The current market environment, with its sharp dump since the recent top in December 2024, looks dire, and many people are in panic mode. Many altcoins are down 70% to 90% from their last highs. However, sentiment on Twitter remains overall balanced. In euphoric market stages, people often forget proper risk management, which becomes painful in a downturn. This is precisely what market makers and big KOLs exploit to earn money.
Will altcoins recover?
Some will, but most won’t, at least not to a new all-time high (ATH). I also bought some coins that I believe won’t recover, and I’ll be lucky to sell them at break-even. My main mistake was expecting this cycle to be more similar to the last one. While I spotted the AI trend early and had some big wins there, the expected Layer 1 narrative did not play out as anticipated, leaving me with some losses as well. I still believe there is plenty of time to recover losses, but an honest reevaluation of everyone’s portfolio is something I highly recommend. In crypto, you either adapt, or you lose.
Taking a realistic look at the crypto market, the big KOLs/Market Makers will always post bullish content at the top to lure in retail investors with unrealistic targets, using them as exit liquidity. This has always happened and will continue to happen. Those signals were clearly visible at the end of last year, just before the dump began, but I ignored them because I didn’t expect such a sharp drop in prices across the board at that time.
That said, I also believe we will see a rally soon, simply because most people are devastated and heavily down. To avoid hurting the market in the long term, there must be a pump to prevent people from leaving the market entirely.
“There will be a rally soon; they won’t let the crowd leave” is a fitting statement I read recently.
While we often hear about market dilution, I think this statement is as flawed as “There won’t be any altseason.” These phrases are just tools pushed by KOLs and market makers to manipulate the emotional landscape of retail investors.
We will see an altseason where many coins will pump, both collectively and through rotational narrative pumps. However, some clarifications are necessary:
- Market Cap Threshold:
Dilution is real, but it depends on the market cap sector. Small and micro caps are pure attention PvP, often exhibiting pump-and-dump charts. These are the most affected by saturation, and holding them for extended periods can be devastating. However, identifying their floor/bottom price can present opportunities to buy in and sell aggressively, taking profits quickly with short exposure times. - VC Grifts:
The prevalence of VC grifts will only increase. While these projects might run later on, they generally launch and dump hard on investors. A prime example is VVV and BERA, which featured fast exchange listings, allowing VCs to open large leveraged short futures and drain money from retail investors.
Does a simple “Buy and Hold” strategy still work?
Yes, but I believe there’s been a fundamental change compared to the last cycle.
With a larger market, VC grifts and KOL scams have become more blatant and obvious. They employ a deceptive approach, luring in investors through extensive marketing and media coverage. Identifying and using these schemes to our advantage could be key to outplaying the market.
The way forward is to ride this wave with them rather than against them, identifying the most hyped coins at their top and waiting until attention is gone and a solid floor has formed, buying close to their floor price. At this stage, KOLs typically don’t talk about these coins. Once they’ve loaded their wallets and the price has pumped, the big marketing machine begins. This rinse-and-repeat mechanism works because of investor greed. People will sometimes win big and then fall for similar schemes elsewhere, hoping for more gains.
My Strategy Going Forward
Adapting to market circumstances has always been crucial in crypto to stay ahead and keep up with new developments. Given recent events, I have started focusing more on short- to mid-term trading. More on this soon in the Discord.
