“So if this bull market resembles those that came before it, and I think it likely will, the last third of the bull run, all coins, in general, are likely to outperform Bitcoin. And that’s happened every time in the past. It tends to happen in traditional markets, where you get– basically, lower-quality small caps outperform quality. And the reason is people’s risk tolerance grows.
There’s a greed element. They generate a lot – Bitcoin goes up 5x, people are now rich. They’re looking for their next 5x. And Bitcoin feels like it’s going to be hard to give it to them. So you start rotating into lower-quality assets, chasing that same high.”
As for timing the bull market top, the BlockTower Capital managing partner says he’s on the lookout for signs of extreme greed.
“Things I’ll be watching for are: rallies being driven by retail traders with high leverage, total leverage in the ecosystem at exorbitant levels…
Timing market tops is exceptionally hard. Hardly anyone is really good at it. I do think it’s very possible to identify the ‘9th inning,’ the general last phase. The challenge is that this phase could last a year (although that’s unlikely), and BTC might rally 300% during it.”
When it comes to making the most out of the current boom cycle, Paul suggests that the best strategy is to watch the paint dry.
“If I’m even close to right, it will be difficult to beat a buy and hold strategy through the end of this bull run. For active traders, it’s certainly possible to add lots of alpha with timing and rotation, but the opportunity cost of mistakes is high.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/wacomka
