Bull markets are never easy. Pullbacks are to be expected, including times when altcoins halve in value. This is what has happened in the past few months. In this post, I explain why I’m using this as a chance to buy more altcoins.
Key Takeaways
- Market corrections—even ones that last several months—are a part of any bull market. Prices will never go up week after week in perpetuity.
- During these corrections, altcoins can often fall by more than 50% from local highs, especially ones with relatively small market caps. This volatility is what comes with altcoin investing.
- Nothing has fundamentally changed in recent months that has caused me to panic or change my expectations for this bull market. Six months from now, I still expect prices to be much higher across the board.
- I’m using this correction to add to my altcoin positions, including SOL, MKR and JUP.
Sentiment Turning Sour
Market sentiment is the worst I’ve seen in a very long time. My day-to-day interactions are signalling this, as are leading sentiment metrics such as the Fear & Greed Index, which just returned its lowest score—a ‘Fear’ reading of 30—since September.
This fearful sentiment may seem odd if you just look at Bitcoin (BTC), which is only 15% below its all-time highs from March, but it makes sense when you look at altcoins.
Using OTHERS—an index that measures the combined value of all cryptocurrencies outside the top 10 by market cap—as a proxy for the altcoin market, it’s down 33% from the March highs, even after a slight uptick this week.
As a percentage of the total market cap (i.e. OTHERS.D), this index has essentially been down only since March. Its current value of 10.5% is the same as last August and is well off the all-time highs of January 2022 (19.4%).
Why I’m Buying Into This Fear
All that’s to say, it’s been a rough few months for crypto investors, especially those whose portfolios mostly consist of altcoins.
Personally, I’m taking advantage of this fear by adding to my altcoin positions. Ultimately, things are unfolding much like past bull markets. These retracements were always going to happen.
I still don’t plan on selling any time soon. As I’ve said before, I’ll be telling members when I start to sell later in this bull market. (As a reminder, by the end of this bull market, I plan to have no cryptocurrency holdings other than BTC and ETH.)
I have some cash I’ve been waiting to deploy during market corrections. This feels like the right time to use it. (If I were more risk-averse, I’d wait for confirmation of higher highs across the top cryptocurrencies. This has yet to happen, but I’m confident enough that we are either at or very close to a local bottom, and I’m willing to accept the risk we slide a bit more.)
What altcoin positions will I be adding to? Solana (SOL) will definitely be one. Even though I’m already up 600% from when I told members I was buying last year, I still think SOL is the best risk-adjusted play currently available in the market.
Some diehards are predicting that SOL will hit $1,000 USD by the end of this bull market. That’s absurd, in my opinion. I’d be thrilled if SOL tops out at half that price. (Not saying SOL never reaches $1,000, just not this bull market.)
Another two I’m looking to buy more of are Maker (MKR) and Jupiter (JUP). My reasons for MKR are basically the same as in my recent post. As for JUP, I continue to be impressed by their execution and the recently proposed tokenomics changes were also promising. (More on this in our monthly Shift List Update in the coming days.)