The Golden Era of Shorting Altcoins is Over, Says Crypto Expert 0xSun

On April 7, Smart Money and well-known crypto figure 0xSun (@0xSunNFT) shared a candid market update, looking at the dynamics of cryptocurrency trading.

For the last two months, 0xSun had employed a steady shorting strategy against altcoins, profiting from the volatility and downside pressure in the market. But now, according to his latest insights, that strategy is shifting.

0xSun believes the days of easily profiting from shorting altcoins are coming to a close, which is a stark warning to traders looking to capitalize on what he sees as a rapidly evolving market.

0xSun’s recent update provides insight into some important factors leading to the decreased profitability of shorting altcoins. For many months now, a general market downturn has affected a broad swath of the smaller, lesser-known altcoins. This downturn, says 0xSun, has already exacted a heavy toll on the value of older tokens. Those coins have taken steep price drops and are thus now giving us not much opportunity (if any at all) for further downside.

In addition, new altcoins that had been hot and highly speculative have undergone valuation corrections. 0xSun observed that this has helped to take some of the speculative “froth” out of the market, making it less probable that these new tokens will have the kind of durable, downward price action that they seemed to have in the not-so-distant past. With this market calmness, the clear opportunities to profit from shorting these assets have become an even rarer event.

According to 0xSun, another crucial shift is the increasing capital funneled into shorting strategies. When we see traders jumping on the shorting bandwagon, we have likely seen them doing this with far less groupthink and far more insistence on the individual trading styles that they have cultivated over the years and which supposedly set them apart in a market that largely looks the same from the outside.

Shorting, as we know, has many particularities and risks, not the least of which is that should the market move against you, your losses are theoretically infinite. When one shorts, one is betting that the price will decline. One is also betting that if it doesn’t, one will need to cover the short by buying back at a higher price. In order to sustain this ecosystem, cover this little shorting campfire with a quilted flannel blanket of nefarious market-making practices, and keep nearly half the market down at a distance, hanging around under the clouds of a recession until the promised sunny daybreak arrives on the other side of it, is no easy task.

Given these developments, 0xSun cautioned traders considering shorting altcoins. “The golden era of shorting alts is likely over,” he said. “If you’re not an experienced trader, tread carefully.” This is contrary to his previous advice, when he had given favorable views to shorts on altcoins.

0xSun has taken up a new strategy, concentrating not just on shorting altcoins but also on trading in a diversified way. His new plan is to set up much smaller trades across a variety of targets, to concentrate much less on any single position, and to go after a much wider array of trades even as he times them to different points on the up-and-down spectrum of the current market. This current plan of attack allows him to keep the total position size much smaller and seems to have cut his average trade loss in half.

0xSun remains cautious about further market downside. He views the current setup as especially vulnerable to macroeconomic headwinds, though he’s not pinned down on a specific tipping point. The Trade Terror strategy, for example—that’s the term academics seem to have settled on for what the Trump administration is doing—could provoke a serious market reaction. In any case, at the moment, 0xSun thinks it’s better for traders to wait for a clearer sign of stabilization before plowing back into the market.

For traders contemplating a bottom-fishing strategy—attempting to purchase assets at or near their lowest point—0xSun provided some astute insights. He recognized that certain market moves might give you a chance to make some profitable buys; however, he also made clear that calling the market is always a tough task and an even tougher task in an environment of high uncertainty. To use a couple of terms from physical science, market bottoms are slippery to identify in real time, and they also possess a kind of potential energy that might make the returning trader angsty. If you jump in too soon, you could expose yourself to even further losses.

The advice that 0xSun gives to those who hope to catch a market rebound is simple: be patient and gain experience. In the face of macroeconomic unpredictability and an ongoing volatility in crypto markets, traders should be very cautious about making any sudden moves. Instead of trying to buy the dip in the hopes of an imminent recovery, 0xSun now advises investors to watch the market carefully and brace for more short-term fluctuations.

0xSun offers some sobering insights regarding the current crypto market. They are especially relevant for traders who have counted on shorting altcoins to make a profit. As we are now in a bear market, with older coins seeing stunning declines and newer coins settling down after their valuation corrections, the former opportunities to make easy profits by shorting seem to have largely dried up. And if shorting was a winning strategy for some traders in the past, it now appears to be a much riskier play.

In the ever-evolving world of cryptocurrency, not just skill but an understanding of the shifting tides is required to stay ahead. As the market continues to navigate the macroeconomic influences and the inevitable shifts in investor sentiment, 0xSun’s updated strategy reflects a more cautious, diversified approach to trading. His advice for traders—be they shorting, bottom-fishing, or exploring new strategies—reminds us that the current moment calls for patience and adaptability, virtues that are sometimes taken for granted in times of apparent market stability.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!

The post The Golden Era of Shorting Altcoins is Over, Says Crypto Expert 0xSun appeared first on The Merkle News.