Wise Move After Hitting New Highs: Stay Away from the Market and Hold Cash.
Translation: Deep Tide TechFlow
Introduction
The "Spring Heist" is finally over, and the market crash on February 3 caught many off guard, causing account balances to "slide down the slide," even leaving some seasoned traders stunned. What exactly happened? What should we do next?
Deep Tide TechFlow has compiled thoughts from two crypto KOLs that may help clarify your thinking.
The first article shares how a trader accurately escaped the market peak before the crash and locked in profits through aggressive profit-taking strategies. He also mentioned that the upcoming market may enter a consolidation phase, with more opportunities arising from short-term fluctuations.
The second article analyzes the underlying logic of this market trend from a macro perspective, pointing out that the fading of catalysts and the bearish sentiment in the altcoin market are key factors. Bitcoin is increasingly resembling a macro risk asset, while altcoins are trapped in a dilemma of funding shortages and lack of confidence.
Here is the full content.
1. Wise Move After Hitting New Highs: Stay Away from the Market and Hold Cash
Source: @Gold_Cryptoz
Unless some major macro events occur, I believe the market may enter a dull range-bound consolidation mode, as all key events in the first quarter have settled.
The key points I will focus on next include:
Trading opportunities at the top and bottom of the range
Market fluctuations driven by macro news
Some small on-chain investments to satisfy my investment interests
A greater inclination towards short positions
Aside from that, I plan to stay away from the market for a while but will still keep a certain level of attention.
As always, there is room for improvement in investing, and it is difficult to buy at the lowest point or sell at the highest point (analyzing each trade afterward is always easy). However, overall, I am satisfied with my grasp of this market trend.
Currently, the market value of my investment portfolio has far exceeded its historical peak, and I plan to maintain this status. I will not overtrade at this stage. In fact, the reason I have achieved such results is entirely due to aggressive profit-taking strategies, withdrawing funds from the market and not reinvesting.
As for successfully avoiding losses from the market crash, it is largely due to luck. The night before, I had taken a small position long on fartcoin, XRP, and SOL. When I woke up the next day, the market had just experienced a price correction. Although my judgment was correct, the timing was slightly off. If I had been awake at that time and saw the price correction, I might have panicked and closed my positions. But in reality, I felt very excited, immediately opened my computer, and increased my positions that morning. Ultimately, I closed my positions that night, earning about $200,000 in profit.
Now I have completely liquidated my positions, and all funds have been converted to USDT.
2. Some Thoughts on This Market Trend
Source: @bh359
In simple terms, I believe this market trend is mainly influenced by two factors:
The fading of catalysts has caused cryptocurrencies to behave like macro risk assets again
There is a general bearish sentiment in the altcoin market
Fading of Catalysts
Over the past two years, the crypto market has been driven by various catalysts. For example, market liquidity support from BTFP, ETF applications submitted by Blackrock, expectations of interest rate cuts, the possibility of ETF approvals, Trump's support for cryptocurrencies and his rising chances of winning, the potential for SBR, and so on.
However, for the first time in a long while, after the presidential inauguration and the disappointing results of SBR, the market seems to lack a clear main narrative to drive sentiment. Although there are still some potential catalysts in the market, most of them lack a clear timeline. In this context, Bitcoin (BTC) behaves more like a macro risk asset, while the risks associated with altcoins appear higher.
Bearish Sentiment Towards Altcoins
Throughout the cycle, we often hear calls for a "altcoin season," usually based on the typical four-year cycle theory. Many traders have long realized that, for various reasons, it is unlikely we will see a true comprehensive altcoin season. For example, the reduction of liquidity by the U.S. Federal Reserve and the lack of clear catalysts in the short term, a significant increase in the number of newly issued tokens leading to market inflation, and a lack of signs of capital inflow into the altcoin market—evident from the continuous sector rotation within the industry.
Nevertheless, many still hold out hope that certain factors will change, and 2025 may see a repeat of the prosperity of 2021.
However, after waiting for 2-3 years, as we approach the typical altcoin season in the four-year cycle, the performance of altcoins against BTC has begun to decline significantly, while the fundamentals have worsened.
For some investors, the emergence of this bearish sentiment is understandable. If they have primarily held underperforming assets over the past 2-3 years, have not participated in sector rotation, or have become increasingly pessimistic about the entire industry, this sentiment may be further amplified.
Behind this market trend, the selling sentiment in the altcoin market has been further amplified by multiple factors. Especially when BTC encounters broader market risk sell-offs, this sentiment spreads rapidly, creating a larger chain reaction.
However, these are already things of the past. Currently, I do not have a particularly clear view of the market's next direction.
Moving forward, I will continue to monitor macro-level dynamics (such as Trump's handling of tariff issues, market reactions, relevant statements from the Federal Reserve, etc.), as well as any potential catalysts related to cryptocurrencies (such as new ETF developments, unexpected SBR progress, or other breaking news) to gradually form my own views.
From my basic assumptions, the market may see sufficiently strong catalysts later this year to drive a rebound (even if just a brief one). However, it is still uncertain when this will occur. Additionally, depending on the type of catalysts that ultimately drive the market rebound, it is also possible that the market may experience further declines before improving.
This is just my personal opinion. I hope those who have been most affected by this market trend can recover quickly, and I hope those who seized opportunities can feel gratified. I still have some long positions opened last night, but my proportion of stablecoin holdings is currently at its highest throughout the entire cycle.
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