Leverage Trades & The Current Market

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18 Sept 2024

Timing Is Everything
One of the most attractive aspects of opening long positions during the initial stages of a bull market is “trade security”. In other words, even if the market moves against your trade, eventually, it will move in favor of it. This is due to the bias being predominantly bullish over an extended period. Furthermore, opening a long position with the additional confluence of a breakout, and even better… a breakout confirmation, increases the odds.
The bottom is likely in for altcoins. That does not mean the market will not correct and retest the recent lows. What it does however mean is that a deeper correction is unlikely. This provides a great opportunity for leverage trades but with modest leverage. To trade with 2X or 3X leverage at the current levels is a relatively safe trade, considering that altcoins are down and trading close to their bear market lows. Furthermore, the fact that altcoins are down 60% from their recent highs also provides a degree of safety.
It might not be the beginning of a bull market for BTC. However, altcoins are yet to impress and begin making significant moves. I was looking at some charts today. Between February and March of 2020, ETH dropped 70% largely due to the pandemic. This came after a 140% pump since December. Currently, ETH has corrected as much as 48% since February/March. There was also a correction in September of 2020.

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Deep corrections around similar stages of the cycle. ETH and altcoins have however battled to adjust their trajectory like they did in 2020. However, a strong reversal at this stage of the game can equalize the ratio. Essentially, altcoins are 4 to 6 months behind schedule. When you view this within the context of a 4-year cycle it still makes sense. Strong and weak moves alike can create reversions to the mean.

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Viewing this in percentage terms reveals a 10% discrepancy, easily rectified by a strong altcoin season. I have used ETH as a reference, as Ethereum led the altcoin market in the previous cycle. Solana has been a more reliable point of reference in the current cycle. In many ways, it’s comforting to see altcoins behaving in harmony with previous cycles. The lack of muster in the current market is a result of multiple factors.
I still expect September to be the turnaround point. I expect October to usher in “Uptober” and for things to heat up fast. Moves or discrepancies that appear significant at this stage will be marginalized as the price action matures. As the old saying goes:

When in doubt zoom out!

The hour is late but not detrimental. There is more than enough time for altcoins to perform. My only concern at this stage is a possible fallout due to election results and reactionary measures that are likely to occur if certain “entities” find themselves in an unfavorable position. However, you can’t base your decisions on what could happen but on what is statistically and fundamentally expected.

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Final Thoughts
Bitcoin has broken through the $60K level again. It won’t be long before a significant breakout opens the cage door for altcoins and a fresh Altcoin Season is in full effect. I remain incredibly bullish and am keen to see what takes place this week. Hopefully, the FED doesn’t throw a spanner in the works. However, when the time is right… it just happens! All the best! See you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.