I have not made a serious post in quite some time but thought I'd give it a try again. Hope you enjoy the content.

Historically, the money flow in a crypto impulse follows a certain pattern that can best be described by this picture:

https://preview.redd.it/7qgvg0ai32ua1.png?1998&format=png&auto=webp&s=7f4ddd9308f5a867c7bbd7b0ee73ebe7e722dcba

Generally the idea is that

1. first, people hold FIAT, like the US Dollar or Euro (or Stablecoins).
2. Then money flows into Bitcoin.
3. Later, a part of the money that went into Bitcoin is used to buy large cap altcoins. Often, Ethereum goes first, followed by other major alts like ADA, DOT, and XRP.
4. Money then trickles down to smaller caps and in the end micro caps experience crazy gains.

Note that this money flow cycle can repeat multiple times throughout a 4 year Bitcoin cycle. After step 4, the market usually corrects. and money flows back into Bitcoin. Later, alts get their turn again.

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Thesis: We completed the FIAT phase, are at the tail end of the (first) Bitcoin phase, and might be starting the "Large Caps" part of this impulse. Let me explain:

(1) We completed the FIAT phase

The crypto market lost a lot of value relative to FIAT since the 2021 all time high. The US Dollar was king and during this phase a lot of crypto was sold for FIAT. The cryptocurrencies that did best were the stablecoins, with a caveat that some stablecoins turned out to be unstable.

The US Dollar (DXY index) was king

(2) We are experiencing the (end of the first) Bitcoin phase

The DXY is falling off hard (see picture above) and a lot of stablecoins were converted to Bitcoin over the past few months. This is why Bitcoin rallied 100% off the November 2022 lows.

https://preview.redd.it/1vfpmchvr2ua1.png?1261&format=png&auto=webp&s=f9f01d82debea76126eda51c35d97ea8a15ef092

Bitcoin also gained a lot of dominance relative to the alt coin market. Since october 2022, Bitcoin dominance climbed from 39% to 49% this week. This is arguably the most dominant Bitcoin has been since May 2021. In other words, it holds the most value relative to the rest of the market since then.

Bitcoin Dominance

(3) We are seeing the first signs of the Large Caps phase

We are starting to see the first signs of the "Large Caps" phase, where large caps catch up to Bitcoin. Over the past 7 days, Bitcoin is up 8%, while Ethereum is up 13%, ADA 18%, and SOL 19%.

This makes sense. As the picture above shows, Bitcoin dominance is rejecting. This means that Bitcoin is likely to consolidate somewhere here and give space for alts to run, as alts grab back some of the market share of Bitcoin.

Moreover, this is typically the place where Bitcoin season ends and alts start coming back. Over the past 90 days, only 7 cryptocurrencies in the top 50 outperformed Bitcoin. THis is typically the spot where alts regain momentum. See the altcoin season index.

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https://preview.redd.it/kpacpqwhw2ua1.png?1237&format=png&auto=webp&s=a979f49fe61ef077e5f7f4847644635ca85b2256

So what?

• If this thesis is true, holding larger alts now should be a good move, at least for a while. Bitcoin needs a bit of time to cool off.
• Personally, I will start taking agressive profits when the small caps start running hard. Then, a correction is likely near.