No doubt, the crypto bull is here

Source: Coin Market Trader

After Trump won the election as the new US President, the bullish sentiment in the crypto market was completely ignited, and Bitcoin broke through $73,800, setting a record high. At the same time, the long-dormant Ethereum also ushered in a strong rebound, with a single-day increase of more than 12%, and the ETH/BTC exchange rate saw the largest single-day increase in nearly half a year. However, due to the extremely violent shocks before the start of the bull market and the rapid fermentation of the market, many investors missed the first stage of the rise, which also caused the market sentiment to be very anxious. So, should investors who missed the opportunity or light positions chase highs?

From the trading level, once a trend is formed, it often has a strong inertia. Usually, there are only two possibilities for a trend to change: one is the exhaustion of momentum; the other is external shocks. Therefore, the group of Bitcoin will either enter a stage of accelerated rise (bullish venting) or collapse under the impact of negative news (sudden negative news). However, since January 2013, large global entities have continued to increase their holdings of Bitcoin, and their holdings have risen from 22% to 35%. Among them, the holdings of US industrial capital account for as high as 25%. Without a big outbreak of bullish sentiment, these institutions simply cannot complete shipments in a market with a daily turnover rate of only 2%-3%. Therefore, as long as the average daily trading volume of the market does not reach more than 600 billion US dollars (currently around 120 billion US dollars), the trend market will not end easily. This also means that any purchase before the peak of sentiment is correct.

According to past experience, in a bull market, long-term holding and high position operation are considered to be the two key principles for reducing mistakes and maximizing profits.

First, the increase in each round of bull market is usually far beyond expectations, especially in the main rising wave stage, the increase in three days is often equivalent to the increase in the past year. This is the so-called "unlimited scenery on the dangerous peak" principle. Therefore, as long as the currency in your hand does not show signs of accelerating to the top, do not easily change positions and leave the market. Past bull market experience shows that the biggest taboo in a bull market is frequent position changes, because once the rhythm is wrong, it is likely to fall into the trap of chasing ups and downs.

Secondly, in a market with a general rise, investors have a high tolerance rate for each move. In the window period of high winning rate and high odds, the correct approach for investors is to make full use of every penny of funds in their hands and let it create more profits for you as much as possible. Therefore, it is particularly important to maintain a high position for a long time. Of course, in order to cope with market changes, investors can use part of their positions as mobile positions while maintaining high positions and flexibly adjust their position structure.

In the cycle of risk appetite recovery, funds usually shift from pursuing absolute value to price elasticity. Therefore, since November 5, most of the currencies with better market performance are small and medium-sized market capitalization currencies, such as ETH, SOL, UNI, AAVE, etc. In particular, Ethereum has increasingly obvious signs of trend reversal, which is mainly reflected in two aspects: first, the ETH/BTC exchange rate has broken through the downward trend line in the past six months; second, the US stock market has seen the first case of pension funds buying Ethereum ETFs, indicating that the most conservative funds in the market have begun to accept ETH. In short, in the bull market stage, appropriately increasing the positions of small and medium-sized market capitalization currencies can obtain more excess returns.

In terms of target selection, the market starts the first wave, and investors do not need to analyze too much, just follow the trend to easily outperform the market. Because the market is always right, funds always flow to the place with the least resistance. The specific approach is to allocate the top ten currencies in the top 100 market capitalizations on November 16, such as UNI, SOL, AAVE, etc., in separate warehouses. If you really don’t know how to operate, you can mainly allocate ETH. After all, in all the bull markets in the past, holding ETH can obtain excess returns.

At present, the market generally expects that the regulatory system of the US crypto market will undergo major changes after Trump takes office. However, in fact, this change may come earlier. According to Justin Slaughter, director of policy research at Paradigm and former senior advisor to the SEC, the Democratic Party may change its tough stance on cryptocurrencies after losing the election. From the perspective of winning crypto votes and taking credit, the Democratic Party has every motivation to relax restrictions on cryptocurrencies before Trump takes office. At present, the market generally believes that there are two main directions for future regulatory relaxation: one is to exempt some projects from securities review; the other is to allow some projects to carry out POS staking business. Obviously, the former is undoubtedly a major benefit for SOL and XRP, which are applying for ETFs; the latter will solve the problem that US stock Ethereum ETFs cannot enjoy staking income. According to a report by Blockworks Research, nearly 70% of Ethereum institutional investors participated in staking, of which 52.6% held liquid staking tokens (LST). This shows that Ethereum staking has become a source of income that cannot be ignored. For example, nearly 50% of ARK Invest's ETH holdings are Canadian 3iQ's Ethereum staking ETF. It is worth mentioning that ARK Invest itself is the initiator and manager of the US Ethereum ETF. If the problem of ETH being unable to be pledged in the US stock market can be solved, this will greatly boost the demand for the US stock Ethereum ETF.  

According to the theory of technical analysis, the upside of a box breakout is usually 20%, which means that the target of a new round of Bitcoin rise should be 73,000×(1+20%)=87,600 US dollars. If you buy at the current price, there is still a 15% theoretical profit space. In terms of cost-effectiveness, Bitcoin at this position is obviously not as good as most of the newly launched altcoins.