Marketcap is Leaving Bitcoin and Cryptocurrency in General

A raft of nearly 90 coins passed a critical bearish zone in the cryptocurrencies. In this article we’ll review how to prepare for panic selling and the ‘capitulation low’ trading pattern.

As we measure the cryptocurrency versus Bitcoin price charts, we are measuring the price spread between the US dollar value of cryptocurrencies and the US dollar value of Bitcoin.

When Bitcoin is dropping and the spread is also narrowing, this is a sign that market cap is coming out of cryptocurrency in general.

Market cap is coming out of Bitcoin (bitcoin usd price is going down), and, market cap is coming out of cryptocurrencies as well (bitcoin dominance is rising while bitcoin price is falling).

Passing this critical point in our trading plan gives us a heads up about the direction of the market.

More bearish news for crypto regulations

Cryptocurrency exchanges have been operating without following the same rules as all the other trading exchanges. Now, the Securities and Exchange Commissions are finding the teeth to clamp down on these bad actors. Unfortunately, cryptocurrency started off with the idea that it was outside of the law because there were no laws to regulate it. This gave the largest exchanges the idea that they could implement protocols and agreements that are not permitted in stock trading and commodities trading.

This is having a short-term, temporary, and likely a very extreme effect on the price valuations of these very worthy and game-changing technologies.

Our Job As Investors

While the trend may be in a downward direction for now, our job is to maintain our awareness of when the bottom comes in and which coins are bottoming first. There are specific patterns that we can watch for to verify the change of trend of the cryptocurrencies. We can watch for this pattern in any one coin but when we watch for this pattern across all the coins and average it out together in the AltSeason Copilot spreadsheet, it gives us an inside view that is an advantage.

The Capitulation Low

The other method for finding a bottom is called the capitulation low. The Alt Season Co-pilot will not catch the capitulation lows because it is intentionally designed to filter out that kind of volatility. However, in a market condition like we are having now, studying the capitulation low price chart pattern will be a strong advantage for those who are lucky enough to time it properly.

The term "capitulation low" refers to a point in financial markets where there is a sharp decline in asset prices, and this is usually accompanied by panic selling. The term “capitulation” implies that investors are giving up as they sell their positions.

Here's a breakdown of the capitulation low trading pattern:

1. Leading up to the Capitulation Low: Prior to the capitulation low, there is often a period where the market is trending down. This can be due to various factors such as a weak economy, company-specific news, or global events that create uncertainty.

2. Panic Selling: During the capitulation phase, selling accelerates as more investors panic. This is often fueled by emotion rather than changes in the fundamental value of the token. Volume levels spike as large numbers of coins are traded. The heavy selling pressure can also be triggered by automated trading strategies and stop-loss orders.

3. The Capitulation Low Point: This is the point where the asset reaches its lowest price. It is often difficult to identify this point in real-time, as it requires one to ascertain that a rebound will follow.

4. Rebound or Recovery: After the capitulation low, there is often a rebound as the selling pressure eases. At this stage, some investors may recognize that the selling has been overdone and start buying, believing the assets to be undervalued.

5. Confirmation of the Capitulation Low: It is usually only after some time has passed and the asset price has recovered that market participants can look back and identify the capitulation low. This is often easier said than done, as markets can sometimes have several waves of selling before a true capitulation low is in place.

There are some key considerations and risks associated with trying to trade based on the capitulation low:

• Timing: Timing the market is notoriously difficult. Identifying the exact point of capitulation is almost impossible in real-time.

• False Bottoms: Sometimes a market can appear to hit a low and rebound, only to fall again. These are known as "false bottoms," and they can trap traders who think the capitulation has already occurred.

• Psychology: Emotions can run high during times of market stress, and it is important for investors not to get swept up in the panic. Having a disciplined investment strategy can help.

• Use of Additional Tools and Analysis: Traders might use other tools such as technical analysis, support levels, and indicators like the Relative Strength Index (RSI), Bollinger Bands and the Ichimoku Cloud to try to gauge when the market is oversold.

It's essential for traders and investors to approach capitulation lows and other market patterns with caution and diligence. Understanding the risks involved and not getting swayed by emotions is key. Additionally, using a well-thought-out and researched risk management strategy is vital.

The core premise of trading cryptocurrencies

The core premise of trading cryptocurrencies: risk management is the first thing you need to learn as you step up into a risky endeavor.

If you were planning to become an airplane pilot, you would practice every different procedure you needed to handle any emergency situation. You would practice these procedures until they became habitual and automatic. This is why pilots can have a very long career, whereas cryptocurrency traders do not.

Very few cryptocurrency traders practice the risk control rules as the first part of their trading system.

Here's a video that I made as a way for me to study these risk control rules and implement them into my own trading.

In the ever-fluctuating ocean of cryptocurrency trading, where a calm day can swiftly turn into a tempest, being equipped with the right set of navigational tools is imperative. Understanding market trends through market cap tells, and monitoring the bearish zones are your compass and radar.

But the real anchor, the one thing that can make or break your survival in cryptocurrency trading, is risk control. With adept risk management, you not only safeguard your investment but also remain ready to position your money when the time is right.