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Tutorial on escaping market tops | Reviewing the May cryptocurrency market crash, what overheated top signals are worth noting?

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Tutorial on escaping market tops | Reviewing the May cryptocurrency market crash, what overheated top signals are worth noting?

Bitcoin reached an all-time high in April, with most altcoins following suit and setting new historical highs in May. However, the crypto market has been on a downtrend for almost two months now. Looking back, what are some notable signals of overheating tops worth paying attention to?

Crypto Market Top Signals

The crypto community Austerity Sucks reflected on the overheated top signals before the market crash and highlighted the following:

  • The most obvious Coinbase listing
  • Kimchi premium
  • CME launching Ethereum futures

He mentioned that he failed to recognize the top signals and hence couldn't make up his mind to hedge, but fortunately managed to offload about 30% of his holdings.

He also noted that when more people start to believe that "Bitcoin will be flipped by altcoins," it seems like a reversal signal:

One that was talked about to death, but is my favorite, is "Bitcoin will be flipped by altcoins," and the overflowing confidence of these people, showing off that they have no Bitcoin but are filled with altcoins, and then the KOLs start pulling out that only-rises-not-falls rhetoric. These people should show some respect for Bitcoin.

Austerity Sucks means that the drop in altcoins will be much higher than Bitcoin, and he retweeted his tweet from 5/13, implying that those with an overweight position in altcoins will suffer heavy losses.

Larry: Dogecoin is a Top Signal

The Block's research director Larry Cermak believes that Dogecoin's trading volume reaching one billion dollars is an unmistakable top signal. He referenced his tweet from 5/11, where he pointed out:

Among the top ten trading pairs on Uniswap, 5 of them are Dogecoin series tokens, reaching a trading volume of $1.55 billion in the past 24 hours, a record unseen since the launch of Uniswap v2.

Larry mentioned that looking back on this crazy bull market in a few years, he really wonders what everyone will say. Such an obvious top signal, it might really not be a top. However, trading volumes in the billions for meme coins are truly extraordinary.

Larry's tweet on 5/11 neared the historical high of Ethereum at $4,384 on 5/12.

Review

Traditional UK financial investment firm Ruffer Investment had allocated 2.5% of its Ruffer Multi-Strategies Fund to Bitcoin back in November last year and sold off its last batch of Bitcoin holdings in April.

Its investment director Duncan MacInnes had previously stated that Bitcoin was in an overheated state, especially when even meme coins like Dogecoin were valued at $40 billion.

Furthermore, DCG Group founder Barry Silbert also pointed out on 5/9 that "it's time to convert your Dogecoin to Bitcoin," and mentioned that he had shorted Dogecoin three times leverage on the FTX exchange.

It seems they were right.