In a recent video, Guy Turner, the host of CoinBureau, delves into the complexities of investing in altcoins, particularly focusing on the right time for accumulation. He begins by emphasizing that the video is not financial advice but aims to educate viewers on the intricacies of the crypto market cycle.
Understanding the Crypto Market Cycle
Guy explains that the crypto market generally follows a four-year cycle, often influenced by Bitcoin’s halving event, which occurs every four years. The last Bitcoin halving took place in May 2020, leading to significant price increases in Bitcoin, Ethereum, and various altcoins. The next Bitcoin halving is expected in April next year. However, Guy cautions that the current bear market in crypto has been unusually long, possibly due to its correlation with macro factors like tech stocks, interest rates, and geopolitical tensions.
Factors to Consider Before Accumulating Altcoins
- Market Correlation: The crypto market’s correlation with tech stocks has been waning, suggesting that crypto-specific factors are driving its price action.
- Regulatory Landscape: Regulatory issues have made larger investors hesitant, affecting the market.
- Bitcoin’s Influence: Bitcoin is considered the safe haven in the crypto space. Its price action often dictates the flow of money into altcoins.
- Catalysts: Events like the Bitcoin halving or a specific niche blowing up can trigger a flow of money into altcoins.
Altcoin Niches and Bitcoin Dominance
Guy suggests that the next altcoin bull market could be triggered by a specific crypto niche, much like how decentralized finance (DeFi) acted as a catalyst in 2020. He also discusses the importance of Bitcoin dominance and the ETH/BTC pair as indicators of where we are in the Bitcoin-altcoin cycle.
Investment Strategies
- Market Cap vs. Sticker Price: Smaller market caps are easier to move, leading to higher percentage gains or losses.
- Narratives: Marketing narratives can significantly influence which altcoins get attention.
- Fundamentals: Fees and tokenomics are crucial for assessing a crypto’s potential.
Predicting Gains
Guy uses historical data to predict potential gains for Bitcoin, Ethereum, and other large-cap altcoins like Cardano. He suggests that Bitcoin could reach around $120,000:
“There are many ways of measuring historical gains. The way we like to do it is to look at the previous zone of support and resistance for the entire cycle and compare it to the most recent top. In BTC’s case, this [support and resistance] zone was around $1,000 during the first cycle. BTC’s top in 2017 was around $20,000, so 20x [gains].
“In the second cycle, BTC’s key [support and resistance] zone was around $10,000. BTC’s top in 2021 was $70,000, so 7x. This suggests that BTC has diminishing returns over time, which makes sense, considering that this is what happens to every asset as it matures. If we accept this premise, then BTC should see around a 3x gain between its current key zone and its next top.
“As far as we can tell, BTC’s key zone is around $40,000 for this cycle. This actually makes sense, considering that $40,000 is roughly what it will cost to mine BTC after the next halving. So some quick math tells you that this translates to a BTC price of roughly $120,000, which is in line with many other predictions.“
As for altcoins, he mentioned that Ethereum could hit $15,000, and Cardano could go up to $24 in the next cycle. However, he stresses that these are just predictions and that the crypto market is highly volatile.
Risk Management
Guy concludes by reminding viewers to invest only what they can afford to lose and to store their crypto in personal wallets to mitigate risks.
