What Lies Beyond All-Time Highs?

Building off Jason’s earlier post, BTC has officially broken to a new intraday all-time high.

So far, history has been a reliable guide throughout this current cycle, so it’s interesting to note what happened last time around after BTC broke to fresh highs.

Interestingly, last cycle BTC continued to outperform for about a month as it sucked up a lot of attention and liquidity.

But it didn’t take long for crypto participants to start moving further out the risk curve – and that’s when things started to get crazy.

The next phase of the bull market lasted roughly 5 months. Many “alts” outperformed during this time, and this is when the OG meme coin – DOGE – really found its stride.

Then the market topped out at its first peak in May 2021. We were overdue for a flush out, and got a sizable one as crypto prices consolidated for a few months.

But by the time late summer rolled around, all systems were go for the next phase of the bull that would take the crypto market to its ultimate cycle peak in November 2021. This second phase was where today’s household names like SOL really shined.

All in all, it wasn’t until BTC cleared prior ATHs that the green light was really triggered for the rest of the crypto market to go on a tear.

In fact, a vast majority of DOGE’s prior cycle gains came after BTC broke to a new ATH. It rallied 30-40% in the 4-5 weeks leading up to BTC’s breakout – similar to what we’ve seen it do the last few weeks leading up to this one – but it really took off in the months that followed.

Just because something happened in the past doesn’t mean it’s guaranteed to happen again. But a few of my quick takeaways from this are:

  • Meme coin rallies – like the one we’ve seen the last couple weeks – are typically indicative of mid-cycle price action. We saw this same dynamic play out right around the same point in the cycle last time around when BTC was on the verge of breaking to new ATHs.
  • Now is the time to look at the charts and find the best assets with the best narratives – those are the names that stand the best chance of outperforming during the next phase of this cycle.
  • Pullbacks and sharp drawdowns can and will happen, even during bull markets. Volatility is a feature, not a bug, so this comes with the territory.
  • Volatility can also be ruthless, especially when you apply leverage, so don’t get wiped out (you can’t win the game if you’re stuck on the bench).

On a final note, BTC breaking to all-time highs was also the start of the acceleration in crypto fund flows (because we know price is the ultimate catalyst for capital inflows).

Which is why if history serves as a reliable guide this time around, it’s not hard to see this trend continuing too.

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Good stuff mate

So the history indicates holding meme coin in the following several months will give investors higher Alpha?

History suggests they could, but obviously none of us has a crystal ball. The point is just because meme coins have outperformed in recent weeks doesn’t mean they can’t continue to outperform (as we’ve seen in the past). In some ways these have become higher beta plays on the underlying protocol (e.g. BONK vs. SOL) — so further outperformance also depends on avoiding a big risk off move (that causes a market-wide selloff) given how volatile these names are