Crypto trading strategies
The cryptocurrency market has evolved from being largely retail-focused with a long-only strategy to one where more advanced approaches, informed by macroeconomic trends and market structure analysis, offer the best opportunities for balancing risk and reward. Dollar-cost averaging (DCA) has become less effective in this environment, with professional traders instead concentrating on navigating market cycles and entering positions when momentum is strong and risk/reward conditions are optimal.
Dollar-cost averaging (DCA)
Regarding dollar-cost averaging, it’s a strategy where investors allocate their capital incrementally, rather than all at once. The goal is to mitigate the risk of market downturns without overexposing capital. While many investors attempt to time the market, DCA avoids this by allowing for steady investment without the pressure of predicting market highs and lows. It also offers the advantage of lowering the average cost basis over time.
Etherum
Signs of Ether's weakening bullish momentum were noticeable as early as April, as trading volumes decreased and funding rates dropped. Arbitrage opportunities around high funding rates were exploited by protocols like Ethena, whose synthetic dollar product offered a 50% APY in March 2024, but this fell to just 5% as rates declined. The Ethena token peaked at $1.46 in April but has since fallen sharply to $0.21, even with support from key industry players. 10x Research's forecast of a price collapse in June when ETH was trading at $3,725 has proven accurate, with the price now down 37% to $2,360 in just three months. The March 2024 Dencun upgrade arrived too late, allowing Solana to capitalize on the meme coin trend, further weakening Ether's position. Ether remains closely tied to Bitcoin’s performance, and as Bitcoin’s dominance declines, Ether’s price is likely to continue underperforming.
What to monitor
This emphasizes the importance of monitoring market structure factors like funding rates and volumes over simply tracking investments by venture capital firms or exchanges. It also underscores the need for disciplined strategies, such as adhering to stop-loss levels, since momentum plays a crucial role in trading success. Unlike DCA, strategies based on momentum demand a more tactical and structured approach, such as using indicators like the 21-week simple moving average—once Ether fell below $3,200, the window for a bullish outlook had clearly closed.
Source: 10x Research - Pay attention to this: Ethereum bottoming?