Technical Analysis

On-demand TA: Pivoting for profit in crypto

Published: Sep 11, 2024

Is it time to rotate out SNX into POPCAT?

We’ve been discussing the barbell portfolio of majors and memes for a while, and we’ve advocated for moving from altcoins into the majors (BTC, ETH, SOL) and memes (WIF and POPCAT).

Today, we received a question from a community member who wondered if they should rotate from SNX to POPCAT. To answer that question, we have provided more details on what factors to review when you start considering rotating out of one asset into another.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

Asset rotation

We’re seeing some big differences in asset performance right now. SNX is under pressure, while POPCAT is showing strong momentum. So, the big question is: Should you move your capital into the stronger asset?

Let’s get into it and break down what you should be looking at to make the best decision.

market context

It’s all about recognising where we are in the market cycle. SNX has been forming lower lows—clear bearish signals. Meanwhile, Popcat has been on the rise, setting higher highs and higher lows. The evidence is right there. When you see an asset like Popcat outperforming, it’s worth considering whether to rotate out of something that’s lagging, like SNX.

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Focus on risk vs. reward

Exiting at a loss isn’t something anyone enjoys, but holding onto an asset that’s not moving could be holding you back.

Popcat has clear strength in this case, and there’s still plenty of upside potential. Holding out for SNX to recover might take a while; even then, it’s not guaranteed.

Moving capital to a stronger performer means you’re putting yourself in a position for better returns now instead of waiting and hoping for a turnaround.

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Key metrics to watch

Trend strength: Look at which assets are consistently making higher highs and higher lows.

Market sentiment: Assets in the same class often share the same market sentiment. Pay attention to how the market is reacting and what it tells you about strength - are they holding key support? Is demand still showing?

Analysis: Rely on technical, sentiment and price predictions to help with your rotation decisions. Many of these are clear as day; some charts are going up, and some are going down.

Playbook & action plan

Assess your portfolio: Review your current positions. Are you holding assets that are showing weakness compared to others?

Move capital to strength: Look at assets like Popcat with strong upward momentum and consider reallocating from those underperforming (like SNX).

Understand strength in structure: Pay attention to higher highs, higher lows, and other technical signals of strength.

Remove emotion: Don’t hold on to underperforming positions out of attachment. The goal is to be in the strongest possible assets, even if that means cutting losses.

Stay aligned and focused: Monitor the market and be ready to adjust your positions as it evolves.

Cryptonary's take

In the current market, rotating your capital into stronger assets is key, and it shows a winner’s mindset, even though it can be tough and uncomfortable to do. SNX is showing weakness with lower lows, while Popcat is trending up with higher highs and strong momentum.

Now is the time to consider reallocating from underperforming assets like SNX into stronger performers like Popcat. With the relatively resetting and consolidating market period we are in, this period has really highlighted the performers from the weaker assets. Focus on trend strength, remove emotion, and position yourself for better returns in the next phase of the market.