Article source: Talk Li Talk Outside
In the series of articles from the previous days, we continued to discuss market trends through various on-chain indicators, including Supply LTH and STH, Percent Supply in Profit, Open Interest, Funding Rates, Stablecoin Inflows, etc.
At the end of the previous article, I also briefly mentioned my next operational plan, so a friend asked: I currently have a $500,000 position, mainly in SOL, with an average cost of $110. You mentioned in the article that mainstream Altcoins like ETH and SOL might still have 1-2 times potential this year. Should I continue to hold and bet on the possible Altcoin season in the second half of the year?
This question might still depend on the situation:
If the market develops smoothly, we believe SOL still has a chance to reach around $400 this year. However, whether to hold and bet on the possible Altcoin season in the second half of the year depends on your personal risk appetite.
Opportunities will always exist, and risks are everywhere. Money can't be earned endlessly, but it can be completely lost. Our previous point remains: during a bull market, the most important thing is to prioritize preserving your existing target profits, rather than taking greater risks with those gains.
1. Bitcoin and Altcoins
Let's return to the market trend.
From a price performance perspective, BTC seems stronger than ever before, and this strength is not solely built on favorable narratives or news, but also includes the growing long-term bullish belief in BTC.
This can be seen from data in other dimensions, such as the Bitcoin Exchange Balance. As of May 27th, the BTC balance in centralized exchanges has dropped to a three-year low (2.14 million BTC), as shown in the image below.
This typically means long-term holders are accumulating, which is not simply price speculation but definitely occurs against a background of long-term beliefs.
For example, looking at the Coinbase Premium Index, the index has recently turned positive again, indicating significant buying pressure in the US market. This suggests that US investors' enthusiasm seems to be returning, which is a good short-term bullish signal reflecting the optimistic sentiment of US institutions (including retail investors) and capital inflows from the US market, as shown in the image below.
In essence, Bitcoin remains Bitcoin, unchanged in itself, but with global fiat currency's unlimited printing, Bitcoin seems to be slowly and silently becoming a new reservoir of investment or speculation, and in recent years, it has also become a long-term bet for many traditional large companies.
Compared to Bitcoin, Altcoin price speculation is much more obvious, and most Altcoin projects lack any belief support. The only belief is merely the short-lived excitement brought by a few green candles, which is even more evident in MEME coins.
Although many Altcoin projects outside of MEME coins have corresponding products as support, these Altcoin projects and their issued tokens seem to be two completely different concepts. They are either garbage products based on open-source or forked code with some seemingly high-end marketing copy, or tokens issued purely to harvest more investors, such as some AI-themed Altcoin projects with billions of dollars in FDV and fabricated user scale data, whose actual purpose is to provide liquidity for insiders to exit. They repeatedly use AI narratives for speculation and repeatedly harvest funds from ordinary users.
However, the current market is like this because there are no clear regulations or laws to restrict these behaviors. For ordinary investors, this presents both enormous speculative opportunities and extremely high risks. This might be the main reason why people (retail investors) are more inclined to play various MEME coins - at least most MEME coins appear to be fairly launched. This is not just due to negative emotions but also a structural problem in the crypto market itself.
We don't know if or when this problem can be solved. The only thing we can do is to grasp some speculative or investment opportunities based on our own risk appetite. If you're unsure but still want to participate in the crypto market, the simplest strategy remains: just choose BTC directly, which is the simplest and least error-prone investment path.
2. Market Changes and Issues
We previously mentioned that the current market seems to have undergone significant changes in many areas, and some historical experiences, indicators, and strategies seem to have become ineffective or difficult to adapt to the new market.
Many diamond-handed veterans seemingly haven't achieved their ideal success in this cycle, while some young traders have emerged with significant results. Of course, those achieving great results are rare, and most young traders are actually liquidity providers.
Now, CEX is doing DEX's work, while DEX seems to want to directly challenge CEX. The once-popular airdrop strategies seem to be less pursued because too many scam and anti-sybil projects have dampened people's enthusiasm. Everyone is now turning to farming Alpha points for airdrops. USDC and USDT continue to record increases, but many funds seem to remain in a wait-and-see attitude. Various new projects are either rushing to issue tokens for a quick profit or pausing token issuance and choosing to lie flat and wait for opportunities. And so on...
As a result, the market is slowly becoming an interesting polarization: more and more people are starting to believe in Bitcoin, and more and more people are beginning to think Altcoins are scams.
The consequence is that the already limited liquidity will increasingly tend to flow towards Bitcoin. Altcoin sector rotation is becoming faster (shorter time) and more competitive. The entire market no longer pursues genuine internal innovation but seems to be thinking about how to make money quickly. However, one thing remains unchanged: ultimately, most retail investors will be hurt.
3. Altcoin Problems and Opportunities
In other words, in this cycle, Altcoins are not only lagging behind Bitcoin overall but also many people no longer have long-term confidence or belief in Altcoins.
When the market returns from prosperity to calmness, only those Altcoin projects with genuine products, products that can bring real returns, and sustainable returns will re-emerge with their true value.
For example, projects like AAVE and Pendle that we previously discussed fall into this category. When the market is crazy about MEME coins, AI, and other concepts, they are often overlooked by most people. But when the market becomes relatively calm, these projects might break through (such as in price performance) and catch people's attention because they are driven more by the alignment between their products and market development, rather than just empty slogans and exaggerated marketing hype.
In the future, we may continue to see various narratives being hyped and prices raised, new concepts emerging under the banner of innovation, and new projects claiming to revolutionize something... However, from a longer-term perspective, if a project or ecosystem lacks a solid product foundation, what remains after the brief peak will likely be nothing but a mess.
In this situation, funds that have been briefly hyped can only choose to return to Bitcoin. Therefore, the types of people who seem to be able to make money in the market are:
- Those who persistently focus solely on BTC investment
- Those who, after in-depth research, focus on ambushing Altcoins with long-term fundamental potential
- Those with keen information or data sensitivity who can seize short-term market hype opportunities in advance
At the same time, timing is crucial, position management is crucial, and mindset is crucial.
Actually, no matter how the market develops and changes, from another perspective, the market itself is not at fault. We need to learn to adapt to a constantly changing or evolving market, rather than expecting the market to adapt to us. If a person does not respect the market, the market will eventually make him realize his own ignorance.
4. How to Deal with the Current Market
...To be continued, the remaining content will be supplemented and updated through further discussion.
