It's game over for $BTC, $ETH, and alts.
Or right now is the best opportunity to buy with size before alts will go parabolic?
I just dug through all the data to analyze both opinions, and what I found shocked me
This article will be divided into two chapters:
First, we'll examine the opinion of those who believe that the dispersion of alts is harming the crypto market.
Next, we'll consider the viewpoint of those who claim that $BTC and alts are poised to explode soon.
What are we waiting for? Let's dive in!
Chapter ①
First, let’s revisit 2020-2021, the time when $BTC made it's move to $64k from $4k.
New liquidity rapidly poured in, primarily driven by retail investors.
Many believed the bull market would never end and prices would rise even further.
Risk appetite was at its peak.
It was a time when many VCs began pouring unprecedented amounts of capital into the space. Everyone wanted a piece of the tasty cake called crypto.
Such big investments helped fund projects, providing capital for development.
Also, VCs often offered additional services and connections to help projects.
The low barriers to entry and high potential of crypto during the bull market made Web3 a hotspot for startups.
Crypto was already seen as the future of money.
And new tokens emerged rapidly, tripling the total number of crypto tokens between 2021 and 2022.
But soon the party is over.
A real cascade of liquidations, starting from LUNA and ending with FTX, has devastated the market.
Many people were left depressed and lost all their savings.
Launching a project during a bear market was like signing its death sentence.
What did the projects that raised money earlier in the year do?
They delayed their promises as much as possible.
Founders chose to wait for a market reversal.
Low liquidity, bad sentiment, and lack of interest were of no interest to anyone, and we cannot blame them.
In Q4 2023, after months of delays, the founders were finally ready.
Projects could now launch their tokens under better conditions.
And so they did. One by one, tokens started to launch.
Then, a real tsunami of tokens hit the markets.
It wasn't just the old projects launching – many new players saw the bullish conditions as an opportunity to launch a project and make a quick profit.
As a result, 2024 has seen a historic number of new launches, leading to nearly six times more crypto tokens than during the peak bull market of 2021.
This is a significant issue and one of the main reasons crypto has been struggling this year, even with $BTC reaching new all-time highs.
Why?
The increasing number of token launches adds cumulative supply pressure to the market.
This supply pressure accumulates over time.
Many projects from 2021 are still unlocking, with supply pressures stacking year after year...
And this constant pressure from sellers causes enormous damage to the market.
Simply put, think of token dilution as inflation. When the government prints more US dollars, it reduces the purchasing power of the currency relative to the value of goods and services.
In crypto, we face a pretty much similar problem right now.
Now, let's consider the perspective of those who believe this isn't a major issue and anticipate a real bull market soon, with everything skyrocketing daily as it did back in 2020-2021.
Chapter ②
The current bearish sentiment requires a closer examination.
Emotions are running high, with fear dominating the market.
Some believe the market is doomed and we're heading back to $16k.
However, here are the reasons some believe we are still in a bull market
We are currently experiencing 15 weeks of consolidation and a 17% decline from the highs.
This volatility is completely normal after nearly doubling from January's recent lows.
Although it may feel frustrating and dull, this phase is a natural part of the process.
Volatility is currently low, which is understandable for a few reasons:
- There is no clear narrative.
- There is uncertainty after the ETH ETF.
- Summer is always a period of stagnation in crypto.
However, staying bullish during these challenging times can be highly rewarding in the long term.
And let's discuss why
The current cycle is technically very similar to the 2017 and 2021 bull runs.
We are now in the accumulation stage, which means that once the price of an asset breaks out from the accumulation stage, a parabolic move usually follows.
It might feel like the cycle is ending, especially with the recent barrage of bearish news:
· Mt. Gox selling its $BTC
· Daily outflows from $BTC ETFs
· Germany selling $3 billions of $BTC
However, this news is similar to "China bans crypto" headlines from previous cycles.
All this FUD is temporary and designed to make you doubt your investments.
Now let's zoom out to understand the current crypto situation and identify key indicators and catalysts to watch:
1. Fed's balance sheet trend reversal.
The chart is trying to find the bottom after almost two years of decline.
And we know that when the Fed starts buying assets, it will increase liquidity in the TradFi sector.
Since crypto is closely linked to traditional markets, it will also benefit from increased liquidity.
Stablecoin index indicates new capital entering the crypto market.
Currently, we are far from reaching the liquidity levels seen in the previous cycle.
More liquidity = more opportunities = greater risk appetite.
2. Big countries like Canada and Switzerland have cut their rates.
Given this trend, the US will likely follow soon.
Because the sequence is always as follows:
1. Rate cuts
2. Increased money supply
3. More money injected into traditional finance
4. More money flows to risky assets (like our favourite crypto)
3. US elections in Nov 2024.
You've probably noticed that crypto is a key part of politics right now, especially in the Trump vs. Biden race.
Trump even has promised to end Biden's "war on crypto."
Strong support from the US government could significantly boost the entire market.
End Of Article.
If you enjoyed this article, a like/follow would be greatly appreciated!
Purely educational, not financial advice.
So, what are your thoughts on this situation?
I'm eager to hear more opinions, especially from you, my beloved followers.
I believe we are still in the early stages of a bull run and low volatility should not be a cause for concern.
Remember the bullish drivers, stay strong, and enjoy the rest of your summer.
Spend more time outdoors than with charts.
There's more to come this year.
We're all going to make it, I'm sure.
#Bullish #BitEagleNews #MarketDownturn
