter. But what I see is pure desperation. It’s as if you’ll miss out if the tokens don’t rise now.

• The market keeps levering up, is the bull market really back?
• Betting on Bitcoin’s Halving: A High-Stakes Game
• Arbitrum community added 21.4 million ARB incentives, which new projects receive support?

What’s driving this? I also see old coins like MBL or FIL rising. I remember a similar situation in late 2019 and early 2020, before the collapse caused by the COVID-19 pandemic (the Black Swan on 3.12). Looking back at that period, we could definitely call it a bull trap. So is this another bull trap now? Or is it bear market PTSD?

2. Ethereum Underperforming

Ethereum is still disappointing in terms of price. I’m trying to figure out why.

From 2019 to 2020, Ethereum’s rise marked the beginning of the bull market. Today, Ethereum seems to be transitioning from a major asset to a lagging asset.

Calculating the coin returns between October 1, 2023, and November 14, the results are as follows.

• Bitcoin (BTC): 30%
• Solana (SOL): 120%
• Cosmos (ATOM): 22%
• Avalanche (AVAX): 69%
• Fantom (FTM): 50%
• Near Protocol (NEAR): 43%

And here are the returns for Ethereum.

• Ethereum (ETH): 18%

Even when compared to the typically underperforming ATOM, Ethereum is still at a disadvantage. More importantly, compared to new memecoins or newcomers like TIA with Celestia, ETH also appears poor.

Why is it underperforming? I attribute it to staking. Since the upgrade in Shanghai, more ETH has been staked. Of course, staking can prevent ETH from becoming an unstable asset relative to other parts of the cryptocurrency market. However, enthusiasts like to interpret staking as a reduction in supply, which could mean higher prices. But what is happening is just the opposite.

As people constantly exchange ETH for altcoins that are currently in an upward trend, it means ETH is being sold off. Aside from this sell-off, there aren’t any new buyers at the moment. Current crypto investors are experienced and won’t bet on ETH during the wild meme season.

During the previous bull market, when ETH outperformed BTC, it signaled the end of the bull market. Traders no longer bet on other altcoins, they moved their profits to safer assets like ETH, often staking and participating in DeFi mining.

3. Beware of Solana VC holders

As expected, this rally has pulled venture capitalists out of their predicament, and they suddenly announced that they never gave up on cryptocurrencies.

Interestingly, they “promoted” their assets shortly after.

Solana is the most famous VC coin so far, and a large portion of token distribution is aimed at internal investors. So it’s not surprising that they want the price to return to hundreds of dollars. I’m pretty sure these VCs still hold these shares.

Let’s not forget one of the most important holders, FTX/Alameda. According to the Solana Foundation, FTX/Alameda’s SOL tokens will be gradually unlocked before 2028.

4. Pay attention to those “dumping”

All parties are taking advantage of this rally to sell their assets. This includes project development teams, OGs (like Vitalik), and struggling exchanges (like FTX).

In the first round of selling during a bull market, it often ends up being a mistake. But the worst case scenario is that you are forced to buy at a higher price and then get trapped.

However, for some people, this is a rational decision, for example, for projects that need funds to continue operating. Just be careful: 1. You won’t become their exit liquidity, 2. The sale is not because they no longer believe in the project and are seeking gradual exit.

The second point is important because I’ve seen tokens from previously famous projects constantly being sold off by the development team.

When the metaverse concept was still hot, SandBox was a very famous project.

Vitalik stated that he has never sold ETH for personal purposes since 2018. However, he often sells ETH at skyrocketing prices, which is quite interesting.

Some token unlocks are controversial, like dYdX.

5. Stablecoin inflows – Will it sustain the upward trend?

I heard the news of a significant influx of stablecoins on Twitter, so I had to check it out myself to confirm.

The rise in stablecoin market cap is often an indicator of whether the bull market will officially start.

Using DeFillama, I did see stablecoin inflows, and it appears to be substantial, reaching $3 billion. However, if we narrow the scope and compare it to the capital outflows experienced by the market last year, it is still negligible.

Here’s the chart for the past three months.

Here’s a zoomed-in view.

Although my conclusion is that I don’t believe it, it’s still a good start. I hope this chart will continue to move upward (upward trend).

This $3 billion increase in stablecoins is most likely coming from existing cryptocurrency enthusiasts – those who have been waiting and holding onto funds. However, what we really need is inflows from outsiders of the crypto market. That’s also what people hope a spot Bitcoin ETF will attract.

6. Keep an eye on Bitcoin ETF news

Browsing news about ETFs, such as CNBC’s news, can lead to some conclusions.

• The ETF is expected to be approved in early 2024, but there may be delays.

• Traditional asset management firms still advise clients to allocate only 1-5% of their overall investment portfolio to cryptocurrencies. This means we can’t expect them to buy in crazily.

• At the same time, advisors also raise significant warnings about Bitcoin’s volatility.

In short, we can’t expect TradFi funds to “ramp” in.

As for the end of the crypto market’s bull run, we all know that people will try to take profits before the ETF announcement, before it goes live. The approval of an ETF is like a sell-off news event. It’s a bit like Elon Musk’s appearance on SNL and the subsequent DOGE dump.

There are probably a few months left until that day arrives. And then comes the news of the SEC delaying the approval of the ETF. Interestingly, some traders prefer delays because it keeps the market in a bullish atmosphere.

7. In conclusion, the market is still confusing

There is a difference of opinion within the entire crypto community on whether this recent surge will continue. For me, this surge feels a lot like what we experienced in the first half of 2023. People were overly excited about the rise and then immediately felt disappointed when the market corrected the next day.

The urge to “go all in before the atmosphere deteriorates” is a clear sign of distrust in the market. A few days ago, altcoins took a hit and almost all long positions were liquidated.

Imagine spending days building a position, only for it to be liquidated on a one-hour correction.

Such liquidation does not necessarily mean that the market is ready for a bull run. It implies that 1. Liquidity is still too low. 2. Some individuals are still short-sighted, looking to make quick profits.

Another piece of evidence comes from comparing spot trading volume with futures trading volume. A high volume in spot trading usually indicates long-term investors entering the market. However, a quick glance at Binance reveals that the majority of trading volume is still from perpetual contract trading. As long as this situation persists, you can expect drastic spikes and sell-offs in the market.

The “true” start of a bull market typically features a gradual price movement. Instead of significant surges, we observe small increases over several months, allowing long-term investors to gradually increase their positions without incurring losses most of the time.

Perhaps this time is different. Who knows?

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