Welcome to this week’s analysis on which altcoins are performing well and which ones are not. You can view the list here:
Crypto Leverage and Macro Update
Many have asked me about what is causing this recent price action with altcoins dropping so much. I don’t focus too much on the short term as I believe most of it is noise which is why I take a longer term view. Nonetheless I wanted to share what I know regarding what influences short term price action (especially with crypto) and the macro environment.
A lot of crypto volatility comes from leverage. These tend to be traders that want to bet on the direction of a crypto coin whether it’s going to go up or down. So they take a long or short position accordingly and this requires you put up margin to take out a loan. You get a much larger position in the market but you only have to put a smaller amount as collateral. This magnifies your gains as well as your losses. When you open a leveraged position, you also get a liquidation price. This is the price that would automatically close out your position to meet margin requirements and fulfill your debt obligation. There are several issues with leverage which is why I advise against it with crypto:
- Crypto is volatile enough where leverage is not necessary to make outsized gains
- A leveraged position makes you a target for market makers trying to grab liquidity and are typically hired by exchanges to avoid having to pay out customer profits on leveraged contracts
- Leverage makes your emotions go haywire and makes you more likely to be stressed and make poor decisions
- Leverage makes you more likely to lose your position in the market. Those who are able to survive longer in the market tend to be more profitable.
With this most recent drop in the crypto markets, this was mainly driven by too much leverage being built up and this caused market makers to hunt down those positions by aggressively shorting to then take out leveraged long positions.
Here’s a couple posts on X that further explain this recent drop:
Next, I wanted to share some more information regarding the macro environment for what I think is coming for this year. This is what continues to make me bullish even with this recent drop. This next post from X does a great job of summarizing it:
If you want to take a deeper dive into understanding the macro environment and the business cycle to build confidence with investing, I highly recommend the Macro Investing Tool from Real Vision which you can access through their Plus membership. It has been a game changer for me personally and well worth the investment if you are looking to build more confidence and conviction with your investments: https://www.realvision.com/levels/plus
One last thing I wanted to share is that historically February to May in the final year of the 4-year cycle cycle (the year of Bitcoin All-time Highs) tends to be very bullish for altcoins. I also applied optimized z-score parameters to the OTHERS/BTC Market Cap ratio on the 2-week timeframe and found that we seem to be at a major bottom. I see more upside to come with altcoins outperforming Bitcoin in general.
Bitcoin Update
Bitcoin is still in this same range between 90-100k. Last newsletter Bitcoin was at 99k and now it’s at 95k. It still has not moved much. We have to continue waiting for this range to resolve. I am still sticking with my original scenarios that it could still dip to 85k or break to the upside to 120-130k.
Bitcoin Dominance Update
The scenario I’ve been saying for weeks has finally played out. Bitcoin Dominance went higher and so far is showing a huge rejection. This might finally be the top we have been looking for and we will see a major shift from Bitcoin strength to altcoin strength. Time will tell over the course of this month. If Bitcoin Dominance continues to drop from here and eventually breaks below 55%, this will be the confirmation of the alt season we have all been waiting for.
As I’ve shared in the last couple newsletters, we have seen this type of behavior in previous cycles where it revisits the highs before plummeting. Upon further examination, there are two tops with Bitcoin Dominance that occurred in late 2020 and early 2021 that appears to also be playing out in a similar way to late 2024 and early 2025.
OTHERS Dominance 2 Week Z-Scores
As I’ve mentioned in previous newsletters, we could revisit the trendline and here we are. We have fallen below for the time being and touched the June 2023 lows. We have to wait and see how these next couple weeks play out but given that Bitcoin Dominance is showing signs of topping and now Others Dominance is nearly 2 standard deviations below its mean, all the data is suggesting a major pivot could be coming.
Solana Update
Solana has dropped lower with this recent liquidation event. It revisited this $175 which is at the bottom of this range. Similar to Bitcoin, this has been stuck in a range so we have to be patient and wait for it to break out to the upside. I think it will continue to hold here otherwise the next level would be $160. This is still a great buy area in my opinion.
SOL/ETH trend is still in place and going higher even with this recent drop in price:
SOL/BTC still in this range but has nearly touched the bottom. Once this breaks above, we will really start to see Solana outperform.
Dogecoin Update
Dogecoin recently hit this golden pocket area which suggests the drawdown may be done. There is still a chance it goes to the lower level of this zone around 0.17 so just be prepared in case it does.
Dogecoin Pi Cycle High/Low Update
One of the experimental indicators I built to identify Dogecoin cycle lows and cycle first tops has triggered a potential first top in Dogecoin. I am skeptical that this is a first top as we have not seen any other Dogecoin indicators trigger. This also seems to be delayed at triggering around 0.25 when if it was a first top, it should have triggered closer to 0.48. This is why we look at multiple indicators because sometimes an indicator can lose its consistency as new patterns emerge. I will continue to monitor these indicators but I don’t see any reason to sell any Dogecoin at this time.
Here are the other Dogecoin top indicators I use for reference and you can see that none of these are showing anything close to a first top triggering yet. My conclusion is that we still don’t have a first top yet in Dogecoin and there is still more upside to come.
Large Caps
For large caps, here’s the ones that stand out on a long term timeframe:
- XRP
- Dogecoin
- Stellar
- Sui
Sui has shown incredible strength through this recent liquidation event and bounced fairly hard after touching the 2.41 level which was within this golden pocket zone:
The remaining coins are XRP and Stellar which as I mentioned in previous newsletters, I would not advise buying.
Here’s the ones that stand out on a short term timeframe:
- XRP
- Stellar
- Cardano
- Chainlink
- Dogecoin
- Sui
XRP, Stellar, Chainlink and Cardano make the short term list also but again I’m cautious on these for the reasons mentioned in previous newsletters. I think other coins like Sui or Dogecoin will have a better risk-to-reward at this point.
Pepe fell below the golden pocket zone but bounced fairly hard at the next major level below. I adjusted the forecast lines where it looks like it could range lower before resuming the uptrend. These liquidation events can throw a wrench into things but as long as the overall macro environment is still bullish, this is a “buy the dip” scenario. I would still add to Pepe at these levels:
One of the reasons I continue to be bullish on Pepe is that it has outperformed Dogecoin since it was introduced and is a larger market cap meme. It has underperformed recently but I think it will start to outperform again as altcoin strength returns:
Model Portfolio Update
The model portfolio is now up over 20% even with this major liquidation event:
To see the detailed analysis on Mid Caps and Small Caps as well as the complete portfolio, sign up and become a pro today and gain an edge in the crypto market.
Not financial advice. Please consult a financial advisor before making any investment decisions.
