Sector Rotation
Glossary · Macro & Cycles
Sector rotation is capital moving between crypto sectors — AI, DeFi, memes, layer-1s, gaming — as narratives shift. One sector leads while the rest chop or bleed, then leadership passes on. Traders track each sector's relative strength to stay in what's leading instead of averaging into what the money already left.
"The money never leaves the casino — it just changes tables."
Money moves down a path: BTC leads, ETH and large caps follow, then whichever narrative sector is hot — AI, DeFi, memes, gaming — runs as a basket, because traders buy the theme, not the ticker. Measure it with relative strength: each sector index versus BTC over 7-30 days. A leading sector can outrun the market by 30-50% in a few weeks while the rest chop sideways, which is why holding last month's leader often means going nowhere in a green market.
The trap is arriving late twice: chasing the sector after weeks of leadership, then buying its 'laggards' — coins that are cheap because the basket buyers don't want them. When the junk names in a hot sector start doubling, the rotation is closer to its end than its start. The edge is watching for the handoff — relative strength rolling over on the leader while a new sector turns up on volume — and rotating with it instead of mourning the old one.
See which sector's leading today
Related jargon
Questions
- What is Sector Rotation in crypto trading?
- Sector rotation is capital moving between crypto sectors — AI, DeFi, memes, layer-1s, gaming — as narratives shift. One sector leads while the rest chop or bleed, then leadership passes on. Traders track each sector's relative strength to stay in what's leading instead of averaging into what the money already left.
- How would a trader say it?
- The money never leaves the casino — it just changes tables.
Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.
Crypto Jargon
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