It’s Not Too Late to Play the Crypto Rally; Here’s How to Capitalize Without FOMO

After months of stability, the cryptocurrency market broke out suddenly on Tuesday, as bitcoin’s (BTC) bullish crossover signaled the end of ‘crypto winter.’ Despite adding nearly $30 billion overnight, the cryptocurrency market is still trading at a fraction of its record high, which means there’s plenty of time to play the rebound provided that you allocate your money toward the right assets.

The Bulls are Back

After a prolonged period of stability, bitcoin achieved monumental gains Tuesday, as its sphere of influence on other assets widened. For the first time in months, BTC re-emerged as the principal driver for the rest of the market, a feat that is highlighted by its growing dominance rate. As bitcoin surged, so did the broader market, bringing the total value of all coins in circulation to $165 billion. That’s the highest level since mid-November when the bitcoin cash (BCH) community declared civil war. Market-wide trade volumes also surged, eclipsing $59 billion in the last 24 hours alone.

At the time of writing, 98 out of the top 100 cryptocurrencies by market cap had reported gains. The following snapshot highlights the extent of the rally within the top 20. As you can see, Litecoin (LTC), BCH and Cardano (ADA) are the only majors outperforming bitcoin in terms of percentage gains.

Prior to the rally, bitcoin was trapped below a major resistance tracking from $4,200 to $4,300. With the gains, the bulls are now targeting $5,800, another major inflection point.

How to Capitalize on the Rally without FOMO

Gains like we’ve seen in the last 24 hours tend to make traders trigger-happy as the fear of missing out (FOMO) overwhelms them. The last thing you need right now is to panic about missing another huge rally. It’ll cause you to make irrational decisions and allocate more money to crypto than you actually have.

For the past three months, Hacked has been telling investors that the end of ‘crypto winter’ was near and that a monumental shift in market sentiment was already underway regardless of whether the price reflected it or not. But this is a process, not a one-time thing.

The latest melt up in crypto prices is likely to be met with a textbook pullback in the not-too-distant future. It’s not difficult to see why. After Tuesday’s rally, most of the majors were severely overbought based on the relative strength index. The ebb and flow of the market will likely lead prices to cool in the near term, creating more attractive buy opportunities for investors.

But even if that didn’t happen, crypto prices are still trading at a fraction of their all-time high. In fact, the market as a whole hasn’t even reached 20% of its high from January 2018. If you recall, the market peaked north of $840 billion. Today, it is valued at a mere $164 billion.

The next bull market, should it materialize, will have some important differences with the previous cycle. For starters, we don’t see a rush to buy initial coin offerings (ICOs). Secondly, investors are less keen on throwing all their money on every altcoin/token that sounds interesting. Those of us who remained invested following the ICO boom have become much more discerning in how we allocate our resources.

To get a sense of which cryptocurrencies are likely to succeed, it’s important to look at not just fundamentals and use cases, but also which assets have performed independently of bitcoin. Interestingly enough, price independence is a good sign that the coin is trading based on fundamentals or other value drivers.

On that basis, there are three large-caps to monitor: Litecoin, EOS (EOS) and Binance Coin (BNB). These three coins have shown the greatest propensity to move independently of bitcoin. Case in point: Litecoin has more than doubled this year while Binance Coin is on track to triple.

You probably shouldn’t expect Ethereum (ETH) to rise with the same velocity as the previous bull market. That’s because pent-up demand for ICOs has all but diminished. The so-called developer’s cryptocurrency still has a lot to offer but a closer look at the technical roadmap is needed.

Some of the leading small caps are also providing exceptional value, and like LTC, EOS and BNB, are moving independently of bitcoin. Some of the best ones are Ontology (ONT), Tezos (XTZ), Maker (MKR), VeChain (VET), Basic Attention Token (BAT) and RavenCoin (RVN). Hacked has covered these in depth all year long.

For a deeper dive into low-risk, high-reward small caps, check out our Investing Ideas section. We recently covered Steem (STEEM) and ICON (ICX).

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi