Veteran crypto trader and Founder of MN Trading Michaël van de Poppe shared his views on altcoins. Poppe was particularly pondered on the frequently asked question in the crypto community right now. Is it the right time to buy altcoins?
How to determine the right time to buy altcoins?
It starts with a look back at previous cycles that showed altcoins spiking 10x, 100x, or even 200x. However, when these cycles are evaluated, it is stated that a significant portion of them subsequently experienced an astonishing 90-99 percent decline, raising questions about their future revival.
This, of course, leads the investor to discuss “factors affecting altcoin timing”. Poppe says that understanding the complex dynamics of the altcoin market and deciphering the optimal buy or sell windows depend on a few key components.
The right time to buy #Altcoins might be now, or isn't it?
If you think about the previous cycle, you've seen altcoins running to a 10x, 100x, 200x or even more.
Most of them have been losing 90-99% of the valuation. Does that market come back or is it over? 👇
In… pic.twitter.com/VL1eS9tiBG
— Michaël van de Poppe (@CryptoMichNL) August 28, 2023
How is the altcoin market interpreted?
First, market sentiment is important. Often driven by social media conversations, this plays a crucial role. Social platforms, in particular, show declining YouTube views, declining Google searches, and declining overall engagement, reflecting an ongoing bear market psychology among long-standing survivors.
Secondly, it is necessary to look at the basic elements. The health of the projects is very important at this point. While fraudulent attempts are eliminated, legal ones continue to advance. Ethereum’s transition to Proof of Stake (PoS) and upcoming Ethereum ETFs are examples of this progress. Advances in DeFi and NFTs also add to the situation.
Third, price levels come to the fore. Poppe says price action is vital. Altcoins are usually at their lowest level of their cycle about 10 months before Bitcoin’s halving. Bitcoin dominance typically peaks at this point, signaling a potential shift in the dynamics of the market.
Despite significant progress and improvements in projects, prices may not reflect the market. Rally attempts often face selling pressure and investors aim to exit rather than evaluate a new bullish cycle.
History often repeats itself. Prior to Bitcoin’s halving in 2015 and 2019, the market experienced similar trends, with Bitcoin dominance rising while altcoins were hovering near cycle lows. This pattern seems to be repeated in 2023 as well.
Ethereum’s performance against Bitcoin is unique in the current cycle, with a relatively modest correction of 20-30%. This shift is attributed to Ethereum’s transition to PoS, fostering a deflationary ecosystem and contrasting with traditional inflationary models.
As a result, Poppe recommends accumulating positions with a consistent Dollar-Cost Average (DCA) approach, given current market dynamics. Holding these positions over a two-year time frame reflects the belief that future market trends can align more favorably.
