When you no longer believe it is a bull market, it will not disappear
"Reality is that when you stop believing in it, it doesn't disappear." - P. DickOriginal source: DistilledCrypto X account
Written by: Crypto, Distilled
Compiled by: Deep Tide TechFlow
Cryptocurrency - Has the top already appeared?
This is a taboo question in the cryptocurrency community (CT).
However, ignoring it can be costly (which is why most people experience the full cycle of ups and downs).
"The reality is, it doesn't go away when you stop believing in it." - P. Dick
Here are the reasons why the top may have already appeared and how one can still thrive in such a scenario.
Destruction of Market Structure
The first major concern is that $BTC has recently lost its 4-month range.
While the long-term trend remains intact, the mid-term trend has turned bearish.
Andrew Kang believes this is similar to the price action in May 2021.
(Thanks to @Rewkang)
Potential Double Top?
With the loss of key support levels, the double top pattern on the weekly chart is hard to ignore.
While I'm not a technical analysis expert, this looks like a classic Complacency Shoulder pattern.
"The spot market feels comfortable, cryptocurrency is safe because liquidity will rise again" = consensus view
From "Wall of Worry" to "River of Hope"
Bull markets climb the "Wall of Worry"; bear markets slide down the "River of Hope."
This transition occurs gradually and is often only confirmed in hindsight.
To assess this transition, one can analyze the following points:
- Price reaction to positive/negative news
- The psychology of idle capital
Market Reaction to News
In a weak market, good news is ignored while bad news triggers immense fear.
Recent examples:
- Good news: Trump talks about Bitcoin ($BTC) as a corporate asset + Ethereum ($ETH) ETF is coming soon.
- Bad news: Mt. Gox/Germany sells Bitcoin ($BTC)
(Thanks to @CryptoDonAlt)
Idle Capital and Bottom Fishing
Retail investors blindly bottom-fishing without clear catalysts is a concerning issue.
As complacency and denial turn into panic, the market slides down this River of Hope.
(Thanks to T. Livingston)
Technical Rebounds in 2022
The market experienced several technical rebounds in 2022, but no trend reversals.
Ideally, you want to see significant catalysts ahead while idle capital hesitates to bottom-fish.
The opposite scenario signals danger, as shown by the recent price action of the Ethereum ($ETH) ETF.
Bitcoin Supercycle Theory
Many altcoins may have peaked, but Bitcoin ($BTC) could enter a supercycle.
While global liquidity may surge, this challenges the assumption that altcoins are the fastest horses.
A paradigm shift may be underway, with its effects lagging.
(Thanks to @Rewkang)
Divergence Between Bitcoin and S&P 500
The weakening correlation between Bitcoin ($BTC) and stocks (lowest in 4.5 years) could be a worrying sign.
A significant oversupply (Germany/U.S., etc.) may push this decoupling to extremes.
(Thanks to @WClementeIII)
Similar to 2019
The divergence between Bitcoin ($BTC) and the S&P 500 ($SPX) is reminiscent of 2019 when Bitcoin peaked in June.
It took over 12 months to set a new high.
(Thanks to @intocryptoverse)
Large AI Companies Outshine Cryptocurrency
Perhaps the market peak is not due to cryptocurrency being poor, but because AI is more attractive.
We are witnessing the thinnest stock rebounds in history (dominated by large AI companies).
Despite unprecedented access to Bitcoin ($BTC), retail demand is growing slowly. Why?
(Thanks to @TXMCtrades)
Has the Biggest Frenzy Passed?
The biggest frenzy may have already passed. This cycle could just be a flash in the pan.
Evidence: memecoins peaked in Q1 2024 and have since been on a downward trend.
Bitcoin ($BTC) peaked in Q1 2024 (coincidence?).
(Thanks to @kiyoungju)
Memecoin Supercycle = Top Signal
The concept of a "memecoin supercycle" could be the ultimate top signal.
A similar top signal appeared in 2021 when it was predicted that Bitcoin ($BTC) would enter a supercycle ($250k+ $BTC).
Due to less disillusionment in this cycle, perhaps we entered the memecoin frenzy more quickly.
Dominance in the Memecoin Space
For the first time, memecoins have become the most popular category on CoinMarketCap (CMC).
Without real applications driving organic demand, how long can altcoins operate in a speculative bubble?
(Thanks to @coinmarketcap)
Profiting Through Hedging
Even if we may have reached the top, it doesn't mean all hope is lost.
Hedging strong altcoins by shorting weak ones can be very profitable.
This allows you to profit from declines while still maintaining market participation.
(Thanks to @GiganticRebirth)
Rising Bitcoin Dominance
In risk-averse markets, investors often sell altcoins for Bitcoin ($BTC), which tends to increase Bitcoin's dominance.
Shorting weak ALT/BTC pairs to capture this trend can be very profitable.
@intocryptoverse believes Bitcoin dominance ($BTC.D) could reach 60% by Q4 2024.
Profiting from VC Greed
Identify those coins with oversupply and unrealized profits for venture capital.
What If the Four-Year Cycle Is Broken?
Imagine if March 2024 is just a peak for the next 6-12 months?
Is this still considered a cycle top?
Given the limited rise in this cycle so far, it is reasonable to expect a smaller decline.
Because of short cycles + low volatility.
Macro Top Not Yet Appeared?
Despite some potential signals, the cycle top may not have arrived yet (personal opinion, for reference only).
Liquidity is the most critical factor, with strong evidence suggesting that the peak may occur in 2025.
While current liquidity is low, we seem to be on the brink of a significant shift.
(Thanks to @zerohedge)
