It’s official. Alt-coin season 2021 is finally here.

Bitcoin dominance is currently at a cycle low of <50%. Which means that alt coins now make up more than half of the entire crypto market cap.

And you know what’s better than having 1 Bitcoin in your stack?

Why, having 10 of course!

The last time BTC dominance was this low was in 2018

Welcome to the wonderful world of penny stocks altcoins. Where the name of the game is to stack sats or satoshis. Ie. increasing your Bitcoin equivalent stack through altcoin trading.

Let’s face it, bull markets don’t last forever. You need to make the most of altcoin season or what’s better know as alt season.

Because when crypto runs, it really runs.

Now, while diving head first into any ICO you encounter is just oh-so-last-cycle, it pays to optimize your stack for maximum efficiency during this period; instead of just plain ol’ hodling.

Narrative/Momentum Rotation

From DeFi in Summer of 2020, to NFTs in the earlier part of this year, the narrative’s where the action’s at. Blaring at you from all corners – media sources, socials, peers, you’d be spoiled for choice in deciding which coin to dump your BTC for.

Uniswap, Compound, Terra, Yearn Finance have all had a good run. If you had vested in any of them before they peaked, congratulations! You’d have easily doubled or tripled your money. Some of them have even made it to the top ten market cap.

But this list doesn’t stay the same for long. And that’s just how crypto is. With things changing so fast, it’s always about the flavor of the month, quarter or year. With the previous cycle it was about exchanges and smart contracts.

And now DeFi is making a comeback, on the Binance Smart Chain.

So while I’m a believer of long term investing where stocks are concerned, this is just a sub-optimal strategy for crypto. Unless you’re talking about Bitcoin and Ethereum, which have consistently been in the top 2 spots for as long as I can remember.

But remember, we’re talking about stacking sats here, so the benchmark is really to outperform the numero uno.

Momentum trading involves keeping your eyes and ears peeled on social media like Twitter, Discord and Reddit. Sometimes new coins and sectors do take a while to gain some traction, but once they pick up speed, you’d best get on board.

Other sources of momentum include noticeable investors getting involved – some of these are actually legit projects with proper infrastructure and adoption.

On the other hand, Doge, is well, just Doge.

It takes quite some effort to keep up with the times, but you’d be handsomely rewarded for it. There are also social listening sites like Lunar Crush that can make your life easier.

Just be careful when your mom starts shilling you the next 100x coin.

Staking and Yield Farming

I can’t emphasize enough how much I love this space. This is probably the best way to supercharge your stack during this cycle.

DeFi-nitely the place to be

It’s crucial to pay attention to which platform you lend/stake/farm at though. The ones that do well, are arguably early to the game, or have a unique selling point (USP).

And apart from the usual rug pulls and hacker risks, there are also other things to also consider, such the macro overview (eg. ERC20 vs BEP20 industry changes), in deciding which DeFi platform to choose. Unless of course, you have unlimited funds to spray everywhere.

Most platforms pay out rewards in their own tokens – so generally if the platform does well, your coins also appreciate in value, which means that you do doubly well. For example, buying and staking $CAKE tokens at Pancake Swap would yield the staking rewards + get you capital appreciation of the token. How’s that for incentives?

Buying the Dip

Buying the dip works only in an upward trending market.

Read that again.

When Bitcoin is continuing on its bull run there’s not much to fear. But when the momentum starts slowing (and it will eventually) – that’s when you need to be aware of the shifting winds.

Being mindful of where we are in the cycle will help to keep euphoria in check. As they say – between bravery and stupidity lies a thin line. And you certainly don’t want to be caught on the wrong side when the proverbial knife falls.

Timing is everything in crypto markets, and missing out on a nice entry just because you were too busy binging on the latest episode of Peaky Blinders does not mean that you should jump right in.

Because that sh*tcoin Dogecoin that you bought at $0.40 could very well drop to $0.20 in a span of a week.

Still, buying the dip offers considerable opportunity in the crypto world. Price fluctuations of 10-30% a day are perfectly normal. Always keep some dry powder ready (either fiat or Bitcoin), because that will allow you to scoop up your favorite coins at bargain levels during times of FUD or whale sell offs.

Also keep your eye on the cash/USD price vs the BTC price. At times where BTC stay at depressed levels, you might find yourself better off buying your altcoin for cash, and then switching back in BTC when you eventually take profits on it.

How to Avoid Getting REKT

It was the Summer of 2017 and my overall portfolio was up 100% in fiat terms.

I was just killing it or so I thought. Without a proper risk management system, I soon found myself with the heaviest of bags.

Well I soon learned the hard way that what I had were all just paper gains in my head.

When I finally cashed back out to Bitcoin, not only was my entire PNL wiped out, my port was actually down substantially from my original fiat value (since the value of Bitcoin tanked as well) 😱. Ah… the follies of youth.

Bagholding is never fun

Volatility is part of crypto.

It means that you are invariably riding the explosiveness of the price action breakout (or break down). That’s right – as you’re aiming for that 2, 3, 10 or even 20 bagger, you could also potentially be rekt and be down 90% like I was.

Because who actually knows how much a coin should be valued at? Right now crypto is still so nascent and valuation models are still up in the air.

Although, practicing some common sense (such as not buying a coin after it has already 100x) will get you a long way. Sure you may miss out if the coin continues to run, but there’s a lower chance of you losing your pants too.

As you become greedier more interested in the different coins, no doubt the rabbit hole will pull you deeper. With these altcoins, the exposure to volatility increases (price movements become more violent), and liquidity becomes thinner (more difficult to get out of the position).

But with an aggressive risk management using a (i) Barbell strategy and (ii) parlaying gains back into a stable stack, all while being disciplined with profit taking and loss cutting, it’s still possible to ride the momentum AND limit potential losses on the downside at the same time.

If you’re interested to do more than hodling (why else would you be reading this), here is an intermediate strategy that you can use for managing your stack (I save the best for those who read till the end):

Stable Stack : Used for growing your fiat/cash. Plough your profits here back into the fiat world, unless you’re planning to live off crypto. Feel free to stick only to Bitcoin here, but don’t add anything more than Ethereum to this category.

Growth Stack : Used for stacking sats. A transition stack for letting your winners run before you take profit on them.

Speculative Stack : Used for stacking sats. Put your dogecoins, ICOs, the shiny new coin you read about, and anything else which doesn’t belong in the other 2 stacks, here. A small position can balloon into a sizable one if you catch a good run.

Don’t Let FOMO Ruin Your Life

Reading all these articles about everyone getting rich on crypto can easily get to your head.

As with investing in any other asset class, it is important to stay resolute in your thinking and disciplined in your approach, without letting yourself get carried away by paper gains.

Remember to also take profits every once in a while. Because no one ever went broke taking profits.

I get it. The FOMO is real, but more than ever you need to be aware of your emotions, and fight that huge urge to buy some Dogecoin.

Be careful and good luck out there.

P.S. Nothing in this post is to be considered legal or financial advice. All of the writing here is meant for information and entertainment purposes, so DYOR and make decisions based on your own beliefs.

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