Hi, everyone, for those of you following my channel, you probably already know Cardano is one of my favourite projects. But is it too risky to buy now? The coin is already up 7x from the low made in March and you are wondering if you should pull the trigger? Today, I’m going to do something a little bit different, we’re going to take a look at the current risk level of Cardano as well as its seasonality.
I’m going to make some references for Bitcoin, because where bitcoin goes, usually the rest follow. I think it’s important to draw some parallel with BTC when it comes to trying to understand risks and cycles about other altcoins. In this video, you’re going to learn what seasonality is, and also I’m going to go more in-depth about the risk metric that you’ve seen in other of my videos.
So in the first part we are going to see: what is Seasonality, how does it work, and how we can use it? And in the second part, we are going to see where Cardano stands in terms of risk. And in parts 3, answer the question of is it too late to jump into Cardano? I truly believe that the best trades materialize when you can align your macro and long term views with short term opportunities.
Hello, everyone, my name is Jerome I do videos about cryptocurrency investing. My mission is to bring and share with you some knowledge so that we can invest in the crypto space together with more conviction, and confidence. So if you want to be part of it, please considering subscribing to the channel by clicking on the red button below, I think we are going to go very far together.
I do have a telegram channel for those that want to discuss more actively, so feel free to join (link in the description down below). Alright so let’s jump into the parts I: What is seasonality, how does it work, and how can we use it? In simple terms, seasonality is just describing predictable changes that happen every calendar year.
For example, you can have snow during winter, this is a seasonal pattern, that has a tendency to happen every single year. When you have something that seems to happen every single year around the same time, we are talking about seasonality.
Do not confuse seasonality with cyclicality: cyclicality can describe cycles during very shorts or long periods of time, whereas seasonality is always observed within one calendar year. How many of you could feel that there was some sort of seasonality for Bitcoin (like its rising end of the year)? Well, today I’m going to use DATA to prove you if its a good intuition or not.
So when we look at Bitcoin and dive a little bit deeper into the data, what we can see is that: All months are not made equal bitcoin seems to experience some form of seasonality. You can see that it seems that BTC is falling during the first quarter, but also that we seem to have a rally during the last few months of each year.
Here is a table of Bitcoin’s performance over the last few years, divided by month. The data as always is taken from My Bloomberg Terminal, so it’s very accurate and up to date.
The top row is giving you the average performance for each year, while the bottom part is giving you the detail of the performance for all those months. So if you look at the top, what you can clearly see is that: January is usually bad for BTC (over the past 5 years, it dropped on average, 15%) September is also not really good, On the other hand, December seems to be on average, very positive for BTC (maybe because people are optimistic going into the new year).
The rest of the month is usually slow and steady grind up. This is important information for us because we know that altcoins will somewhat follow BTC price fluctuation. It has been the case for the past few years, so we don’t want to ignore that critical data.
So applying the same thing for Cardano now: what you can see are two things: Every single month seems to be a down month for ADA. And April seems to be the most interesting one from a price perspective. There not much data, however, so please be careful interpreting those numbers.
But what’s very interesting what I want you to notice is that the good months are clustered: Meaning the performance of ADA is very concentrated. ADA is not growing up slowly and steadily. So what I want you to take away from this data are as a following: Most of the months are losing months for Cardano. Don’t jump in and out of the market too much, because you will miss the months were Cardano is doing most of its performance.
Remember that what’s important in the long run is not TIMING the market, but TIME IN THE MARKET That is true for cardio, but its also true for other coins like chainlink, ethereal and other altcoins. Let me know in the comments or in the telegram channel if you want me to cover other coins with that model.
Alright so let’s jump into part 2: Is Cardano Cheap or Expensive right now? Now that you know what seasonality is, I’m going to show you what I use to time my entries better. This is a proprietary model that I built and you’ve probably already seen it in my other videos. I to try to understand price volatility but also try to see whether something I’m looking at is CHEAP or expensive relative to history.
On bitcoin, what my model says is that BTC seems to be a little bit overextended. It’s on the yellow to reddish zone, so it’s telling me that compared to the historical average, we tend to be on the upper range in terms of relative excitement. The last time we had such a move was last summer when China announced that it was investing aggressively into blockchain technology.
IF we combine this with the seasonality (remember, we know that January is one of the worst months for BTC on average), then you don’t really want to go all-in on those levels.
On Cardano: if I run this model, here is the risk chart What you can see is that at the moment, the risk is lower than for Bitcoin because it’s in my medium zone In mid-2019, we had very brief moments of expensive levels And earlier this year, we had this zone where essentially Cardano was starting to push through the historical range in term of expensiveness, you can see in red.
In November it dropped to a low-risk level and those would have been good entry points. I think myself the lowest I have purchase was cents during this drop. For those of you wanting more updates about the model, you can join our telegram group (link in the description down below) Another interesting chart is the ADA/BTC Chart.
If I apply my same principles, it is clearly telling you that we are in some form of historical cheapness relative to BTC at the moment. I did convert some bitcoin into ADA myself because I’m playing the narrative of people thinking that BTC is so expensive, that they will jump into Altcoins that are still down compared to ATH.
Its also aligns very well with Goguen coming up in late Q1, so I’m comfortable adding more to my ADA position: Alright part 3: is it too late to jump into Cardano? For those asking, if right now would be a good time to buy, I would say that from a short term perspective, it is in the medium risk zone. It’s better, in my opinion, to buy Altcoins rather than BTC at the moment, from a risk-reward perspective.
With the SEC bomb the other day, (I made a video about it if you want to check it out), I think a lot of people panicked and sold their coins. So I think its a great opportunity to accumulate. If you are a believer in the project and think that Cardano will go to 1, 2 or 3 dollars over the next few years, does it really matter if you buy at 15 cents or 13 cents? Not much right.
Take a step back and look at the big picture. The coin can drop 20 or 30% easily but you know what, if you like the project at 15 cents, you would love it even more at 10 or 8 cents, and by then Cardano will have made even progress in terms of features.
I’m fully expecting the regulation to come after crypto, so there will be big drops along the way. It’s a lose-lose situation for the governments to allow cryptocurrency. If we take back our monetary power, their legitimacy goes to 0. Do they think that when they release the digital USD people will start using it: really?
What do you think people will do if they have the choice between two digital moneys: ONE is USD and losing value every single day, and the other option is a cryptocurrency where you have limited supply?? It’s obvious to me, its just a matter of time.
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