A topic that is the most popular among crypto investors at the moment - Is the new altcoin season coming?
The quick answer is we don’t think it’s coming anytime soon. Interested why? Then keep reading!
There were many conversations, forecasts, and especially speculations about this topic among investors, influencers, and media. So let’s see if it’s the real deal or just an attempt to push the market.
First of all, many of the speakers were pointing out the tech analysis and indicators and were confidently throwing us examples and saying that we have to be prepared for the new bull season for altcoins.
But the problem is that for a sustainable long/ mid-term bull market, you need to have a combination of factors that would keep it afloat.
One of the main factors is plenty of cheap money out there.
We have seen a long bull market recently mainly because funds were able to get loans with 1-2% interest rates, and they were also able to raise astronomical amounts from LPs because everything was growing and everybody was willing to jump on that bull train.
Don’t forget the trillions that were printed and given to the public. Now, the interest rates are several times higher, banks are way more cautious, and LPs almost stopped investing in VCs and Hedge Funds the way they were doing in recent years.
Additionally, it doesn't seem there’s a chance we will see more newly printed trillions anytime soon.
The second factor is a generally positive and stable economy.
You can’t grow tremendously in the long-term while the rest of the economy is falling apart. Of course, there would be companies that will be growing amazingly well, but the general bull market is when almost everything is growing.
We don’t know what you think about the current economy, but we don’t think it’s stable and prosperous at the moment.
Third, the valuations should be reasonable.
The first 50 tokens in the top-100 market cap are worth over 1 billion - should we say that the vast majority of them aren’t making a profit at all?
The largest market trend in VC right now is cutting valuations. That’s a situation when large and sometimes even successful companies are cutting their valuations by up to 80% to raise a new round.
Stripe is a good example of it as well as many others. The question is could altcoins go lower, and where would the price be when large investors will be ready to buy them up?
Everything could change, that’s just our opinion which might be close to reality and might be absolute bullshit, but time will show.
In general, we have to be prepared for short-term fluctuations, a new wave of bankruptcies, M&A deals, and other things that will shake up the market.
As many successful VC investors say, a bear market is the best time to build. Don’t scrutinize your portfolio too much, and don’t trade with leverage if you don’t have a well-built, tested-by-time model.
When you invest in startups, you need to be ready that most of them will fail, but the winners will bring enough profit to cover it and remain profitable. if you’re confident in your picks and you have built a diversified portfolio, then just let them build and grow.
When the market will start functioning better, your portfolio will start getting better as well. Some of the companies will go bankrupt of course, but those who will survive till the new bull run will deliver a good return.
Thanks for tuning into our Xillion Incubator Series, stay tuned for more useful insights.
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