Research firm unveils “Altcoin Trading Playbook”.

Research firm unveils "Altcoin Trading Playbook".

The Altcoin Trading Playbook: Navigating the Blockchain Bull Run

The blockchain industry is known for its dynamic and ever-evolving nature, with new altcoins constantly entering the market. K33 Research, formerly known as Arcane Research, has recently shared its altcoin trading playbook, providing insights and guidance for navigating the next cryptocurrency bull run.

The Appeal of New Altcoins

According to K33 Research, new altcoins tend to make better trades than old ones due to several factors. In the absence of price-driving fundamentals, narratives and liquidity take precedence. As a result, new coins generally outperform their older counterparts.

To illustrate this, K33 Research points to the performance of some “Ethereum killers” during the last bull market. The chart below showcases how these newer coins fared compared to the older ones:

Altcoin Performance during 2021 Bull Market
Tron (TRX) Underperformed
EOS (EOS) Underperformed
Solana (SOL) Outperformed
Avalanche (AVAX) Outperformed

As shown, Tron (TRX) and EOS (EOS), hailed as Ethereum killers during the 2017/18 bull market, failed to reach new all-time highs (ATHs) during the 2021 bull run. Conversely, newer altcoins like Solana (SOL) and Avalanche (AVAX) delivered significantly better returns.

Challenges Faced by Old Altcoins

One might wonder why old altcoins struggle to recapture their former glory. K33 Research identifies several factors contributing to this phenomenon. Firstly, coins that have already been through a market cycle often have a significant number of holders at a loss, waiting for prices to rise so they can exit their positions. These underwater investors create additional selling pressure during rallies, which new coins do not face, as everyone is generally in the green during the initial rally.

Another hindrance for old coins is the rising circulating supply due to token unlocks. The increase in supply can exert downward pressure on the price if the demand side fails to keep pace. This contrastingly affects new coins, which typically have lower circulating supplies.

Furthermore, old altcoins may be tied to narratives that have fallen out of fashion. Investors are often drawn to new coins that launch with fresh narratives, making them more appealing and interesting.

Identifying Promising Altcoins

While new altcoins generally possess advantages over their older counterparts, not all of them can be considered good investments. K33 Research provides some guidelines to assess the potential of a project before investing.

Firstly, investors should pay attention to the rate at which the total number of holders is increasing for a particular altcoin. Higher adoption suggests a stronger foundation for sustained growth. Additionally, caution should be exercised when dealing with altcoins that have a low float and high fully dilated value (FDV).

The State of Ethereum

As of the time of writing, Ethereum (ETH) is trading at around $1,600, with a 3% increase over the past week. While Ethereum continues to be a significant player in the blockchain industry, it faces competition from various altcoins striving to offer innovative solutions and capture market share.

In conclusion, the altcoin trading playbook offered by K33 Research sheds light on the dynamics of the blockchain industry during bull runs. It emphasizes the potential advantages of investing in new altcoins over old ones and provides valuable insights for identifying promising projects. However, it is essential to conduct thorough research and exercise caution when making investment decisions in the rapidly evolving and complex world of cryptocurrencies.

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