Time to Be Vigilant, But Not Bearish
Indications of Froth
Given the violent nature of the past month’s rally, we have been vigilant for signs of a local top. It would be disingenuous to claim that some qualitative "top signals" are not flashing right now. XRP—which we noted as a possible election trade back in October—with only 1–2k daily active addresses (vs ETH's over 400k, source: Artemis), is ripping toward new highs while influencers take to TikTok to discuss their lofty price targets.
This is not to hate on XRP bulls – we will always respect the pump. We even wrote back in October about how this was probably a great election trade.
However, the point is that "late retail” is back in full force, which confirms that, while we do not believe we are close to the cyclical top, we are no longer super early in this cycle. As cycles progress, there are opportunities to capitalize on local tops in the market for better entries. Thus, it is our view that we should start being more observant for signs of a potential pullback while remaining allocated. Keep in mind that the latter half of any cycle is actually where a lot of outsized returns can be made.
The qualitative data mentioned above can be challenging to rely on for ...Unlock this article by joining our Community!
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