“Euphoria” in the altcoin market. How and why not to succumb to emotions.

ASTL Token Project > Our publications > “Euphoria” in the altcoin market. How and why not to succumb to emotions.

Analysts of the ASTL investment project warn that mass enthusiasm often indicates the formation of a peak in the price of crypto assets. In the first week of January, there is a massive increase in crypto assets on the market, some of which showed price jumps of tens of percent. Analysts of our project called what is happening “euphoria”. From January 9 to 10, the platform resources recorded the maximum number of posts on Twitter over the past month containing positive keywords in the context of cryptocurrencies and their prices. In just a few days, many of the top 100 coins by market capitalization have risen in price noticeably. Among the leading crypto assets in terms of price growth over the past week are Lido DAO (LDO), Solana (SOL), Aptos (APT), Decentraland (MANA), The Sandbox (SAND) and others. Dozens of tokens from less capitalized projects also show price fluctuations of 10% or more.

In search of the logic of the growth of certain crypto assets, community members seek out the so-called market narratives, that is, the hype around global trends, projected onto the development of existing crypto services. An example of this was the rise of protocol governance tokens that provide liquid staking (liquid staking) amid news about the Shanghai update dates on the Ethereum network. After the news began to appear in the media that OpenAI, which created the sensational ChatGPT text bot, was valued at $29 billion, coins of blockchain projects, one way or another related to developments in the field of artificial intelligence (GRT, OCEAN, FET, RLC) began to grow. and others).

Crypto billionaire Justin Sun tweeted that he sees potential in the Chinese market. On the same day, a trader known after a series of successful multi-million dollar transactions under the pseudonym GCR said that he sees China as the driver of the next growth cycle of the crypto market. Commentators took this as a wave of interest in coins with Chinese development teams. So ideas, in fact, become a self-fulfilling prophecy. Opinion leaders hypothesize about a “new narrative”, it is picked up by the audience, large-scale interest appears, flowing into financial injections into assets, which is already pushing their price higher.

In our project, they believe that the market often “plays” against the masses. In the company’s Jan. 6 poll on whether “altcoin season” (a term that refers to the massive growth of cryptocurrencies) has begun, the majority of participants voted in the negative. Prices often go in the opposite direction of the crowd’s expectations, analysts write. In a January 10 report by Bernstein, cited by CoinDesk, Solana and Lido had the highest number of short positions over the past 24 hours, which did not prevent them from rising in price by 24% and 21%, respectively.

As a counter example, our analysts provide a comparative graph of the frequency of mentions on Twitter of such words as “altseason” and the price of Ethereum (ETH). The rate of the latter begins to decline when positive sentiment reaches a maximum. When prices rise rapidly, the crowd “notices” this, the masses, guided by emotions, try to buy assets that have already grown in price, which, as a rule, leads to the formation of a local price peak and its further fall.

Summing up the report, the investment company Astol Advanced Lined (Hong Kong), which is the owner of the ASTL investment project, warns that at this stage it is worth being more careful buying assets at current prices, although they admit that growth may continue for some time. In case of successful transactions, do not forget to take profits. Experts also agree that there are no fundamental factors on the market that contribute to a change in the global trend, and the current growth of crypto assets will be short-lived.

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