Key Ways To Position Yourself Within The Crypto Market

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1 Mar 2024

A Market Driven By Narratives
Bitcoin controls the game. It’s always been this way and seems unlikely to change. BTC sets the tone. However, understanding capital rotation within the Crypto sector will aid in effective decision-making. Profitable investing comes down to a series of excellent decisions. The better the decisions, the greater the returns. The formative stages of any bull market are always great for Bitcoin.
Just look at February, Bitcoin is up by a whopping 50% and is still showing signs of pushing higher. A $22K monthly candle is quite simply incredible! Outsiders continue to underestimate this market, largely due to not having an asset class worthy of comparison. Even seasoned Crypto investors are often taken by surprise. Once Bitcoin enters bull mode, you better hold on.

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During a bullish cycle, there are additional cycles of capital rotation. Essentially, capital flows into Bitcoin and is then redistributed into altcoins. From here, capital moves into micro-caps and memecoins. This cycle is repeated multiple times in a bull market, and serves as an excellent indicator, regarding where and when to deploy capital. Understanding this dynamic has helped me to capitalize on what I have referred to as the layer 1 effect.
Layer 1 blockchains generally tend to rally during the first capital rotation, which takes place after a monstrous move from Bitcoin. Understanding this dynamic will enable investors to initiate trades in succession, and so capitalize on each unique rally. A strong move, regarding the price appreciation of any layer 1 project will ultimately result in the rallying of smaller projects within that particular ecosystem.
This applies to memecoins as well and was evident in the recent Solana rally. The initial rally saw Solana reaching higher highs over a prolonged period. What followed was a surge in smaller projects within the ecosystem such as Solanium, Raydium, and others. Then, of course, we had the memecoin craze, which produced hundreds and thousands of Solana-based memecoins, many of them being rugs.
Fans of a particular layer 1 project can begin planning a capital deployment strategy for when their coin enters the limelight. It’s important to note that these are ecosystem-related market movements. However, many of these projects can rally sporadically when it comes to micro-caps. Important partnerships and other developments are often at the heart of a significant micro-cap rally.
Memecoins, on the other hand, are usually linked to a boom within their respective ecosystem. This dynamic is sometimes overridden by a larger market cap memecoin such as PEPE, FLOKI, or BONK. However, smaller projects often require the base chain to be in a bullish phase, before a significant rally. That being said, a period of dormancy, or sideways chop can often cause smaller memecoins to dump indefinitely.
The Current Narrative
Then, of course, we have trending narratives. The most recent being gaming and AI. Delysium is one of my recent altcoin picks, which suddenly exploded, being a part of this narrative. Essentially, investors should be doing the following, in my opinion:

Trading the current narrative
Building positions relevant to potential future narratives
Building positions in micro-cap projects set to explode
General trading of intra-day market movements

Once a narrative has been identified, opportunities tend to abound for a brief yet actionable period. Utilizing these opportunities can generate capital for future investments. This idea was addressed in a recent article entitled, “Rebalancing As An Accumulation Model”.
A trending narrative is capable of producing stellar returns, ultimately, outperforming the altcoin benchmark. This is Alpha! Don’t miss out on trending narratives. Yes, position yourself for future moves in the market, but also take advantage of what is currently on offer.

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Final Thoughts
These are just a few key thoughts regarding market exposure. Of course, any idea can be expounded upon. That is the beauty of strategic planning. These are of course my thoughts and ideas regarding the Crypto market and should not be construed as investment advice. Enjoy the weekend, and I will catch you in the next one!

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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.