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Broader Crypto Market Trends: How to Capitalize on Them

Broader Crypto Market Trends How to Capitalize on Them

2020 and 2021 have seen a number of larger trends in cryptocurrency markets. Aside from holding Bitcoin for the long-term (I do) which is projected to be a very successful long-term strategy, how can one navigate the markets?

The majority of amateur traders, not to mention those playing with fire itself (leverage traders) lose money in trading. Whether it is emotions such as fear or greed, the inability to manage risk, or the unpredictability of markets, this has been a losing game for many, including myself.

There is another strategy which appears to have a higher success rate for those that put in the effort and training, and lay out and execute plans. This is swing trading. Swing traders attempt to capitalize on trends and broader market swings. This can be from a few days to even weeks and months.

A successful investor or swing trader generally sees an upcoming trend and invests in it early on. With over 13,000 cryptos listed on CoinMarketCap, it is difficult to effectively research and find the gems that will 100X. And while it is no sure thing, following broader trends allows one to hone in on the area one wants to look into.

Driven by the overall upward trend market of Bitcoin from the crash in March 2020 to the present, the cryptocurrency world has seen rapid growth, as well as several broader trends. The most obvious was investing in Bitcoin itself, which briefly dipped under $4,000 in March, and is currently over $60,000.

This was followed by a number of other broad crypto market trends, and investors who got in early to these broader trends were wildly successful. And it makes sense, if the leading cryptocurrency was doing so well, the risk appetite to make more gains increases.

While the cryptocurrency markets can seem to be one connected whole, looking into these trends seem to indicate four major trends that have occurred since 2020.

Altcoin Season

The first visible trend was that many larger cap altcoins followed and eclipsed Bitcoin in gains, such as Ether, Binance Coin, etc. While investing in Bitcoin in May 2020 may have resulted in a 1,000% gain, and a $1,200 stimulus check now (October 21, 2021) around $12,000, that same amount in Ether would be closer to $23,000. Invested into BNB that would net $33,000. ADA $52,000. SOL $344,000. You get the general idea.

This seems to occur after periods of sustained gains in Bitcoin such as December 2020 through May 2021, after Bitcoin was experiencing massive gains from March to December 2020. It also occurred from July through September 2021. One can see this through looking at the total crypto market cap without Bitcoin.

DeFi Summer

Another major trends was known as the “DeFi Summer of 2020”, followed by rapid growth of DeFi since. Nearly unheard of before 2020, this is now a $158 billion sector per CoinMarketCap data. Here are some examples:

Uniswap is a decentralized exchange (Dex) and token by the same name. Built on Ethereum, it was listed on CoinMarketCap in September 2020, the token is near $5.00. Its value is around 500% what it was then.

Its main competitor on Ethereum, SushiSwap, entered the game in the last few days of August 2020, and was around $1.10. It is currently around $11.00.

Their Binance Smart Chain competitor, PancakeSwap was just over $1.00 and listed later the same month. It is up around 2000% since then.

And in addition to DEXs, there were other DeFi projects that exploded — projects like LUNA and COMPOUND. LUNA has an ecosystem where a stablecoin is that is apparently (I say apparently because I haven’t closely looked into it) balanced by the the supply of a cryptocurrency, which is also its governance token, Terra. Terra went from under $6 in July 2020 to over $40 as of mid October 2021.

Another popular DeFi project, Compound Finance, was listed on CoinMarketCap in June 2020. On January 1, it was $136 and by May 10, it s $854, an increase of 528% in 4 months and nine days. It has since cooled off, and is trading around $318 as of October 21. It has also experienced some negative news headlines recently.

MemeCoins and Dog Tokens

In early 2021, there was the explosion of memecoins and specifically dog tokens, with attendant cult-like community, price pumps and speculation galore.

Dogecoin started the party. Under $0.01 on January 1, the Dogecoin meme party was led by Elon Musk. Mark Cuban, Guy Frieri and countless celebrities and brands from Budweiser to AMC to Slim Jim followed. WallStreetBets embraced Dogecoin. At one point in May, its price was over $0.70. First created as a humorous Litecoin clone in 2014, the meme currency’s loyal holders were rewarded and Doge was a Top 10 cryptocurrency.

Then the joke caught on in ways unimaginable to anyone attempting to explain it with fundamental analysis.

Dogecoin clone Shiba Inu increased over 10,000% in a matter of days in May and then subsided, to again pump up over 900% in October. It boomed from total obscurity to being the #20 cryptocurrency per CoinMarketCap, when I started writing this blog a week ago. It is now #10, having briefly flipped Dogecoin.

Many traders are attracted to the heavy volatility of these coins and their periodic pumps and dumps.

Needless to say, speculators have been quick to jump on the bandwagon. And while I am a supporter of cryptocurrency and even speculation (as long as one knows what risk they are undertaking), this trend has gotten ridiculous. One the one hand, numerous people who bought in and sold high should have obtained a greater degree of financial independence, which is a great thing.

Then on the other hand, a quick search of CoinMarketCap shows 100 coins named “Doge”, 53 named “Shiba” and 16 named “Floki” (the name of Elon Musk’s personal Shiba Inu). In my opinion, the casino has turned into a dumpster filled with liquid garbage. And to top it off, there are at least nine named after Elon Musk himself, my least favorite being ELONBALLS and ELON SPERM. Oh, the drawbacks of decentralization and allowing literally anyone to launch a token.

NFTs

I extensively cover NFTs elsewhere in my blogs.

There was the explosion of NFTs in March 2021 and then another explosion midsummer. Started with a project on Ethereum in 2017, Crypto Punks were originally given away. This has grown into an ecosystem with billions in sales every month, onboarding tens of thousands of artists who can bring their art to market without a gallery or other mostly centralized institution. Investors and traders have pulled in as well. And since the currency used by NFTs has been cryptocurrencies such as Ether, Tezos and others, a natural bridge formed connecting cryptocurrency users and NFT art. Metrics for these fast growing markets can be found on Dappradar.com and nonfungible.com.

Buying and selling NFTs themselves has been an extremely popular trend. Also NFT-centered cryptocurrencies exploded in activity and price.

Cryptocurrencies such as Tezos (377%), Theta (770%) and Chilliz (3690%) saw massive gains in the first few months of the year.

It is my opinion that the next trend to explode in the blockchain space will be gaming. Why?

Gaming Is Going To Explode

Gaming Is Going To Explode

Markets can be affected by a number of factors, including the price of Bitcoin, based on current conditions. However, without some unforeseen market-changing event, it appears that gaming is the next sector within crypto that is going to explode.

There are an estimated 2.8 billion gamers on Earth. The most popular crypto game to date, Axie Infinity, has just under two million daily users.

In emerging markets across South America, Africa and Asia, there are more factors. This includes projected explosive growth in population, national economies, the adoption of crypto, and the number of active gamers for the rest of this decade.

How can one take advantage of this?

One way is to invest into specific crypto tokens that see large gains. Another is to invest in blockchains and ecosystems that will see increased use due to the expansion of gaming decentralized applications built on top of their platform.

Ethereum and specifically Polygon appear to be well positioned to benefit from the explosion in the gaming sector. I have personally invested in Polygon (ticker symbol $MATIC) over the past few weeks and I am bullish on $MATIC. In fact, I am so bullish that I believe it has the potential of being the top-performing crypto among the Top 50 over the rest of 2021 and balance of the bull market.

Additionally, if other application-layer blockchains successfully compete with Ethereum to attract significant numbers of gaming projects, they will also significantly benefit from the explosion of gaming. This includes Binance Smart Chain and potentially Solana, Cardano and others.

In coming blogs, I will do more specific deep dives into gaming cryptos that are riskier and could also potentially see more outsized returns than the platforms mentioned above.

I will also be discussing gaming cryptos as a major topic on the Twitter Spaces I host on Saturdays at 1 PM EST, as well as interviewing personalities who are deeply involved with this topic.

Coming up Next:

Crypto and Gaming: The Perfect Storm

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This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.

Author

Alexandre Lores is a personal finance writer from Tampa Bay, Florida, with the goal to help one million people achieve financial freedom. He has spent over five years studying markets and economics, finding Bitcoin in 2017 and never turning back. He frequently appears on TV and in online news articles and is a regular Twitter spaces host.

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