What is Narrative Trading? Key Takeaways to Find The Next Trend in 5 Minutes

Narrative Trading is all about anticipating the current market trend and identifying the next narrative. It involves reading the news, following the market trends, and looking for alpha to stay ahead of the curve. By being early before a narrative plays out, traders can increase their chances of success. To do this, they can follow current news daily, see what people are talking about, and follow what firms are building. In this blog post, we will explore Narrative Trading in more detail and provide key takeaways for finding the next trend.

You may have come across the term “current narrative” or “new narrative” on Twitter, with people calling for alpha. But what exactly is this Narrative Trading, and why is it important to follow the current narrative? In just 5 minutes, you’ll learn all about it.

Narrative Trading is all about focusing on the current market trend. As expected, the meta and the news are always shifting towards a new topic. For instance, in 2021, we witnessed Layer1 cryptocurrencies like SoLunAvax rotation trend and saw enormous gains on layer-1 blockchains such as Harmony, Avalanche, Solana, and many others. Before that, the Metaverse trend saw decentraland and sandbox go parabolic.

Narrative Trading is about reading the market and anticipating the new meta that could be the next narrative, finding the outperformers. There is always a current narrative, with AI being the current one. The next narrative could be Layer2, ZkSync, or even Privacy blockchains.

So how can you find the next narrative? Everyone is after it, and it’s crucial to be early when a new narrative starts. However, the market sets the new narrative, not a single person or influencer. All you can do is find the next narrative by reading the news, following the market trends, and looking for alpha.

In the graph, we can see that $XRP is outperforming other assets. The narrative for XRP was that their case with the SEC is going good on their behalf. source

Here are three things you can do to be early before a narrative plays out:

  1. Follow the current news daily and try to think about what could be the new meta. Always think one step ahead instead of thinking about today.
  2. See what people are talking about. Markets cannot be determined by a single person or group, but you can see what people are building and following. Subscribe to Reddit sub-threads of builders and follow some people on Crypto Twitter.
  3. Follow what firms are building. For example, Polygon started ZkSync after several solutions were established by different companies. Companies always try to follow the new trend and act accordingly. You can also follow their Medium blogs for more information and learn what they aim to build before they do.

By following these steps, you can increase your chances of finding the next narrative before it plays out. We hope you to be at always on the outperformers side.

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