Are “alts actually back”?

[Arvydas77]

Great thread on twitter by Mr. Brendan Bernstein inspired Fundstrat data. I will share it here as I think it is very helpful analysis.

1/ Are “alts actually back”? The crypto market moves in well defined cycles, and we just completed the 3rd major one. Inspired by @fundstrat, below is the best metric I've seen to show it: the % of alts (top 5-100 by MCAP) increasing 200% over 90 days.



2/ Howard Marks describes two ways to profit from markets: (1) buy more of what goes up and less of what goes down, and (2) cycle adjustment: building risk exposure when markets rise and reducing when they fall. Most people ignore the 2nd. Let’s dig in.
3/ Each cycle is more exaggerated than the previous. The first peaked at ~10%, the second >30%, and the last at ~70%. Absolutely crazy. 70% of alts went up 3x over 90 days. It was shooting fish in a barrel and way too overheated.

4/ Each time, the cycle peaks and sharply reverses back to near 0. The time on the way up and down is usually symmetrical. The most recent one just completed. A few questions: (1) What causes each cycle (2) are there predictive factors (3) What's next? Can we get a clue from BTC?



5/ Hopefully this doesn’t cause PTSD- let's dig into the most recent cycle w. BTC added. BTC went from $6009 on 11/11 to $19500 on 12/16. The % altcoins increasing 200% went from 3% to 71% on 1/13. BTC then fell to $5900 from the peak of $19.5k, retracing the full move



6/ BTC peaked about 34 days, or 27% into the cycle. This is also 54% of the way to the alt top on 1/13.



7/ After the BTC peak, alts took off for the next month. About 1 mo after the BTC peak, their MCAP (shown in green) fell from $187bn on 1/16 to $46bn on 4/7. Meanwhile, the % of alts increasing 200% fell and flatlined at 0%. The cycle played out: BTC —> Alts —> Overall pullback.



8/ What drives this? BTC runs the show as it’s the most liquid fiat on-ramp and most established asset. Before and during the start of each cycle, BTC price increases as more fiat comes into the space. As people are comfortable with BTC the new wealth trickles into riskier assets

9/ Going into each cycle, BTC dominance rises. As the 2nd cycle (04/17-09/17) progressed and turned into the next one, BTC rallied 240% more than an mcap weighted portfolio of the top 20 altcoins. After a large gain in BTC, you can see the peak as that money moved into alts



10/ Given most alt trading is against bitcoin and BTC is the best mechanism to bring fiat in, before alts can go on a major rally, it looks like *wealth first needs to be made* in BTC. If you look above, there is a lag between BTC and the alt cycle.First BTC gains, then alt gains

11/ Before last cycle, from 9/1 to BTC’s peak and the start of the massive altcoin gains, BTC dominance (shown in orange) rose from 45% to 65%.



12/ As risk tolerance and “house money” grows, the technologically weaker assets rise the most. B/c alts are more illiquid, each fiat purchase compounds price more. Sentiment gets out of control. The flippening is on the horizon. Its unsustainable and the *whole market* corrects

13/ How should we position ourselves now? Lets look at the previous, 4/1/2017 cycle to figure out. 1st, some similarities. During the cycle, BTC rose from $767 on 1/12 to $2910 on 6/11-a 267% increase. And prior to the cycle getting started BTC ran up from $572 to $1241 or 117%



14/ Before the cycle, BTC outperformed alts and dominance rose. The gains rebalanced into riskier altcoins that rallied even harder after. The wealth generated in BTC sows the seeds for the next alt coin rally. This looks almost identical to our recent cycle.



15/ Are alts back? Let’s look at the 2nd cycle again. As the cycle trended back towards 0, alts bottomed and even increased in USD terms. We're in a similar place now. The fall in USD terms ended then and it may have here too. But I wouldnt go chanting alt season just yet



16/ Traders need to keep in mind oppty cost. I’d argue that the big gains in alts — the super cycles where many rally 200%, can and will only happen after a large cap rally. There are still gains to be made in altcoins right now, but oppty cost may be high vs large caps.

17/ Before each of the last 2 cycles, BTC and large caps rallied 2-3x more than alts. Despite the altcoin usd rise, you would have done better by holding the larger caps. Pictures once again below.





18/ Before the next cycle, I’d look for the dominance of large caps to rise like it has before previous cycles. Prices are largely driven by liquidity. For another major super cycle to form there needs to be more fiat that comes into the system. Question is where that goes first?

19/ What to watch? The larger institutions who bring in new capital likely will do so through the more established assets. BTC dominance is up about 5% from the end of the last cycle on 3/1 from 40% to 42%. As this # changes it could be a good indicator of the market composition



20/ 1 good indicator to watch is ETH / BTC. Last cycle, ETH / BTC fell >50% as BTC rallied to highs. But on 12/11, 5 days before the BTC peak, it bottomed right before alts started to rally the most. ETH / BTC may be a good leading indicator to track the next major super cycle



21/ Disclosure: Long BTC

 

[kolesozw]

Too much graphs and pics without any real conclusions.

You can't predict alts > Top 30 movement, because they can be easily manipulated. Even somebody with few BTC volume could push in one or another direction. Examples: FunFair, MonaCoin, Centrality and many more with few hundred K to 1-2-3 M daily volume.

[redwhite037]

I also think like you. Capital is being focused on altcoin. and it has increased by 20% in the past 2 days. I think altcoin is really back. Hopefully the market can go up slowly but it will be sustainable

[Lastsamuraj]

If you havent invested yet,id recommend to wait another few weeks to minimize the risk.Btc might just bouncing due the crash and dragging alts up.Neee to see ,will market hold the support or not

[bhantom]

You can not predict how will be look market in future. Nobody can do it because market can be manipulated by whales in any moment. So your work has been in vain

[kurlllviss77]

It was interesting to read, but still make predictions about the future price is useless.

[O9NpJ9ld1opS]

Very interesting post with a lot of useful information.
Most of the alts dipped almost 90% during the last few months compared to their previous Aths. Most of them are slightly recovering now. We can't say that the alts season started, Anytime BTC can ruin the fun. Anyway im short term bullish on both alts and btc.

[leea-1334]

Thank you for these charts. Easy to see and easy to read. My decision is always simple. Make back what I invested, which I did in January, and then keep the rest for holding or for buying in more alts. As I said, January was that opportunity so I gained back all my bitcoins invested plus a little profit, and then played around with the rest of the alts. Now the market dipped and again I bought into long term holdings but also some risky alts, thankfully, not everything crashed and like with Verge I made back plus profits. Sort of like trying to ride this pattern, but maybe I am just lucky?

[keyscore44]

Answering on your thread by my thoughts it is able that market will recover and prices will be back in soon days or weeks so just you need to follow real market and don't speculate nowadays cause prices are so uncertain.

[teilwalL05]

Reading the movement with the graphs and charts can be helpful sometimes but we can not always rely on the past movements, there are sometimes negative and positive outcome in what is happening all the time with the value of bitcoin and other Cryptocurrency, In my opinion it will sometimes work but not all the time we should rely on it, And have a mind set that in every investment you make there is a risk involve in it.

[pleaderzazure]

I think is sure alts actually back, if I see in your graphics share, alts grow with on unexpected

[crypto1010]

Very helpful but as far as I know alts ride the bitcoin wave which means when the bitcoin price rises so do altcoins rise ,unless an alt is weak on the market it wont ride this wave.

And I agree with Mr. Brendan Bernsteins analysis as the crypto market does follow through the trade cycle of Recovery, Boom, Recession, and depression which is a continous loop and this trend will forever happen so people need not to lose confidence in the market should a dip happen, FYI these are normal market behaviours which we need to go through to stimulate demand and supply.

It was interesting to read, but still make predictions about the future price is useless.

I don't think making predictions is useless as this is used to draw an estimate of how long you could hodl before selling some for profits.

[BetadiNe]

I do not know much about it, but in this week altcoin in the market is in a pretty good trend, obviously it is good news for everyone.

[pey]

Whether or not altcoins actually back... Bla bla it is a big bubble, there is no production no real value... But you make lots of money even you can't believe in it.

[AlisaWhishie]

It was interesting to read, but still make predictions about the future price is useless.

For sure, making predictions is useless, but analysing the market is not.

I really liked this profound research, that by no means couldn't be called "a prediction".
Actually I never cared much about ETH/BTC chart, though now I see that indeed it can be a great indicator to watch, so I opened cryptowat.ch now and checked it - and yeah, it really makes sense.

[Yuuto]

I don't think that we're "fully back" yet.

We're seeing a temporary halt in the bear market with a pump. ETH, LTC, EOS, IOTA are all benefiting a lot from this pump. It is definitely a result of BTC's movements stabilizing at the $6600 level which led to a pump, and later a short squeeze.

As kolesozw said, there is way too many irrelevant graphs and no conclusions drawn.

I personally think that this may only be a temporary upward adjustment, that will be followed by a correction soon after. The real bull market's not here yet.

[sehoon]

If I am going to observe the graphs in the past days, I can already include that the altcoins are already back in green. But for me, it can go back to red any time because it can be controlled easily by the whales.

[mu_enrico]

So many graphs sir?!
Also why it kinda looks like pump and dump?
Anyway i don't think top 5 altcoins are still there next year. Maybe just bitcoin cash

[Enzo05]

Great thread on twitter by Mr. Brendan Bernstein inspired Fundstrat data. I will share it here as I think it is very helpful analysis.

1/ Are “alts actually back”? The crypto market moves in well defined cycles, and we just completed the 3rd major one. Inspired by @fundstrat, below is the best metric I've seen to show it: the % of alts (top 5-100 by MCAP) increasing 200% over 90 days.



2/ Howard Marks describes two ways to profit from markets: (1) buy more of what goes up and less of what goes down, and (2) cycle adjustment: building risk exposure when markets rise and reducing when they fall. Most people ignore the 2nd. Let’s dig in.
3/ Each cycle is more exaggerated than the previous. The first peaked at ~10%, the second >30%, and the last at ~70%. Absolutely crazy. 70% of alts went up 3x over 90 days. It was shooting fish in a barrel and way too overheated.

4/ Each time, the cycle peaks and sharply reverses back to near 0. The time on the way up and down is usually symmetrical. The most recent one just completed. A few questions: (1) What causes each cycle (2) are there predictive factors (3) What's next? Can we get a clue from BTC?



5/ Hopefully this doesn’t cause PTSD- let's dig into the most recent cycle w. BTC added. BTC went from $6009 on 11/11 to $19500 on 12/16. The % altcoins increasing 200% went from 3% to 71% on 1/13. BTC then fell to $5900 from the peak of $19.5k, retracing the full move



6/ BTC peaked about 34 days, or 27% into the cycle. This is also 54% of the way to the alt top on 1/13.



7/ After the BTC peak, alts took off for the next month. About 1 mo after the BTC peak, their MCAP (shown in green) fell from $187bn on 1/16 to $46bn on 4/7. Meanwhile, the % of alts increasing 200% fell and flatlined at 0%. The cycle played out: BTC —> Alts —> Overall pullback.



8/ What drives this? BTC runs the show as it’s the most liquid fiat on-ramp and most established asset. Before and during the start of each cycle, BTC price increases as more fiat comes into the space. As people are comfortable with BTC the new wealth trickles into riskier assets

9/ Going into each cycle, BTC dominance rises. As the 2nd cycle (04/17-09/17) progressed and turned into the next one, BTC rallied 240% more than an mcap weighted portfolio of the top 20 altcoins. After a large gain in BTC, you can see the peak as that money moved into alts



10/ Given most alt trading is against bitcoin and BTC is the best mechanism to bring fiat in, before alts can go on a major rally, it looks like *wealth first needs to be made* in BTC. If you look above, there is a lag between BTC and the alt cycle.First BTC gains, then alt gains

11/ Before last cycle, from 9/1 to BTC’s peak and the start of the massive altcoin gains, BTC dominance (shown in orange) rose from 45% to 65%.



12/ As risk tolerance and “house money” grows, the technologically weaker assets rise the most. B/c alts are more illiquid, each fiat purchase compounds price more. Sentiment gets out of control. The flippening is on the horizon. Its unsustainable and the *whole market* corrects

13/ How should we position ourselves now? Lets look at the previous, 4/1/2017 cycle to figure out. 1st, some similarities. During the cycle, BTC rose from $767 on 1/12 to $2910 on 6/11-a 267% increase. And prior to the cycle getting started BTC ran up from $572 to $1241 or 117%



14/ Before the cycle, BTC outperformed alts and dominance rose. The gains rebalanced into riskier altcoins that rallied even harder after. The wealth generated in BTC sows the seeds for the next alt coin rally. This looks almost identical to our recent cycle.



15/ Are alts back? Let’s look at the 2nd cycle again. As the cycle trended back towards 0, alts bottomed and even increased in USD terms. We're in a similar place now. The fall in USD terms ended then and it may have here too. But I wouldnt go chanting alt season just yet



16/ Traders need to keep in mind oppty cost. I’d argue that the big gains in alts — the super cycles where many rally 200%, can and will only happen after a large cap rally. There are still gains to be made in altcoins right now, but oppty cost may be high vs large caps.

17/ Before each of the last 2 cycles, BTC and large caps rallied 2-3x more than alts. Despite the altcoin usd rise, you would have done better by holding the larger caps. Pictures once again below.





18/ Before the next cycle, I’d look for the dominance of large caps to rise like it has before previous cycles. Prices are largely driven by liquidity. For another major super cycle to form there needs to be more fiat that comes into the system. Question is where that goes first?

19/ What to watch? The larger institutions who bring in new capital likely will do so through the more established assets. BTC dominance is up about 5% from the end of the last cycle on 3/1 from 40% to 42%. As this # changes it could be a good indicator of the market composition



20/ 1 good indicator to watch is ETH / BTC. Last cycle, ETH / BTC fell >50% as BTC rallied to highs. But on 12/11, 5 days before the BTC peak, it bottomed right before alts started to rally the most. ETH / BTC may be a good leading indicator to track the next major super cycle



21/ Disclosure: Long BTC

 

Yes it's already back but I just don't recover at all because of scam ebtc . I lose total of 70 percent . If I just invest it on ETH I recover it back but anyways maybe you need to experience to lose and profit and that's will you lead to be a good trader .

[trumper]

It is enough to analyze only bitcoin, now all coins depend on bitcoin. I think bitcoin is now very bullish, it is just waiting for its exploder.