The cryptocurrency market is a sometimes wild ride of peaks and troughs based on hype and speculation. Understanding the difference between what’s hot now and what’s going to be hot later will let you make intelligent investment decisions. Let’s break this down a bit more.
1. Attention Market vs. Entry
You might want to scour, like everybody on crypto Twitter, for the next big cryptocurrency. Here’s the problem with this: you’ll be bombarded with what’s popping at the moment. It’s almost impossible to make a buck out of what’s popping at this very moment. And of course, everybody knows the saying: “Easy come, easy go.” Most of the time, this proves to be the case because most people are influenced by shills—people hyping a token for their gain. And while their arguments can be very persuasive, the hype isn’t. By the time a cryptocurrency is all over Twitter, it often—more times than not—has reached its peak. Any further investment is most likely going to lead to losses.
Instead of attempting to get everything now, focus on what will be hot in the future or later in the cycle. Even though something may seem like a good choice because it’s trending, these are often the attention tops. This is especially true when the talk is all over social media.
2. Tools to Find Your Entry
The most strategic thing, in this case, is to time your entry. One of the most effective approaches would be to understand market cycles. That’s right—each market cycle duration can be different, but one thing is constant. Here’s the easy, effective approach I take:
- Observe the Hype Cycle: When the price is going crazy and everyone on Twitter is talking about it, we’re most probably in phase one of the cycle.
- Wait for the Hype to Die Down: Here, you wait for the heavy price drop once the chatter dies down.
- Locate the Parabolic Point: Look for the prices to come back down to the original parabolic point they started from. They might not always return there, though.
- Keep an Eye on the Transition: Look for the steep downtrend and wait for its transition into a more stable, ranging environment.
- Check the Sentiment: If the general sentiment is “back to zero,” that’s another signal to get you buying.
You can either buy at the equal lows in the range (stage 3) or wait for the initial higher high again (stage 4).
3. Bitcoin Meme Token Example
Let’s take an example of Bitcoin meme tokens. What usually happens is that during various events such as the Bitcoin halving or the launch of Runes, these gain hype and peak on social media. Now, it’s Ethereum memes that are hot, with Ethereum memes taking away the thunder from Bitcoin memes. But if you’re a Bitcoin ecosystem believer, you hold the view that these tokens are still undervalued.
If you buy into it, the most likely scenario is you see the price tank as the hype dies down. Instead, get in when the buzz has died down. I started getting into $PUPS after it retraced to 20-35 and bought again now at 12. This way, I get my average down to safer levels, rather than buying it at its peak price of 110.
4. Other Hype Niches
- Ethereum Memes: They are holding up quite well since the ETH ETF and ETHBTC bottom. Since ETHBTC has some room left, it would be wise to bet on the Ethereum memes like $PEPE, $FLOKI, and $DOGE for the coming months.
- Solana Memes: After the ETH ETF and ETHBTC bottom, Solana memes aren’t doing so hot. But I do think Solana will pump later in the cycle, and tokens like $BONK are going to be a great buy here soon.
- Bitcoin Memes: As stated earlier, the loss of attention is for these memes. Anyhow, this is the time to accumulate Bitcoin memes for the next turn of the market cycle.
Key Takeaways
- Do Research: Don’t just go with the flow. Understand which coins and which theses make sense to you.
- Attention Peaks: Understand the correlation of finding a token on social media and how that works with the peak in attention it gets.
- Expect Downturns: It’s not bad luck that the coins you bought went down and others went up but just the natural part of the market cycle.
Stick to these principles, and you will be able to navigate the cryptocurrency market in a much more level-headed manner, making sound decisions well outside the noise of the immediate hype.
