This Trader Sees A 'Barbell Portfolio Of BTC And Memes' As Most Profitable Trading Strategy

Crypto trader Cred sees the polarizing sentiment in the current market as a consequence of the disparities in opinions to unevenly distributed returns and the absence of traditional cycle indicators.

What Happened: The trader took to his X account to point out that the usual “risk curve” strategy—from BTC to Ethereum ETH/USD, then to large caps, mid-caps, and finally meme coins—has proven unprofitable this cycle. Instead, a barbell portfolio of BTC and memes has outperformed other strategies.

Part of the reason there's so much disagreement regarding where we are cyclically is because returns have been so unevenly distributed

Additionally, a lot of previous cycle signposts have been absent and/or entirely invalid

1. The conventional ‘risk curve' trade of BTC —> ETH…

— Cred (@CryptoCred) May 14, 2024

Cred notes that ETH/BTC has shown unusual weakness, whereas it typically thrives in a risk-on environment. This weakness extends to ETH Layer-1 (L1) and Layer-2 (L2) trades, with meme coins on Solana SOL/USD outperforming NFTs on Ethereum, marking a shift in the "crypto as a casino" thesis.

Also Read: Why This Crypto Market Is ‘A Bear Trap’ And Which Coins This Trader Is Backing

Meme Coins Surging: End Of Cycle?

Cred points out that meme coins have consistently led the market. Unlike in previous cycles, rotating out of meme coins has been costly, challenging the common belief that a surge in meme coin prices signals the end of a cycle.

Bitcoin has deviated from its traditional bull market behavior by not experiencing the standard 30-40% pullbacks. This anomaly has sidelined many traders and given rise to various theories, including shorter cycle and super cycle narratives.

The proliferation of tokens, amplified by meme coins, means that the "crypto bull market" no longer implies that all listed assets will rise. Instead, there are distinct winners and losers, with clear leaders like Solana outperforming stagnant sectors like the ETH ecosystem.

Diverse traders, Diverse strategies

Cred acknowledges the resulting diverse experiences and perspectives among traders. "It's entirely plausible that you have Trader A who rode Bitcoin, Solana, and memes and feels like stuff is hot and needs to cool off, whereas Trader B has barely made any money and feels like stuff hasn't even picked up yet," he notes.

He emphasizes that different portfolios, trading styles, time horizons, and risk appetites contribute to the varied outlooks. Despite the disparities, Cred encourages the crypto community to stay calm and kind, as most traders believe in the long-term upward trajectory of the market.

In response to Cred’s thesis, macro trader Alex Krüger said that the super cycle implies there are no more 85% drawdowns, but recurrent 20%-40% corrections, with regular ETF inflows and bitcoin partially dragged up by equities. He agrees that there may be a “supercycle,” but only for Bitcoin and not for altcoins.

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

Read Next: Bitcoin Boom Sparks Surge In Crypto Wallet Recovery Services: ‘It’s Just Pure Economics’

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image created using artificial intelligence with Midjourney.