Nothing to worry about here… just an observation. I can only see two times where Bitcoin was 4 or lower on the Altcoin Season Index.
First what is the Altcoin Season Index?
The altcoin season index indicator is a useful tool for identifying periods when the market is primarily focused on either Bitcoin or altcoins. Additionally, the Fear and Greed Index and the altcoin market capitalization chart can provide insights into the timing of the altcoin season’s commencement.
How did Bitcoin do in the past when it was this low on the Index?
Just looking back at the last 5 years we detect this two times. The First was in August of 2018 when the price of BTC was a little over $6,000 then. The Second time was in September of 2019 when the Bitcoin price was just over $10,000 as you see on the chart below.
The good news is that both times it meant that we were entering a Bull market. This above chart is a weekly chart so we are talking of this happening over the course of months not days.
The bad news…
Each time the Index was at 4 or lower Bitcoin dropped by more than 45%. In August of 2018 it took about 140 day to do so and then in September of 2019 it took about 200 days to do so and it included the black swan event we all know of COVID in March of 2020. Can you imagine how painful this is for a retail investor like you and I? You Invest all your life savings into bitcoin because everyone says its going up (which it will) but as soon as you buy say $10.000 within weeks its now worth $5,500 you’ve “lost” nearly half of it. Then you get angry and frustrated and exit because you are tired of seeing it go down and as soon as you do off she goes back up but you don’t believe it will last so you don’t do anything and then it keeps going up and up until it near the price you originally got it then you think its too late so you wait again then it starts going higher and higher and people start talking about all time high’s again so you start thinking that you don’t want to ,miss out on it again so you go all in again and by then its too late and you buy the top again and as soon as you do they take it all from you again. (See post about Psychology of a Market Cycle). Where are we now?
The Altcoin Season Index
As of May 2023 the index is at 4. Maybe it will bounce here but if it does what it did the last two times it means that in the next 100 to 200 days we may feel some pain add to our red bags, panic sell etc.
If this happens at the current price of just over 27, 000 per Bitcoin if it was to drop 45% it would put us around that 13,000 to 14,000 price. Many Bear Market influencers on twitter have been calling for this range for over a year now. Can it happen?
One thing I have learned in this crazy market is that YES… ANYTHING CAN HAPPEN!
Manage your risk. Take the stop loss and be careful.
Will I stop trading? Probably not. There are always opportunities out there and with the right probabilities you can win some too. Patience and discipline is key.
Let’s follow up in a year on this post and see what happened.
