Markets move in cycles, bull markets, bear markets, trending markets, sideways markets, crashing markets, melt ups, melt downs, frenzies, and a number of other names for these markets.
Analysis of those different markets differ as well.
There are numerous types of analysis to apply to a market in order to anticipate what the market might do.
Fundamental Analysis, technical analysis, tape reading, event driven, algorithms, or simply following people on Twitter and buying/selling what they buy/sell.
The real important part is determining what type of analysis is best applied to the current market conditions. In order to do that you need to know what the current market conditions are first.
Currently (as of this writing the first week of January 2018) the cryptocurrency market is in a broad based secular bull market. In one year the cryptocurrency space has moved from low double digit market cap to high triple digit market cap.
We could/should even call this current market a frenzy. Frenzy's are defined as a state or period of uncontrolled excitement or wild behavior.
By anyone's measurement we are certainly in a frenzied market, and most certainly in a very strong bull market.
In a frenzy, logic does not work as well. Fundamental analysis does not work as well. Value investing does not work as well.
When markets are priced higher than their value, when markets move orders of magnitude in mere days, when markets go into bear market territory (down >20%) in a given day and at worst stay "depressed" for a couple of weeks, when you can literally buy the worst fundamentally logical token/coin out there and still 6x your money in a few days, well that my friends is a frenzy!
We are here, rejoice!
Now to the painful part, this is going to hurt a lot of people.
This is not a market where fundamental analysis works.
Fundamentals are based on a logical well thought out analysis and projection.
Crypto is currently trading in a frenzy, recognize it, get on board, come to the dark side, make money.
It will change eventually, fundamental analysis will take over control, once again, and all the haters of XRP (for example), and all the Wall Street haters will (could) be proven right.
We will certainly hear, yet again, as this is nothing new to crypto, "See, told you crypto was a bubble".
So How Do You Trade A Frenzy?
Now that we've identified that we are in a bull market, a massive expansion, and a frenzy, we can identify the tools that will give us an advantage.
Next we need to identify an advantage. This is the core of what being a trader is all about. Removing all the noise and finding the few areas that you can capitalize on.
Discovering patterns that repeat, are predictable and align with your temperament.
The above chart looks just like XRP but it is in fact is Exxon Mobile ($XOM) a stock (not cryptocurrency) traded on the New York Stock Exchange
This is XRP
The point here is that trading a market is the same whether it's crypto or otherwise. Parabolic moves are everywhere, as are massive crashes.
The patterns exist.
Personally, I'm a technical trader and I find that for over 20 years of real in the trenches live trading, this works best for me in both bull and bear markets, in trending markets, in frenzies, in really narrow ranged dull markets, in reversion to mean markets, basically any market that I care to trade in.
As a technical trader I don't make trading decisions based on my opinion about the team, vision, market, or even if an asset is real or not. At the same time I can have my own opinions on that, I just won't be trading off of those opinions.
Rather I have spend the time looking at chart patterns, developing a methodology, backtesting, testing on different non-correlated markets, in different times, to build my strategies.
Driving Factor
More money piles in daily, the exchanges have daily/weekly/monthly limits on amounts of money people can bring into the cryptocurrency space.
There is a constant bid.
This is the first time that Wall Street and the Bankers are not leading a financial bubble.
I speak daily with my Wall Street friends who continue to try to invest their own capital into the crypto markets and are routinely frustrated that they cannot put enough money to work in the crypto space.
As they continue to add another $5,000 per week, the market will continue to swell.
Then they discover other exchanges, margin, and alt coins.
Money moves to the low priced coins and as they are wall street people, they find trading setups and trade these new assets.
There is little rhyme or reason, they just pile on. XRP is a great example of large amounts of non technical people (in the sense that they don't understand crypto and blockchain technology) entering these markets.
For all the ones who've been in crypto forever, saying "just wait until Wall Street show's up", they are here! Now!
This is what it looks like.
