Cycles within Cycles
Learning the 'Secrets of Crypto', the New Trickle-Down Economics
Litecoin (LTC) is likely gearing up for a pump. In fact, it has already started to run. Let me explain why.
In the second edition of this newsletter, I wrote a piece on Bitcoin’s cycles and its price trajectory. If you haven’t read that piece, please start there. Once you have read it and once you understand Plan B’s Stock to Flow model, then, it’s important to learn that cycles happen within the bull market portion of Bitcoin’s cycles. (Also, if you’d like to see how accurate Plan B’s Stock to Flow model has been, see below.)
During bull markets, Bitcoin (BTC) leads the charge, as its market cap and, therefore, price are the first to increase among all of the cryptocurrencies in existence. But then the profits that people take from the BTC holdings often trickle down into Ether (ETH), and then to the alt coins with larger market caps, like Litecoin (LTC) lastly to the alt coins with smaller market caps. We are currently in phase two of this current trickle-down mini-cycle within this overall Stock to Flow cycle, the phase in which ETH slows down a little after a big pump and coins like LTC, more established, larger alt coins, begin to pump. LTC just hit its all time price high and is now moving into what is called “price discovery” territory (AKA a parabolic rise in price).
Above is my charting for LTC vs. BTC. Now that it has broken the blue “resistance” line, it will likely move into this aforementioned price discovery phase.
Some are predicting LTC will go on a tear to $1000 per coin in the near future. I can’t say I am that bullish, but if you are looking for a short-term trade, LTC will likely do you pretty well for the month of May. For a more detailed breakdown of how these cycles within cycles work (or worked in the 2017 bull run and are currently working) check out the chart below from @SecretsofCrypto (Twitter). Also, please keep in mind that the cycle below happens repeatedly in bull markets. Each big leg up in BTC’s price usually initiates a new cycle within a cycle. With that said, ETH is kind of becoming its own beast, so this time around, these cycles within cycles could be different (though, they haven’t been thus far).
You can check out the full Tweet below.
The Tweet above is part one of a longer “thread” filled an incredible amount of important infographics. Thank you, @secretsofcrypto for this amazing thread and for these incredible materials.
Someone else who has created a very simple visual for money flow within cycles is @RektCapital (Twitter). If the above graphic was confusing in any way, here’s a much simpler illustration of how money flows during these cycles.
And here’s the Tweet from which I took this graphic. (Fiat = cash, or a government-backed currency that isn’t pegged to a commodity like gold.)
Again, YOU WILL FIND NONE OF THIS IN FINANCIAL TEXTBOOKS, which is why this is so exciting. We are in barely charted territory. One day, though, academics and investors who were completely late to this party will look back on these graphics as well as the Stock to Flow model and regret dismissing them, if they have even seen them at all yet. However, mainstream media is beginning to come to the table, as Forbes recently wrote a piece on the Stock to Flow model.
So, ETH might still pump a little more, but we’re likely about to see coins like LTC and Terra Luna (LUNA) steal the show for a hot minute. After that, some smaller market cap coins might run, and then it’s back to the BTC hour. Now, please keep in mind that this isn’t an exact science. One of the best traders I follow is well-known for pointing out that BTC usually follows LTC, so given that LTC’s price is on an upward trajectory, we may see BTC take off again in the not-so-distant future.
As I am not a financial advisor, please do not take this edition of a newsletter as any indication that I am encouraging you to trade these markets. This email is for educational purposes only. Just having some exposure to BTC and ETH is still likely your safest bet in these markets, but, then again, I’m not here to give advice; I’m just here to share my thoughts.
Big love to everyone.
Best,
Frank
Twitter: @frankcorva
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Great work Frank! You distilled years of experience into one amazing article. For everyone else reading this, pay attention and tip well! This info is gold.
Jeremy says it all - nice work!