Capitalizing on Fear In The Crypto Markets

When you were a kid, do you remember getting in trouble because some of your friends did something wrong? Or maybe a disruptive kid at your table got the entire class punished? It was frustrating and probably made you feel frustrated and angry. And rightly so!

Today, we are experiencing a similar event in the crypto market where risk-taking degens (myself included) were overly speculative on memecoins, AI coins, and leverage. The market decided to punish this group with a severe correction, and everyone, except for Bitcoin, was taken down with it.

While the market psychologically wants you to sell out of fear, uncertainty, and doubt, I will explain why that may not be the best play right now. In fact, I am looking at this opportunity similarly to what I wrote about last year in How I’m Taking Advantage Of The German Crypto Firesale!

Is the Bull Market Over?

We can create a laundry list of reasons to believe the bull market is done. Here are some popular ideas right now:

• Too many altcoins exist for there to be a real altseason again.

• Quantitative tightening and high interest rates will lead to risk-off trading.

• Bitcoin is up over 6x from its lows. That was the bull run this time.

• Almost every influencer fighting for views is fear-mongering to get clicks.

• There’s no new narrative in crypto to draw in retail like ICOs (2016–2017) or NFTs (2020–2021).

I’ll bet you won’t have to think very hard to find more reasons. But these are powerful, logical, and compelling arguments to make the most optimistic investor want to sell everything into BTC or USD.

Why the Bull Market Isn’t Over

“In the stock market, the most important organ is the stomach. It’s not the brain.”

-Peter Lynch

I know this quote refers to the stock market, but it also applies to the crypto market. After round-tripping 100% of my bags in the bear market in 2018 and successfully keeping some of my gains through the bear market in 2022, I have more of a stomach for the crypto gyrations than newer entrants in the space.

I’ve watched my portfolio shrink by over 30% multiple times. Several times, it bounced back and went to all-time highs, and sometimes, it kept cascading to where I had numb feelings of apathy.

I thought I’d challenge myself to come up with some real reasons other than just saying my gut feeling is that the crypto bull isn’t dead.

#1- Bitcoin is still trading near all-time highs. Historically, Bitcoin has led the entire crypto market up and brought it down. Bitcoin, only 11% away from highs, has been a gift to anyone with a diversified Bitcoin-heavy portfolio. I’ve painstakingly watched my alts crash and burn, but my Bitcoin is still firmly in the black.

#2- Instead of listing off 30 indicators saying the bull market isn’t over, I’ll refer to Coinglass, which tracks 30 top signal indicators. No peak indicators have hit yet, increasing my confidence that there is still room to run.

#3- Based on history, monetary policy should expand in 2025. Sometimes, I’m guilty of being so US-centric that I don’t internalize that crypto is a global asset. Money isn’t only printed in the US. Other economies (such as China and the EU) can add significant liquidity to the money supply. Further, the US has been employing backdoor liquidity policies that I don’t fully comprehend (TGA and reverse-repo markets).

#4- $ETH ETF inflows are up for February. If policymakers thought the altcoin market was over, why would they be snapping up Ethereum? Additionally, $ETH whales are loading their bags, which bodes well for the altcoin market.

#5- There’s plenty of negative sentiment and fear. Typically, a contrarian approach has served well in crypto markets. It seems like my most profitable investments were the hardest ones to make. Meanwhile, the ones I aped into often turned into worthless piles of digital dogshit.

A Level-Headed Approach

There’s a high probability that you don’t have much cash to buy the dip if you invest in altcoins. Unfortunately, I doubt you are like the influencers who smartly converted to stables when they were dumping on our heads.

If you fall into this camp, I will hold what I can. The big capitulation most likely occurred when $8–10 billion was wiped out over the first week of February.

Some of my shitcoins are down 99%, and selling them now doesn’t make sense. Others, where I am down 50–80%, have a possibility of bouncing back in the right bullish environment. Surprisingly, I’ve seen this happen several times, so I’m keeping hope alive.

You have a few options if you have some cash you want to deploy.

Option 1: Hang onto the cash and keep it to function as a form of added security. If I am wrong, and the bull market is over, at least you won’t have to lose all your investing money.

Option 2: Buy Bitcoin. As stated earlier, if the crypto market goes up, Bitcoin will most likely lead it. Conversely, if the market dives down, there is much historical evidence that being a Bitcoin bagholder is extremely profitable.

Option 3: Buy higher-quality altcoins. Staying in the top 50 on Coingecko or Coinmakretcap should protect you from losing your entire investment completely. And, if Bitcoin pops, most of these coins should follow their general.

Option 4: Buy high-quality altcoins and some shitcoins. Many of the -99% coins won’t return, but some of the coins down 50–80% will. The challenge is determining which ones those are. If you are going into the shitcoin arena, try researching and creating a thesis on why you are buying the coin. Maybe even write it out to see if it makes more sense than buying BTC, SOL, ETH, or BNB.

Option 5: Sell everything and leave crypto. If you are going to sell everything right now, I suggest finding an investment other than crypto. Crypto is like fire. It can be extremely powerful and helpful, or it can burn you to death. It’s ok if you don’t want to play with fire. Selling everything during a buying moment indicates you may not be the best crypto candidate.

My Strategy

I’ve got some money (from savings, not from dumping) that I’m deploying right now. I’ve decided to go with Option 4. My primary investment is in Ethereum. Here’s a short thesis on why I like Ethereum: it’s being ruled out by the masses, it’s been beaten up severely, and I’m hoping there will be a positive regression. Politicians and institutions are buying it, so who am I to fight the richest people?

Beyond Ethereum, I have added to my Sui bags. I’m biased because I got into Sui at a lower price, but I really like the project and the way it is being built. Maybe I’ll write a deeper piece about my increased confidence in Sui, so keep an eye out.

Then, I’m loading up on some shitcoins. I’m not going to mention them here. I’ll randomly post them on my X or Focus.xyz account if you want to see them. However, let me share that some of these shitcoins are up 25% from when I bought them, and some are down 50%. It’s been a mixed bag, but they should outperform when the bull market resumes.

Key Takeaways

Watching significant wealth disappear in a week is tough, especially when hopes were so high based on our new r̵u̵l̵e̵r̵s̵.̴ elected officials. Congratulations on owning insurance if you are fortunate enough to have a bag of Bitcoin. But, if you are in the altcoin market, I’d encourage you to reflect deeply on your situation and how you want to approach this.

I’m optimistic that in six months, I can refer to this article confidently like I did my German government paper-hand article. That said, if I or anyone else knew what would happen, I wouldn’t be writing it here or discussing it on X or YouTube. I’d be spending that money on the life we all want.

I own ETH, BTC, BNB, SUI and SOL. This information should not be taken as investment advice. I haven’t been paid to write this article. Digital assets like crypto and NFTs involve risk, so you should always perform due diligence before investing.

Follow me on Twitter.

Follow me on Focus.xyz