Alt Season Is Coming? Why I’m Still Bullish on Crypto

Lately, many have lost hope that this bull cycle can continue. Given that many of the top altcoins have dropped by more than 60% over the past few months, you can’t really blame them. It’s hard to survive in this market during downturns like these.

But there are many factors that suggest this cycle is not over yet. Of course, nothing is certain in financial markets. But I believe the bullish risk/reward is very attractive.

In this episode, I’ll cover why I expect an altcoin trading season to occur later this year and what I’m doing now to maximize profits during the next parabolic phase.

Why I’m Still Bullish on Cryptocurrencies

There are many reasons for this situation.

In short, the main points are as follows:

• Stock markets are at all-time highs

• The Fed is expected to cut interest rates later this year

• The total supply of stablecoins continues to increase

• US Presidential Candidates Now Support Cryptocurrency

• TradFi Institutional (BlackRock) starts to pay attention to cryptocurrencies

• About $16 billion in cash will be distributed to FTX creditors in the coming months — many of whom are likely to put that money to work in the market

Historically, the third quarter is the worst performing quarter for cryptocurrencies, which may explain the recent decline.

But I'm very excited about the fourth quarter.

With the US election, the Fed cutting rates, and FTX cash redemptions scheduled for Q4, I can’t imagine a scenario where BTC has already peaked.

BTC dominance has only risen a little so far in this cycle. When this trend reverses, the altcoin season usually begins, which I think could happen in Q4.

Betting on the right projects

Now that I have shared my bull thesis, I also want to talk about my strategy for identifying the coins that are likely to perform best in the next market phase.

A great way to become a better investor is to study the market's past.

For example, I think the best way to learn how to catch 10x gems is to first analyze what the coins that have already done 10x have in common.

In the last bull run, the following five currencies had returns of more than 100 times:

• SOL — Solana Token, the Most Popular Non-EVM Blockchain

• LUNA — the token of Terra Luna, an algorithmic stablecoin experiment that ended up going terribly wrong

• MATIC - the token of Polygon, one of the most popular Ethereum L2 projects

• SPELL - the token of Abracadabra.money, a DeFi lending platform that supports some very high-yield degen strategies

• FTM - the token of Fantom, a blockchain that is one of the fastest growing ecosystems in the 2021 frenzy phase

I think their huge success can be attributed to a few main factors:

• Spiritual Leaders - Do Kwon is the spiritual leader of LUNA. Andre Cronje is the spiritual leader of FTM. Daniele Sesta is the spiritual leader of SPELL.

All 3 of these people are extremely charismatic and have managed to build strong communities around their projects. Founders with good media presence and a good personality can contribute greatly to the success of their project.

The retail industry loves to invest in projects with strong leaders. Most projects with cult leaders don’t perform well in the long run – but you can make huge money by betting on these projects until the bull run ends.

• Innovative products

There is no need for a new Uniswap fork.

The best chance of achieving this is to bet on innovative projects that push boundaries rather than simply copy-paste competitors’ projects.

This doesn’t mean they have to build something entirely new.

But ideally, you want to bet on a product that is 10 times better than the competition and ships much faster.

A good example that comes to mind is Pendle.

Pendle is the first yield trading protocol to support airdrop point trading, and it has achieved huge benefits by implementing this feature for the first time.

In fact, its team continues to announce integrations with popular protocols, helping Pendle maintain its position as the largest revenue-trading protocol.

• Partnerships with web2 and/or web3 giants

Retail investors love to see their projects announce partnerships with other large web3 projects or very popular web2 companies.

Polygon, Solana, and Terra Luna attracted a lot of attention by doing this.

During a bull run, partnership announcements could spark some massive token rallies.

• Good token utility and low token emission

SOL, MATIC, FTM, and LUNA are all used to pay gas fees and protect the blockchain network, while SPELL adopts a revenue sharing model.

Simple governance tokens like UNI also performed well in the first half of the 2021 bull run.

However, I believe that most of the tokens that outperform in this cycle will not be simple governance tokens, but will have some additional utility.

Here are some examples of potential token use cases:

• Fee discounts

• Revenue Sharing

• Paying network fees

• Buyback and destruction mechanism

• Increase rewards for protocol users

• Access to exclusive products (e.g. access to the web3 launchpad)

Memecoin is obviously an exception to this rule, they perform very well even without any utility, but with the exception of memecoin, I generally don't buy coins without any utility.

It is also important to check the vesting schedule. You don’t want to buy a token whose circulating supply will increase by more than 300% in the next 365 days.

Major token unlocks can significantly impact the price of a token, and have happened multiple times this year. You can use tools like Token Unlocks to monitor upcoming token unlocks and the vesting schedules for over 100 tokens.

A large portion of the total token supply is already in circulation, which is a good thing.

• Major catalysts on the horizon

Here are some examples of catalysts that can have a positive impact on token prices:

• Major protocol upgrade

• Token Economics Upgrade

• Token listing on major CEXs

• New product launch

• Fundraising Announcement

• Major Partnership Announcements

Catalysts can significantly boost a token’s price performance, which is why I usually only invest in projects that have huge catalysts in the near future.

I often ask myself a question:

Why would someone buy the same token as me but at a higher price?

If I can’t find at least one good reason, I won’t buy that token. Conviction is the bet that will really make you rich.

My plan for this cycle is to hold a maximum of 10 coins that meet the above criteria. If you know what you are doing, it is not worth it to over-diversify your investments.

Airdrops: Are They Still Worth Farming?

Several recent much-hyped airdrops have left many people disappointed.

LayerZero is a recent example. As airdrop farming has grown in popularity over the past few years, many airdrop opportunities are now highly diluted, especially due to the emergence of industrial farmers.

Therefore, most airdrops today are distributed linearly and are no longer based on a tier system (like Jito) to avoid rewarding industrial farmers.

Is linear distribution of airdrops a bad thing?

The problem is that whales are the ones who benefit the most from a linearly distributed airdrop, which is not a good thing for users with less capital.

It is almost impossible to turn $1,000 into $50,000 through airdrops right now. But I believe you can still make some money by doing it the right way.

The main criteria I look for in a tokenless protocol are as follows:

• Strong community — The more active the project community on X, the higher the valuation of its token

• Has raised money from venture capital firms — the more money its team has raised, the higher the valuation of the protocol token is likely to be at launch

• A low TVL/total raised funds ratio compared to other tokenless projects - the lower this ratio, the better, as a high ratio could indicate that an airdrop opportunity is being overfarmed

Polymarket is a great example of a protocol with an excellent TVL/total funds raised ratio.

Ideally, people would use airdrops from protocols because they believe those protocols are actually useful, rather than just for airdrop farming purposes.

Every bull market creates a new generation of millionaires.

But data shows that more than 90% of people end up giving most of their profits back to the market because of greed. That’s why you need a realistic exit plan.

For long-term positions, I primarily base my profits on fundamental triggers.

Whenever I start seeing multiple top signals that indicated tops in previous cycles, I start selling using a reverse dollar cost averaging strategy.

Reverse dollar-cost averaging is the opposite of dollar-cost averaging and involves selling the same number of tokens at fixed time intervals.

Some good top signals I follow:

• Jim Cramer has been heavily promoting cryptocurrency

• Coinbase Becomes the #1 App on the App Store

• Your friends and family start talking about crypto

• Some celebrities are starting to issue their own currencies

• People show off their Rolexes and luxury cars on your X timeline

• Useless project raises tens of millions of dollars

• Financial YouTubers start talking about cryptocurrencies more frequently

• Google searches for "cryptocurrency" surge to new high

• Ponzi farms offering 5-digit APY rewards are attracting billions of dollars in TVL

The only top-level signal we’ve seen so far is celebrities launching memecoins. This makes me think we’re still in the early stages.

Taking profit when BTC or your altcoin reaches a certain price level is also a valid strategy. But I think it is much more difficult to identify the right price level and determine when it is a wise move to sell.

Conclusion

I always try to be realistic, so here are my thoughts:

Succeeding in this bull market may be much more difficult than in past cycles. One reason for this is the skyrocketing number of crypto tokens.