Reflections on the Early Bull Market

The cryptocurrency market is currently in a pre-bull market phase, with prices continuously recovering as we await liquidity to trigger a major bull market next year.

Written by: XinGPT

Last week, I discussed some views with several experienced traders and discovered an important issue that I had previously overlooked: the cycle and purpose of trading. Each trade must consider whether it is a long-term or short-term position, and for each strategy, a corresponding information collection system, analysis framework, position management, and risk control approach must be established.

The core of a long-term position is cost control; only with low costs can one hold onto the position. Therefore, building a position should occur at low levels, focusing on determining whether we are at the bottom of the cycle or if the market has mispriced the asset.

The information system for long-term positions: It is essential to assess whether the fundamentals still hold logically, ideally remaining solid. However, if the stock price is under pressure due to lack of investor interest or macroeconomic reasons, a long-term information tracking system for the asset must be established.

From a technical perspective: after breaking key support levels, if there is support, a low-volatility consolidation at the bottom begins, which can be compared to the characteristics of previous cycle bottoms.

On the emotional level: the sentiment shifts from pessimism to negativity to despair, with the asset even being considered "dead," "outdated," or in a "bear market."

The selection of assets for long-term positions is crucial; they must be industry leaders with long-term investment value, such as Nvidia and Bitcoin, which have the potential to reach new highs after experiencing several bull and bear cycles. If an asset does not reach new highs in the new cycle, it is not a preferred choice.

Long-term positions also require taking profits and exiting, so it is essential to constantly observe what stage the market is in, how much future potential remains, and the proportion of new players waiting.

The logic for short-term positions currently is to follow trends. The main difference from long-term positions is that long-term positions are bought more as they decline over time without setting stop losses for spot trades; short-term positions involve going long or short in line with trends, with clear stop-loss rules set before entering. If the logic fails, strict stop-losses must be enforced to exit.

The core distinction between short-term and long-term positions is to remind oneself of where to focus attention: the best time for long-term positions is often when they are forgotten by others. Therefore, it is necessary to establish observation and long-term tracking for long-term positions. I often find myself chasing hot trends and forgetting the positions I should focus on long-term, only to realize they have already risen. Additionally, as mentioned earlier, if stop-loss rules are confused, one may panic sell at low points of long-term positions while continuously buying into short-term positions that break down, leading to deep losses.

To Do: Establish a personal observation list for long-term positions and continuously track the information and price trends of these assets; clarify whether each trade is short-term or long-term, and prepare a plan for profit-taking and stop-loss exits.

Returning to the main topic, let’s start with the cryptocurrency market.

I believe the cryptocurrency market is in the pre-bull market phase. The previously analyzed viewpoints remain unchanged. From the perspective of a four-year cycle and market feedback, this pre-bull market is still ongoing. I remain optimistic until the midterm elections. If the narrative and liquidity align, a major bull market may begin next year.

Early 2023:

Early 2019:
We can see the situations from previous early bull markets. After the first wave begins, there will still be a pullback to test the SMA200. In a larger cycle, there are still opportunities for significant swings; for short positions, I will set a stop loss around 75500. If it breaks down without recovering, I will exit the short position. For long positions, I will continue to observe: if it breaks the SMA200 and starts to consolidate, or tests the SMA200 without breaking it, I will consider building a position.
ZEC:
ZEC has entered the second consolidation phase after breaking new highs. I remain optimistic and can gradually dollar-cost average (DCA). If it does not break down, I will continue to hold:
Pons is looking for support; if it can stabilize at the 0.618 level, I can gradually buy:
The narrative for MEME is very strong, technically robust, combined with Bonkguy's calls, focusing on on-chain layouts; 88m is Bonkguy's call point, and 42m is his "cost price." The safest strategy is to start buying around 88. If it drops back to the cost price, I will stop loss. If there is a brief drop below 88, I will also consider buying:
Now, let’s talk about stocks:
Storage stocks have started to strengthen after OAI released a new model, forming an ascending flag pattern. NBIS has also formed a head-and-shoulders bottom pattern. Before Friday's CPI, I can engage in short-term high selling and low buying. Before the CPI, I will consider reducing my position.