Researching past market data for crypto and digital assets should be a mandatory tool in deciding your trading/investing strategy.
By merely comparing the All-Time Highs (ATH) and the market bottoms of the previous two cycles, you will determine that a majority of assets will never set a new ATH, but that by investing in the right asset (at that right time) it is equally just as hard to lose.
How To Start Researching Past Market Data
Begin with a free-to-use resource like CoinMarketCap and locate the ‘Historical Data Snapshot’ section. Start with the top 50 cryptos and compare the price from the previous two cycle highs. For example, Bitcoin (BTC) did go on to make a new high and went from $19686 to $68,789.63. Ethereum went from $1365 to a new ATH of $4891.
But as you go down the ranking things begin to change. A few assets also go on to regain, or even surpass, their past ATH. Most you will see do not. For example, Bitcoin Cash (BCH) and XRP did not. As you continue down the list you will see names that you will probably never have heard about. Many of them still exist in the market, but remain lowly ranked and never regained their past glory.
Overall, approximately 20% of cryptos hit a new ATH from one cycle to the next, and 80% did not.
The vital question for this next bull market phase, is will that lack of performance repeat for the majority of cryptos from the last cycle top to whenever the next is reached? Here the only thing we can say will any certainty is that history is not necessarily a predictor of future performance.
But returning to the rankings, the data trends are even worse for the top 100 cryptos of the past two cycles.
Irrespective of when you came into the market, or whether you are beginning this time round, many of the driving narratives of this coming bull will simply be repeats. Narratives will be built around things like community, tech, who are the backers, etc. Yes, the recent talk has all been about the proposed ETF’s potential approvals and the upcoming Halving event, but those are primarily for Bitcoin, and Bitcoin is different.
But just stating that 80% of cryptos never regained their ATH’s is unfairly negative. It is also important to look at the previous cycle lows to the tops. Just looking at tops does not show there are attractive gains that are still there to be made.
Instead, for example, compare the 2018 cycle low to the 2021 cycle ATHs. Bitcoin went from a low of $3252 to $68,789.63 and Ethereum %84.63 to $4891. As you move down the rankings you will see that Bitcoin Cash went from $80.33 to $1549. DASH from $41.43 to $396. NEO $5.64 to $122.79 and QTUM $1.07 to $26.72. This is not an exhaustive list, I could go on, but you will surely get the point. But what all the quoted examples do show is that there are good returns to be made even from crypto that might never regain its ATH.
And this is why it is hard to lose, potentially.
You do though have to still time correctly your entry into the market and more importantly when to sell. Identifying tops and taking profits is the hardest thing for most traders/investors to do. This is just one reason that many find a ‘Dollar Cost Averaging’ of ‘Value DCA’ strategy the most effective over the longer term.
But even at this point in time, with the Halving coming in April, there is still an opportunity to average in. In addition, remember that there are always new coins in the market that will possibly become the new darlings of the cycle. Again, take a look at the historical data, and you will see that in previous cycles 40% of the best performers came out of nowhere, and provided massive gains. But during the very last cycle, only 3 out of the top 50 were new to the market. But as of today, out of the top 50 ranked cryptos, 14 out of the top 53 are new to the market.
Amidst uncertainty, the best thing you can do is research the market as much as you can. Remember the 80/20 rule for your entry and exits, as past data can be helpful to your decision-making today. When it comes to strategy the choice must be yours.
Happy trading in the bull market of 2024.
Personal Note From MEXC Team
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