I Have Survived 3 Crypto Bull Runs And Made Money; Here Are Four Tools I Found Useful That Could Help You As Well

In the crypto and traditional markets, many investors exit at a loss when there is “blood in the streets”, or during a bear market. The bears are often followed by a bull market. How can you survive a bull and bear market?

Every investor needs a few tools that keep them grounded during extreme and not-so-extreme market movements. No one can consistently know the top or bottom of market cycles, however, there are tools that provide hints and allows the savvy investor a chance to take a profit or avoid damaging losses.

The crypto ecosystem has grown consistently over the last 7 years and now lends itself to some interesting characteristics. Normally, a market behavioral pattern has a history that allows it to be measured and tracked to build some useful metrics. Crypto is no exception, over the years the market has exhibited repeatable patterns and trends that have allowed the community to build the following metrics.

These metrics are a useful guide to the market’s state and how investors think.

Crypto Greed & Fear Index The greed and fear index uses a set of social signals and market trends to gauge the overall sentiment of the whole market. The crypto market is far from fundamentally driven, humans are more creatures of emotion than logic. People often get greedy when the market rises fast. The final phases of this market even result in euphoria and a sense that you are indestructible.

Often, every investment you make is simply a winner, forcing investors to hold for longer than they should. FOMO kicks in at various points for holders and non-investors alike, forcing those not invested to buy in at the top and those already invested to hold for longer than prudent. This behavior is called FOMO (fear of missing out.).

The reverse is also true, in bear market extremes, investors are scared to invest, often waiting for the bottom, with the result that they miss buying the lows. The Crypto Fear and Greed index is a handy tool that can save you from your own emotional overreactions.

Extreme fear is often a sign that investors are worried that things will get worse, and that they will lose money. Extreme greed coupled with Euphoria is a sign a market is due for a correction. Here is a quick summary of its behavior since 2018. Source: Alternative.me Crypto Fear and Greed Index

Bitcoin Rainbow Chart The rainbow chart is a very helpful tool in giving you a rough idea of where the market is at. While it will not help identify the top or how low the market will drop, often what it does is give you an idea. The closer to the blue bottom you are, the more likely the market has bottomed or is in a bottoming phase.

You should never FOMO in, it’s hard to miss the bottom of the markets as often bear markets languish for far longer than one expects. If you truly want to get in, consider dollar cost averaging in, especially at current Q3 2022 token prices, you can’t go all that wrong over the long run. The closer to the red band at the top, the more overvalued the crypto market is getting. At these prices, often everyone is talking about crypto. It’s in the news a lot, your friends are asking you questions about what’s happening in the space.

BTC Dominance Bitcoin dominance is a measure of how much Bitcoin as an asset makes up of the total market cap of all coins. It’s a good way to gauge the trend of Bitcoin vs altcoins thus telling you whether altcoins are in a downtrend or uptrend against BTC.

In short, when BTC Dominance is going up, alts tend to lose value against BTC, when dominance is going down, alts gain value against BTC. When dominance is on the upswing, it means money is flowing into BTC. This happens either during the start of a bull run or the end of one as money flows from alts back into Bitcoin.

In most cases when a consistent downtrend in dominance happens in crypto bull markets, it’s a sign of the increasing altcoin market cap growing faster. This is often called an Altseason. The chart below does not show much that is helpful as the overall market is in a bear trend.

Ethereum Dominance Ethereum has held onto roughly a 20% market dominance in the last 4 years with a recent drop to less than 15% for a brief period. As the chart shows below, it has come close to a 30% dominance in the past. However, the rally was short-lived as the market came back to earth. Ethereum is considered an altcoin, though a credible and established one at this point. It’s currently holding up well considering the state of the market.