Hello magicians,
I trust you have all had a profitable week, if not, that’s okay. You’ve still got a lot of time to make gains.
Bitcoin and Ethereum have been setting new all-time highs lately which is both incredible and expected since April is typically a very bullish month for crypto making it a saving grace compared to March which is typically considered the most bearish month.
This is in wake of some very bullish news such as the Coinbase IPO, Ethereum being upgraded and the DeFi hype returning.
Ethereum has been struggling over the past few months due to the ridiculously high gas fees but there is not much besides L2 solutions ahead of the London upgrade to take place in a few months.
The stepping stones have been laid with the Berlin hard fork introducing new transaction types and lowering gas costs (you can read about it here ), the most important upgrade will come in July where we could see Ethereum become even more deflationary than Bitcoin. This has already been reflected in the move we’ve had from Ethereum so far to almost $2,500.
While the narrative of “Ethereum Killer” continues to grow, I’m still a very strong believer in ETH. There is of course a gap in the market right now which is why we’re seeing projects like BNB stealing the show.
This just highlights how important it is for transactions to be fast and cheap. Unfortunately, most people are not in cryptocurrency because they believe in decentralization, improved technology, and the complete revolution of our traditional financial system (yet, at least), but instead, they’re here for a quick buck.
There’s nothing wrong with this as this actually helps the industry grow and brings a lot of new eyes to crypto.
This is easily understood, as most people want to make some money and when they hear about the crazy gains that can be made in crypto, they rush in and throw their money at whatever they can without understanding even the very basics. This hype and attention are good for crypto overall but in the end, when the hype begins to die down and profits start being removed from the market, we will see many of these “hype investors” get burned badly and call crypto a scam again. Just like we saw in 2017.
Even coins like DOGE have been hitting insane new highs. I don’t hold any DOGE and if you don’t either you might be feeling a little left out, but we’ll discuss later in the newsletter why this shouldn’t be the case.
The Coinbase IPO has to be one of the most exciting moments we’ve had in crypto. Yes, a crypto-first company that allows you to buy crypto with your FIAT went public and has a $100Bn valuation in FIAT terms is beside the point. What is important is that the legacy systems and future financial systems are merging, and eventually, one will just about or completely replace the other.
We’re currently in the “dial-up internet” phase of crypto adoption. We still have many iterations, changes and improvements to be made before we can entirely change the world and change our lives. Think about this, crypto has been around for over a decade yet we are still in the dial-up stage. You are still early!
The perfect of being early to the party can be seen in the video linked below.
Turning $300K into $6.4 Billion – https://youtu.be/x5YApjnTG10
I highly suggest watching this video if you have some time just so that you truly begin to understand how being early and being patient will pay off.
If you’re wondering how close we are to a market cycle top since I’ve seen this being throw around lately with the Coinbase IPO and massive hype from mainstream media and celebrities. I’m here to tell you I don’t think we’re anywhere close.
While Glassnode provides a ton of metrics and charts for us to look at and predict how far along in the cycle we are right now, we can use one metric in particular that could signal both how far along we are from a market-cycle-top as well as how close BTC is to mainstream adoption.
That metric is the inflow of BTC to exchanges. This signals that people are depositing their Bitcoin into exchanges to sell it for FIAT.
It was at its highest in January 2018 at the market-cycle-peak and guess what?
It was at its lowest in three years just a few days ago. This is incredible news meaning that people are not selling their bitcoin.
We’ve still got a long way to go folks.
Market Performance
As you know the cryptocurrency market doesn’t close like the stock market but we can still chart it similarly and after Bitcoin closed on a high of $64,000+, I expect it to continue moving upwards to the $70,000 level and ETH almost touched $2,500 as I had hoped. If this happens, it is well on its way to $3000. You all know that I’m not the biggest fan of price predictions but I continue to share my expectations and predictions with you when I can as it is so often requested. I always want to be completely transparent and for you to understand that I am no oracle and neither is anyone else in this industry. It is becoming increasingly difficult to make accurate calls as the bull market really begins to heat up but that doesn’t mean we can’t make some educated guesses.
Why do I say this?
We know the phrase “a rising tide lifts all boats” and this couldn’t be more accurate for the crypto market. As new money flows into the system and old money gets cycled around, eventually, most coins will have their time to shine. Technical analysis during a time like this does not really help much as one piece of fundamental news can send a chart to the moon or to the depths of hell.
So here is a very important piece of information to remember.
During the craziest and most exciting times during the bull cycle, is the time when you should remain most passive.
Sounds counter-intuitive but trust me, if there is one piece of information you use it should be this.
I’ve seen way too many traders get absolutely REKT because they keep chasing pumps.
You will have remembered from a previous post about how money flows around in the market, but in case your don’t:
Bitcoin -> Large Caps -> Medium Caps -> Small Caps -> Bitcoin -> Repeat
You need to be able to anticipate this movement of money or you will lose out.
If you chase these pumps, you will end up buying close to the top or at the very peak, the money flows out and you’re left holding a bag until the market cycles back into the coins in your portfolio again.
Although, if you anticipate this movement. You can have your bags ready for when they do pump. Wait your turn, and you will be smiling happily.
This is what I try to say time and time again.
BE EARLY and BE PATIENT.
You don’t want to be chasing trends because more often than not you will be at the back of the herd and get left behind. You want to be ahead, sitting comfortably in your little boat waiting for the wave to come and take you along for the ride of your life. This means anticipating which trend will take off next or which category of coins is due for a pump and we do this by following the cycle above.
However, if you are in the position where you’ve chased a pump and now feel like you’re left holding a worthless bag, then remember these two things.
- If you are invested in solid projects with good use-case, their time will come eventually. If they’re working hard at building, creating, and collaborating. Then you have nothing to worry about.
The truth is that even many of the worthless coins with no real value will begin showing insane gains during the next few weeks and months, but they have no sustainability and are completely hype-driven.
- When you see another coin pumping, you can be tempted to abandon your current bags for the hot new pump. Shiny object syndrome will destroy you, since you will perpetually FOMO in and out of projects, incurring a loss each time until you are ruined.
You should know by now that you should avoid ruin at all costs. Sure, you will take losses, you will make wins, but by all means, avoid ruin.
As I said, we are in one of the craziest times during the market right now so it’s very difficult to predict what is going to take off next. Meme coins and dinosaur coins from 2017 are starting to pump which means that the mainstream hype is here. Could they continue to pump? Sure, but if there is no fundamental news driving the price rally so your risk is multiplied.
Once a coin has had a huge rally, deciding whether or not you should get in, comes down to how much risk you’re willing to take.
Think about DOGE coin, there was no way we could have predicted that Elon Musk would’ve taken DOGE under his wing and sent it to the moon, so anticipating growth from a coin like that is almost impossible. The only thing driving the price rally is hype and mostly Elon. If he decides that tomorrow he no longer likes DOGE and makes one bad tweet about it, that could send the price crashing all the way down to zero.
This doesn’t only happen with meme coins like DOGE, something similar could happen with Cardano or even Ethereum. Charles Hoskinson could say something during one of his live streams that triggers some people and that could have an impact on the price of ADA. Charles is a very intelligent guy, but we can’t deny the fact that at least some of the price action is thanks to him being the “face” of the project.
You don’t want to be in a position where your investments hinge entirely on the expectation of one or a few individual’s opinions. This is why I always say that when I mention projects I’m invested in or projects that interest me, don’t take this as a sign that you should buy them. This is not investment or financial advice in any way or manner. All I’m doing is spending hours, days, and sometimes weeks diving deep into the projects, doing all the due diligence for you, and highlighting potentially good projects for you to then go on your own and research even further before deciding it is something you want to invest in. I’m fortunate enough to be in a position where I can speak in-depth to project founders and developers to get the best information there is, then package that up and share it alongside my opinions and insight for your advantage. This should serve as the foundation for your research, putting you in a position where you can make informed decisions about your portfolio.
Now back to following the hype.
During a bull market, it is totally fine to buy high and sell even higher, but you need to be aware of what is causing the hype so that you know when to take profit.
Here’s an example:
Coin X pumps 500% over a week. $1-$5
You wonder if it’s still a good opportunity since everyone is still talking about it and there is a lot of hype.
Consider the upside.
If you want to 2x your investment, Coin X would have to move up 2x from its current price to $10, meaning 1000% from its initial price just a week ago.
This can very well happen, but would you also be willing to endure a possible 50% correction back down to $2.50?
You need to consider whether a potential 2x gain is worth a possible 50% drop.
Now just because a coin has pumped 500% doesn’t mean it’s a bad opportunity, I’m talking about huge rallies in a short period.
Cardano as an example has moved over 6000% in the last year but I still think it’s a good opportunity considering the fundamentals and the news we have lined up.
I personally prefer looking for projects that have yet to receive this mainstream hype and attention and invest in those instead.
That way, I’m sitting comfortably in my boat, waiting for the wave to come along and pick me up instead of trying to jump onto a speedboat as it flies past me ripping my clothes from my body as it does this leaving me naked and afraid.
I would rather enter a coin that has yet to receive this major hype and attention, that way the potential downside risk is greatly minimized while the upside potential is huge!
I would rather have a downside risk of only 10% and a potential upside of 200% than a potential 50% downside risk with a 200% (and possibly more) upside potential.
You see that in both cases, the potential upside is very similar whereas I am limiting how much I could lose. This comes with picking coins that have yet to have insane growth and price rallies.
How do I find profitable altcoins?
As I mentioned, this is an opportunity to make life-changing wealth but this period will be very short-lived. So maximizing your gains right now will set you up for life…possibly.
If you’ve read previous posts you will remember what I’ve said about stacking your gains. Most people are expecting to get rich off of one perfect altcoin pick, but this is very rarely what happens. The best traders stack their gains, think of them as multipliers in a game.
Your first altcoin does a 5x, you take those gains and put them into another coin that does a 2x, then take those and put them into another coin that does a 2x.
You’re left with 20x instead of hoping that someday you might get lucky with a 20x altcoin, all the while if you had a strategy, you could have created that 20x gain yourself.
This doesn’t count out that some coins can make 20x gains alone along the way, but if you’re looking to flip coins, this is a method you can use.
This is why I will never sell all of my position but rather a small percentage of my profits and use that to then buy something else. That way I’m never at a loss and the profits I have made can be multiplied greatly.
What am I looking for in an altcoin?
I receive hundreds of messages daily asking me what I think of this coin to that coin but they’re mostly complete trash.
These are usually projects that will only appeal to a very niche audience or have recently launched with no product at all and completely anonymous teams.
I don’t have much of a problem with anonymous teams, it’s not ideal but we can understand why. Most people think that a project having an anonymous team means that it’s a scam or could be a rug pull. That is not the fear for me, the fear is that since we have no idea who they are, this could be their first rodeo and they have no clue what they’re doing or how to run a business so that is the point of failure, inexperience.
Many anonymous teams have built multiple projects that have succeeded, so always look for a track record.
Obviously, this is much easier with a public team, so if that is the case, do your due diligence and look at the team members on LinkedIn, watch/read interviews with them if you can find any, and look at previous projects and businesses they’ve been involved in.
This will usually give a good idea of the potential of the project as reputation is everything.
I have been approached by hundreds of projects and asked to be an advisor or public team member to “add authority and trust” to a project.
This is something you need to be aware of.
Some projects will tack a name onto their website or whitepaper in order to increase the perceived reputation when in fact that person has nothing to do with the project at all and is just a paid promoter. This is common practice (Eg. George Clooney as the face of Nespresso) and doesn’t necessarily mean something shady is going on, but you need to be aware of the strategies used.
Next, consider the trend and momentum. Just as I mentioned above, determine which category or narrative the project you’re looking at fits into.
Does it fit the current hype cycle, has it already passed, or have we not yet seen any major interest in the category you’re looking at yet? We’ve seen interest shift from Oracles to DeFi to NFTs and back to DeFi in just a few months. Right now, it seems the momentum shift is toward privacy and protection. Scams, hacks, and thefts are happening all the time and in order for the average and institutional investor to feel confident investing in this market, they need to know they’re protected and secure. We can use the example above.
Coinbase is one of the longest-running crypto platforms that has never lost customer funds due to a security breach.
This focus on providing a simple, secure user experience has translated into a thriving financial ecosystem that has managed to bridge its way into traditional markets.
Finally, consider previous price movements and volume.
Has the coin seen a large rally in a very short period of time without a correction?
Yes?
Then consider waiting before you enter. As I mentioned above, during a bull market, buying high and selling even higher is often the case but the risk is always present. That is why I always recommend waiting some time after a pump before entering. Let the chart find its support level, then buy.
Remember to never trade with 100% of your portfolio either. Always scale in and out of positions, this way if you begin incurring a loss, you can always buy more since you have some cash liquid to bring that entry position down to a lower price. This will help you manage your mental health when you start incurring a loss after entering a position. It can be very taxing on your mind to buy something and immediately see it turn red, however, if you dollar-cost-averaged in, then you wouldn’t be as stressed.
Where are we heading next? What am I keeping my eye on.
The most important thing we are seeing this year is institutional interest (bla bla bla), you’ve heard this a hundred times but it really is the most important aspect that we cannot ignore.
Like I mentioned above, I think we will start seeing a large shift in momentum towards privacy, regulation, and protection. This is mostly due to the major institutional and retail interest.
If we look at the current state of the market and even back at 2017, the entire blockchain industry is still incredibly user-unfriendly. Since many of us are already involved in crypto and use or interact with it daily, it becomes much simpler and easy to use, but to the new user, getting into crypto and using it can be an incredibly daunting experience.
Often I will meet new people or friends who have never used crypto and are terrified of it. They think the entire thing is a scam and are afraid of losing their money. I forget that I am so engulfed in this industry that it has become second nature to me and assume everyone knows and uses it as much as I do.
But we must not fool ourselves. MOST people are in this position and this needs to change.
Firstly, the news that reaches mainstream media is often the most fear-mongering and most damaging. So this will often deter people from crypto.
Secondly, when people so manage to get into crypto, it can be so complicated and different from the legacy systems they’re used to, that they get scared off very quickly.
So what needs to change?
We need to transition to a stage where people don’t even know they’re using the blockchain. It needs to be completely hidden in the backend and the user needs to experience something simple and easy on the front-end.
Think of it this way, you’re probably using an email client or web-browser to read this right now. You’re doing this over the internet. The average user has ZERO idea as to how the internet works and often will even forget that they are using it. If I asked the average person to explain what DNS, IP or HTTP is, as simple as these are, they would have no idea how to do it…
AND THAT’S A GOOD THING!
This is where blockchain and crypto need to arrive at. We need to get to the point where we interact with blockchain on a daily basis and don’t realize that we are doing it.
This is mass adoption.
Not some guy trying to flip shitcoins on Uniswap.
Even thousands of people doing this is not mass adoption.
Blockchain needs to be invisible.
So this is where my focus is and where I see the most potential currently. Projects looking to bring crypto to the people.
Closing Thoughts
Keep HODLING, don’t make emotional trades and decisions, and always take a step back to breathe. This market doesn’t have to feel like an emotional ride of a lifetime with a madman at the wheel.
Be calm, make informed decisions and you will have no regrets.
- Sheldon”
