Doubling is just the ignition stage of the copycat season

After setting ATH prices continuously, Bitcoin ushered in a clear profit divergence point in this round of bull market in November: on the one hand, Wall Street vest MSTR frantically bought and bought a total of $12 billion worth of Bitcoin; on the other hand, long-term investors who held the currency for more than 6 months continued to sell Bitcoin at a rate of 25,600 coins per day. The last time the long-short divergence point appeared, Bitcoin entered a 5-month long period of volatility, and the price of the currency also fell from a high of $73,700 to $49,000. Therefore, the reduction of holdings by long-term investors also caused market concerns about adjustments.

It is worth noting that the long-term investors' selling since September is significantly different from that in March-May. First, the investors who left in September were mainly those who held the coins for 6 months to 1 year, accounting for 35% of the selling; while the investors who left in March-May were mainly those who held the coins for 1 to 3 years, accounting for 53% of the selling. The former reflects more the realization of the profits of the band (the market rose too fast), while the latter is like the wavering of believers. Therefore, the wash cycle of the former will be significantly shorter than that of the latter. Secondly, the scale of reduction since September is 507,000 bitcoins, which is much lower than the 934,000 bitcoins in March-May. The weakening momentum of the market smash means that the amplitude of the shock will also be reduced. In other words, although the periodic adjustment of Bitcoin is inevitable, the new round of adjustment will be milder than the previous round of adjustment.

If we want to predict the price range and cycle of the adjustment, I believe that in the next six weeks, Bitcoin is most likely to fluctuate between 88,000 and 105,000. The lower limit of $88,000 is based on the average price of $88,627 for the first large increase after MSTR announced its $42 billion increase plan; the upper limit is based on the pricing of the Bellite Bitcoin ETF options: institutions generally expect that Bitcoin is unlikely to break through $105,000 before January 17 (before Trump takes office).

During the period of Bitcoin volatility, market funds began to turn their breakthrough points to altcoins. In the past week, the market share of altcoins increased from 8.91% to 11.0%, and the daily transaction share also increased from 23% to 37%.

According to CoinMarketCap data, the median increase of the top 100 currencies by market value was 106% from August 5 to December 1. Although most altcoins have doubled, most of the locked-in investors are still indifferent. The reason is that the current valuations of most currencies are still below 80% of the historical percentiles, and the prices are still below 90% of the historical percentiles. Therefore, the main force did not encounter much resistance in completing the first stage of the pull-up. For example, the time-sharing charts of altcoins such as DOT and SAND often show exaggerated "spike sprints", which shows that the willingness of funds to actively buy is extremely strong, but the market selling liquidity is not sufficient. This is also the reason why the author repeatedly emphasizes the need to change the past altcoin bear market thinking.

Unlike the past when small-cap new coins were chosen to break through, the leaders of this round of altcoin market are large-cap coins such as XRP, DOGE, and ADA. This situation has only occurred in the bull market of 2020-2021. The fact that funds dare to deploy altcoins on a large scale and in all directions must be that they have grasped the changes in the market trend in advance. This also shows that after Trump's victory, the potential policy benefits of the crypto market may far exceed market expectations.

Although large-cap old altcoins have shown a strong money-making effect, each doubling of these coins easily increases the circulating market value by hundreds of billions or even hundreds of billions of dollars, which also means that their ceiling is not high after all. Therefore, the pull of old altcoins has played a more important role in raising the overall valuation of altcoins and igniting market sentiment. The projects that can truly obtain high valuation premiums in each round of bull market are often closely related to the narrative logic of growth.

As the market is very averse to new coins with high FDV, the new altcoins issued in 2020-2021 are likely to become a new breakthrough for funds. The main reasons are as follows:

1. Complete bear market cycle baptism: All these currencies have experienced a complete bear market cycle, and the valuation has been fully de-bubbled. At the same time, the circulation rate of most currencies is above 80%, and most of the VC shares have been unlocked within three years, so the market is relatively clean.

2. Capital Sedimentation Effect: Historically, each round of large-scale capital investment usually produces a sedimentation effect. For example, after the Internet bubble burst in 2000, the industry experienced a three-year bear market, but in the end 12% of companies were reborn from the ashes and entered a long-term bull market. 2020 to 2021 is the peak of the crypto investment milestone cup level, but currently only the SOL project has completed the transformation, which is far from enough. In addition, the second bull market was not accompanied by the advent of a technological revolution, and many new projects are still on the route of technological improvement, which means that projects in the previous cycle still have first-mover advantages.

Historically, the most notable feature of the first phase of the launch of the altcoin market is the indiscriminate purchase and elimination of low prices. Subsequently, the market will enter a full reshuffle phase, and currencies with good fundamentals will usher in aerial refueling in the second phase. In terms of target selection, the author still recommends the allocation of old kings and DeFi leaders.