Can you make money using the dumbbell strategy in this bull market?

24-07-27 20:00

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Original title: "Can you make money with the dumbbell strategy in this bull market?"

Original author: Viee, Biteye

Can you make money with the dumbbell strategy in this bull market?

Today I will share with you a strategy that can make a lot of money and avoid losing all your money: the dumbbell strategy.

The performance of the following crypto assets was analyzed by indicators:

· BTC is the eternal king: BTC.D Index

· TH lags behind BTC in this stage: ETH/BTC exchange rate

· Altcoins are generally sluggish: (1) Altseason Index (2) Altcoin market capitalization

· Memecoin has high risk and high return, outperforming BTC and ETH: Memecoin Index

01 What is the dumbbell strategy?

The dumbbell strategy is mentioned by Taleb in Antifragile. It adopts a conservative strategy in one field and an open strategy in another field, giving up the middle road. Simply put, "mostly conservative, a small part radical".

In the cryptocurrency world, most of the assets can be invested in assets with better security such as BTC and ETH, a small part of the funds can be invested in high-risk assets such as Meme coins, and most of the altcoins in the middle should be avoided as much as possible.

In this way, you can maintain stability in the high volatility of the cryptocurrency world, and at the same time have the opportunity to obtain high returns through high-risk assets (such as Meme coins).

Next, through some indicators, let's objectively look at the performance of BTC, ETH, most altcoins, and Meme coins.

02 BTC is the eternal king: refer to the BTC.D index (Bitcoin Dominance)

The Bitcoin dominance index is used to reflect the market capitalization share of Bitcoin and is often used to determine whether the altcoin season has begun. From the figure, it can be seen that during the altcoin season in 2021, the last bull market, the BTC.D index was falling significantly.

The logic that can be explained is: the BTC.D index fell, BTC dominance declined, risks increased, altcoins regained their market position, and altcoins began to soar. (Vice versa)

We are still in Bitcoin season. The index has been rising since the beginning of this year. As of July 26, it was 56%. The performance of altcoins is still inferior to that of Bitcoin, so Bitcoin is dominant.

03 ETH lags behind BTC in this stage: refer to the ETH/BTC exchange rate

Generally, the larger the ETH/BTC exchange rate, the smaller the price gap between the two, and ETH performs strongly. On the contrary, the smaller the ratio, the larger the price gap, and ETH performs relatively weakly.

In addition, this indicator will also be used to judge the market's interest in altcoins. If the ratio starts to outperform BTC, it may be a sign that funds are flowing into altcoins.

Currently, the ETH/BTC exchange rate is still at a relatively low level, and ETH is performing relatively weakly. Even if the ETF is passed, it will not allow Ethereum to reverse the trend. However, since it is at a low level, if you have enough confidence in ETH, you can also consider building positions in batches and wait for subsequent increases.

04 Overall sluggishness of altcoins: Reference (1) Altseason Index

The Altseason Index tracks the sentiment of the altcoin market and counts the proportion of the top 50 altcoins that outperform Bitcoin over a period of time. The index shows that it is an altcoin season when it is greater than 75 and a Bitcoin season when it is less than 25.

It is obvious that we are currently in the Bitcoin season, with the index at 16, and the momentum of altcoins is relatively weak. This year, only at the end of January was the index greater than 75, which only lasted for half a month. Compared with the three months from the end of March to the end of June in 2021 when the index exceeded 75, it is not a true altcoin season.

05 Altcoins are generally sluggish: refer to (2) Altcoin total market value

The full name of this indicator is Crypto Total Market Cap Excluding BTC & ETH. In addition to BTC and ETH, the total market value of other tokens in the crypto market reflects the overall situation of capital flowing into the altcoin market.

After a significant increase at the beginning of the year, the total market value of altcoins did not continue to maintain the trend. It has fluctuated repeatedly in the past few months. There is no obvious breakthrough signal at present. Altcoins are still relatively weak as a whole.

06 Meme coins have high risks and high returns, outperforming BTC and ETH: refer to Memecoin Index

The Meme Coin Index launched by MarketVector tracks the return performance of the six largest Meme tokens by market capitalization.

The main components include $DOGE, $SHIB, $PEPE, $FLOKI, $WIF and $BONK, which best represent the overall performance of Meme coins.

By comparison, it can be seen that the performance of Meme coins from the beginning of the year to date is too eye-catching, with a 120% increase, exceeding BTC with a 52% increase and ETH with a 37% increase.

07 Summary & Risk Warning

Combined with the dumbbell strategy, it can be seen from the above indicators that BTC and ETH are indeed well-deserved safe assets with a high market share under the current market conditions.

Especially BTC, which is even stronger than ETH. From the comparison of return rates, we can see that Meme coin is still a representative of high-risk and high-return assets. On the other hand, most altcoins are still relatively sluggish overall, and there are not many opportunities. It doesn’t matter if you put less chips.

Here we should also remind you of the risks. Crypto asset allocation is a very difficult thing. It is not a simple matter of using a few indicators.

But in any case, please remember that taking risks is meaningful only when most of the funds are very safe. People who have experienced multiple rounds of bull and bear markets must have a deep understanding of this! As the old saying goes, if you keep the green mountains, you will not be afraid of running out of firewood.