0/ The market has changed in the last 48 hrs and we are now entering into the second half of this 3 year bull market which started in Jan 2019. There is new capital flowing into crypto probably enticed by the massive rally in DeFi tokens over the last few months.
1/ As new capital comes in, they go into the safer and more liquid large caps like $BTC, $ETH and $XRP first. When was the large time $XRP was up 20% in a day?
2/ As the large caps rip, legacy capital will be forced to rotate some capital back into liquid large caps, driving them up further. This will come at the expense of the small and mid caps. There will be a penalty for illiquidity short term.
3/ This trend will likely persist until $BTC and $ETH have run their course and significantly reversed the underperformance YTD.
4/ ETH is leading this charge driven by optimism around the impending launch of ETH2.0 phase 0 later this month. Depending on how hard $ETH runs, the successful launch of phase 0 may culminate in a near term peak for $ETH and other large caps.
5/ DeFi coins that have massively outperformed YTD are likely to take a pause while this rotation is happening, unless they have specific positive catalysts that can drive their prices higher.
6/ When this large cap rally has run its course likely within 2-3 months, I expect a flood of capital to flow back into the DeFi names again, triggering the next phase of re-rating, which is likely to be even more powerful than the first wave.
7/ For those that missed the first DeFi run, this will be an opportunity to position for the second wave. Don’t miss it this time.
8/ We are now going into a bubble and one that will last through the next 12 months or slightly longer. Strap in and enjoy the ride. It’s happy times in crypto again.
