Every time smart money rotates early and avoids the top, it feels like they saw the future. But, no they didn’t see the future. They just understand how narratives behave. One of the most reliable ways they protect their edge is by fading the second bounce and it’s usually where capital goes to die. Smart money rotates early. Retail buys into the comeback story. If you want to preserve capital and stay ahead, you need to recognize second bounces for what they are: The market giving you one last out before decay. ● The Anatomy of a Narrative Cycle Most crypto narratives follow a 5-phase structure: 1. Ignition – A few early adopters notice something new: a protocol design, a use case, a points campaign. 2. First Bounce – Price action confirms it. Social capital compounds. Capital flows in fast. 3. Cool-off – Participants take profits. Momentum fades. Narratives rotate elsewhere. 4. Second Bounce – A rally with no new fuel. Volume and attention temporarily return but briefly. 5. Decay – Engagement fades. Volumes thin out. The narrative slowly dies. The second bounce is rarely a true resurgence. It’s the market giving participants one last chance to rotate and most miss it. ● Understanding The Emotional Trap of the Second Bounce Why do people fall for it? Because the second bounce taps into regret. “I missed the first move, I won’t miss this one.” “It’s already down 70%, this is the bottom.” “The community is still active, it’s not over.” But usually: - On-chain activity hasn’t increased - There are no new catalysts or users - Engagement is mostly existing holders recycling narratives - Smart money is exiting into temporary strength It feels like the start of a new trend. But it’s often the tail end of an old one. ● Case Study: Memecoins Memecoins are a near-perfect case study because they’re 100% attention-driven. Take $BRETT, $WIF, or $GOAT: > First bounce → Huge run-ups. Community energy. Viral memes. > Cool-off → Liquidity drains. Traders move on. Volumes shrink. > Second bounce → A whale buys, price spikes 20%, CT starts posting again. Feels like a revival. But what follows is predictable: - No new wallets - On-chain flows decline - Smart money sells into the excitement - Retail gets trapped again Memecoins don’t need fundamentals — but they do need fresh inflows. The second bounce often gives neither. ● What Fading the Second Bounce Actually Means To be clear: fading doesn’t always mean shorting. It often just means knowing not to re-engage: - Don’t re-enter just because something’s down 80% - Don’t assume “accumulation” when volume is thin - Don’t let nostalgia or sunk-cost bias override data Instead, fading can mean: - Taking profits into strength - Ignoring false rebounds - Protecting mental capital by not forcing trades - Rotating into early-stage narratives with stronger catalysts ● How to Spot a Second Bounce Before It Fades A few common patterns can help: 1. Narrative already had its viral moment 2. Volume on the bounce is lower than the first surge 3. Social sentiment is mixed or late 4. Core metrics (TVL, wallets, dev activity) haven’t grown 5. Influencers recycle old talking points 6. Airdrop already distributed, incentives dried up Ask yourself: “Is this a real resurgence, or just inertia?” More often than not, it's the latter. ● Conclusion The best trades aren’t always buys. Sometimes the smartest move is restraint. Don’t be early to the wrong cycle. Be early to the next one. Fading the second bounce won’t make you go viral. But it will keep your capital alive for the next real move. And in this market, that’s the only thing that matters.