Market outlook for the next month: Pain and opportunity coexist, we must learn to profit from rotation

Always do your own research and don’t blindly follow other people’s opinions.

Author: Altcoin Sherpa

Compiled by: Deep Wave TechFlow

I was originally going to write these as one long tweet, but ultimately decided to wrap it up into an article to see if that format would be appropriate.

Next few weeks:

(Here are some random thoughts in no particular order)

• Your spot position may face a sharp retracement, and it is entirely up to you whether to avoid risks in advance. This time can be very painful.

• If you can hold on (hodl, the act of holding crypto assets for the long term) through this painful period, I think the next wave of gains will be very beneficial for some key coins and even completely erase the previous retracement. .

• The market is not "over" and I expect a new uptrend in the next 4-8 weeks. Reasons include high Bitcoin dominance rate (btc.d), seasonal factors, possible rise in Ethereum/Bitcoin (ethbtc), and market capital rotation. In addition, the government has a more positive attitude towards cryptocurrency and there is less resistance in the macroeconomic environment. These factors have theoretically created a good environment for the market.

• On the next move up, you need to gradually become a complete seller . If you choose to continue holding during the trough, I can understand, but the subsequent selling plan should gradually shift to safer assets.

• Safer assets include Bitcoin (BTC) and stablecoins.

• As the market cycle progresses, you need to gradually reduce risks, reduce the size of your positions, and gradually exit the market through Dollar Cost Averaging (DCA) instead of clearing your positions all at once.

• I have no clear predictions about the coming market rotation. From now on, I think the market will belong primarily to traders rather than long-term holders (hodlers). That said, some coins may attract heavy buying, while others may slowly rise (like XRP compared to TIA).

• It is difficult to judge in advance which currencies or sectors will become the market leaders. From a rotation perspective, it seems that all currencies will rise, but at the same time there is no overall upward trend. What I mean is: Ordinary AI currencies will eventually see a surge, but it may only be reflected in 1-2 currencies (for example, TAO's increase may be very exaggerated, while AKT may only increase by 50%).

• Don’t hold onto your coins to achieve unrealistic price targets. It is likely that many coins will not hit all-time highs (ATH) again. Of course, some mainstream currencies may reach it, but the bull market does not mean that all currencies will return to the ATH level. While anything is possible, I think 80% of coins (or more) will struggle to achieve this. It is wise to comply with market conditions and cut profits in a timely manner.

• If your portfolio is very diversified, I would recommend selling over 50-75% of your holdings when the rotation ends on the next leg up. For example, when the AI ​​sector rises, if you hold FET, you can choose to sell; or if you hold RWA (real asset tokenization) currencies, you can take profits in time when ONDO rises well.

• I have sold many of the coins in which I was less confident during the recent rally; I will reallocate funds to other higher quality coins later.

• In the next period of time, you should try to consolidate investments , reduce the number of new positions opened, and reduce the variety of overall positions.

• I 'm not sure when the next big pullback similar to the one seen in the summer of 2024 will come. I speculate that in 3-6 months the market could get really bad and usher in another pullback. As for whether this retracement will be driven primarily by timing factors rather than price factors like 2022, I can't tell yet.

• This summer, altcoins experienced a massive 75% retracement, which was mainly caused by capitulation caused by price declines rather than shocks caused by time extension. Although those 6 months seem extremely long to us, compared to the 1.5-year sideways period of altcoins in 2018-2019 and 2022-2023, this adjustment is actually relatively fast.

• The market may be entering a so-called "supercycle," as some say "this time is different." But I have reservations about it, so I'd still choose to err on the side of caution.

• My ideal goal is to control the portfolio's maximum drawdown from All-Time High (ATH) to about 30%. I know my risk tolerance and would be fine with a maximum drawdown of 50%, but 30-40% would be a more ideal range.

• Your job is to continuously analyze the data on a weekly basis, constantly re-evaluating the top and end points of the market cycle. When markets start to turn, things can get very complicated. Even if the bull market ends, many people will still shout that "the bull market is still there." This situation is always difficult to predict, but you need to stay alert. Don’t try to predict too far into the future, accept market information and adjust your strategy based on actual conditions.

• Finally, be sure to do your own research (DYOR), do not blindly follow other people 's opinions, and independently analyze and operate your own investment portfolio. Everyone’s trading strategy is different, don’t rely solely on your favorite KOL’s exit strategy. Some people may do well, but most may suffer serious losses. If you can exit the market with a substantial profit, you are already a winner. Good luck!