Miles Deutscher

Miles Deutscher

26-10-2022

14:50

POV: You want to buy a coin. You’ve done the research, and the fundamentals are solid. The question now becomes: When to buy? My ULTIMATE guide to buying tokens in a bear market. 👇

Before we can answer that question, we must first determine which market phase a coin is in. I break this down into 4 categories: • Speculation Phase • Retail Zone • Offloading Stage • Accumulation Phase

These categories purely serve as a check list for what we’re looking for in a token before we buy. Most coins WON’T follow these stages. We’re picking the ones that do, coupled with strong fundamentals + potential future narratives (this is the most important criteria).

Let’s look at this using $SOL as an example on a high time frame. 1. Speculative buyers and insiders buy in. 2. Retail gets involved. 3. VCs and early buyers exit. 4. Accumulation phase commences.

This 4 stage cycle can happen over any time frame. We can observe this cycle playing out over days, weeks, months, or years.

There’s nothing wrong with buying a coin in ANY of these phases. But, your position size will vary significantly depending on what stage we’re in. And that is the key to effective DCAing.

During the “Speculation Phase”, you can start placing bets on a project if you really like it. This phase applies to new projects, which haven’t proven themselves in the market yet. E.g $DOT in 2020, $SOL in 2020, $GMX earlier this year.

Next comes the “Retail Zone”, which isn’t an ideal time to buy. Yes, you can make crazy gains here. But in general, buying into hype is a bad idea.

One coin I’d consider to be in this zone right now is $QNT. Good fundamentals? Yes. Good time to buy? (Imo no). Just because a project has good fundamentals doesn’t mean you can buy it at any time. Yes, I may miss a further pump. But I have rules, and I stick to them.

However, if I’m helplessly desperate to FOMO, then I’ll allow myself to buy 30% of my ideal position. That way, I’m at ease mentally. I did this with $GNS a couple weeks ago (despite it being in the early stages of the “Retail Zone” imo).

The next phase, the “Offloading Stage”, is the WORST time to buy. Why? Because risk/reward is at its lowest. You’re essentially trying to catch a falling knife. Occasionally you’ll catch a dip before a quick pump, but if the trend is down - you should honour the trend.

Once price action starts to settle, we’ve officially entered the “Accumulation Phase”. This is the time where speculation and hype is gone. Your BIGGEST size kicks in during this phase (this is the best risk/reward time to enter).

A token is ONLY in accumulation if it has been going sideways for an extended amount of time. $QRDO is an example of this.

If a token is still in a downtrend, it’s not in the “Accumulation Phase”. Tokens that HAVE gone through all 3 phases and reach the “Accumulation Phase”, are the type of tokens we’re looking at buying. Ofc strong fundamentals + potential future narratives are an absolute must.

A few examples of these: $SOL $DYDX $BIFI

Remember, some tokens never get out of this phase. There’s no guarantee they will go up just because they’re in accumulation. There’s countless projects that peaked in 2017 and have been in accumulation ever since.

This is why the first and foremost criteria is finding a project with strong fundamentals and strong potential future narratives.

It’s also entirely possible that a project has another leg down despite seemingly being in accumulation. Extended sideways movement lowers this probability, but we still need to be prepared for that scenario.

This is why position sizing is so crucial. You might want to deploy 70% of your ideal position in the “Accumulation Phase”, but the frequency and duration of your buys will depend on your: • Cash flow • Outlook • Risk tolerance • Time horizon

I can’t give you exact specifics as everyone’s situation varies. But I hope this thread serves as a useful bear market accumulation guide (especially for small cap gems + quality fundamental projects).

TLDR: • Identify tokens with great fundamentals, and strong potential future narratives. • Look for projects that have gone through the 3 phases, and are now in the “Accumulation Phase”. • Create and execute an accumulation strategy based on this information.

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