Throwing a dart at anything and making money is perhaps the best way to describe how the market has been these past few days. But when the market is characterized as such, the bear PTSD prevents the majority of the people from taking advantage of these conditions. That said, not all hope is lost. There are ways to adapt to the new paradigm while gradually leaving the bear PTSD behind.
Anything and everything is going up, which begs the question – what do I buy?
Well, one way is to buy altcoins with upcoming catalysts. This gives you something tangible to hold on to while making sense of the price action. If you randomly buy an altcoin, how do you define your stop loss/take profit? At least if you are basing your trade on an upcoming catalyst, then you can have a time stop (around the event date), or you can observe the PA, and if it isn’t acting accordingly, you can re-evaluate.
Let’s run through an example to understand this better.
In a report I wrote titled “Market Note: The Surprising Interplay of AI & Cryptocurrencies, “I explained how the AI-related tokens were one of the first to rally post-FTX collapse. The rationale was simple: the market was hungry for narratives, and ChatGPT was the talk of the town at the time. So naturally, tokens such as RNDR, AGIX, and FET were used as proxies.
Just look at the chart above; AI-related tokens heavily outperformed ETH and BTC. Not only that, they were pretty much the only altcoins that were rallying at the time.
Of course, over time, the narrative fizzled out, but things don’t go down in a straight line. So, whenever there was a new version of ChatGPT being released or if there were any other developments in the field of AI, these tokens would have their bounces. The release of ChatGPT 4 in March is one prime example of this.
Having said that, what can we currently do with this information? Glad you asked!
There is a big OpenAI conference coming up on Nov. 6. This, coupled with fertile market conditions, makes AI coins prime beneficiaries of the market’s mindshare.
The relative performance of AI-related tokens in the past 5 days gives credence to our theory.
We also know that no matter how significant the catalyst or the narrative is, PA tops right around the event date. Knowing this, one can have a time stop to base their trades on.
This is one way of the many ways to adjust to the new paradigm while still basing your trades on something. AI-related tokens have run up quite a bit and probably will run up some more, but the R/R associated with playing this trend from the long side is quickly diminishing. That said, there are many tokens with upcoming catalysts/events and the same rationale can be applied to those as well.
