Managing Regret in Crypto

Louis Sykes
August 4, 2021

Why didn't I buy this coin when it was $10?

Why did I sell early?

Why didn't I buy the dip?

Why didn't I buy more?

How did I not see the top?

These are questions almost everyone who's been involved in crypto has asked themselves and felt, at one point or another.

Some call it a lack of discipline or FOMO, but it's really all about managing future regret.

This dynamic is undoubtedly present in other asset classes too. Still, it's put on full display in this space, where people are made to believe that regularly achieving 10x baggers is a normal occurrence.

The returns people feel they can obtain by holding coins in this space are largely based on a perfectionist mindset which is both unhealthy and unrealistic.

When the market's soaring to new highs - as has been typical in this asset class over the years - it can sometimes feel that responsibly managing risk is holding you back. The reality is that maintaining a level-headed approach works even when you feel that it isn't.

Everyone has their own goals and strategies for how they manage this regret. Some might just buy and hold Bitcoin over time, while others might diversify their portfolio to include a wider range of coins - there's no wrong answer here.

But as for what works for us at Allstarcharts, we simply put in the work to try to identify these future leaders before they emerge.

Much of the work we do, both in dealing with cryptocurrencies and other asset classes, is to conduct relative strength analysis. We often see these future leaders establish a footing relative to their peers, signaling further upside.

We use and talk about this type of analysis all the time, so this isn't anything new.

But the bottom line is that relative strength is the cheat code for identifying leaders. You can't outperform - no matter you're benchmark - if you aren't in coins or names that are showing relative strength.

It's that simple.

Simply comparing coins on a USD basis, particularly in strong trending environments, makes it difficult to evaluate the leaders. So generally, we analyze how a coin is doing not only relative to Bitcoin and Ethereum but some of the other smaller coins that are leading the asset class higher.

You can't have a looming sense of regret in a raging bull market if you're in the names that are leading the asset class higher. This all starts with relative strength...

The environment just earlier this year is the perfect case study of this type of analysis in action, so we'll be revisiting some of the names we were leaning on in this period.

We're not taking any victory laps, but we're simply reviewing how relative strength helped us position into the right areas.

First up is Theta Token. In the latter stages of the run-up, this coin was one of the strongest performing names in the entire space. Here's what we said about it in February:

How about the recent move in this one? From just 3 cents at the low from last March to over 3.50 today!

THETA is also a leader in the space as illustrated by price pressing to new record highs relative to Bitcoin.

And a few months on prior to the April peak, THETA went on to achieve another 300% in the space of two months...

You can see that strength back in February in the lower-pane with THETA pressing to new highs versus Bitcoin. While it's not shown, the same was true relative to Ethereum, and pretty much every other major coin.

We're not saying we possess a crystal ball, this is simply a great testament to the fact that relative strength was tipping the hands of buyers, telling us this had the potential to be a real winner.

Harmony $ONE was another great example.

Here's how we were approaching this one back when it was breaking out in February earlier this year:

ONE is also just resolving to new all-time highs, offering us a clearly defined risk level and asymmetric profit profile. Combine this with the potential double bottom on a relative basis, and we could have a real winner on our hands here.

We like ONE long if we’re above 0.03 with a target of 0.05 and a longer-term secondary target of 0.078.

Considering it blew past our "long term target" in just a few weeks, and went on to achieve another 150% proceeding its eventual peak, this is another testament to how relative strength led price action:

Again, this isn't to take a victory lap. The main point here is that utilizing this type of analysis let us catch some of the greatest leaders before they ripped higher.

We could go over countless examples of coins exhibiting these characteristics, but the message would be the same.

That is, relative strength is one of many critical tools that's undoubtedly given us a heads up for future leaders.

Employing this type of analysis is certainly a powerful supplement that has helped us position into leading names, avoiding the pitfalls of a lack of discipline and risk management that can arise as the result of regret.

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team

 

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