When Top Signals Don’t Mean The Top

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  • Traditional top signals are starting to make their presence felt in the crypto markets
  • Meme coins are pumping and the Coinbase app is on top of the App Store charts
  • However, the stage of the market should be taken into consideration when looking at top signals

Top signals are something that everyone in the market is looking out for all the time, particularly when euphoria is in the air. With dog coins pumping thousands of percent and Coinbase being at the top of the App Store charts, crypTwit is starting to abound with calls that the top is in. However, top signals can be misleading for a number of reasons and must be taken into account with the state of the market rather than being viewed independently.

Market Changes Shift the Landscape

Top signals are tricky things to work with for a number of reasons. Firstly, what was a top signal in a prior bull run may not be the same in the next one. Markets change, especially the cryptocurrency markets, and what might have been important in 2017 (for example masternodes and ICOs) is not important in the current cycle, making it hard to equate former tops with potential ones.

On the other hand, major events typically are good indicators of a top, either local or long term. For example, the introduction of Bitcoin futures burst the 2017 bubble, while the Coinbase Nasdaq listing represented the peak of the early 2021 cycle. The launch of a Bitcoin futures ETF this month saw Bitcoin spike to $67,000 before dropping $10,000, so we can see another example of a major news event (or more importantly the lead up to it) acting as a market top.

Crypto Market Negates Top Signals

However, when it comes to bull market-ending top signals, we have to look at the state of the market alongside the signals. Bitcoin has just recovered from a 50% correction to double in price and break all-time highs. Market tops happen once an asset has gone parabolic, as Bitcoin did in late 2020 and early 2021, not when they’ve shown such a strong recovery to effectively equal prior highs.

While top signals are good to keep in the back of your mind, you should only start looking for them once the market has hit that euphoric phase and everything is pumping, not just meme coins, which have a life of their own these days.