The current cryptocurrency market is showing many different signs compared to previous bull runs. One of the highlights is how trends are developing and affecting each type of asset in the market. Below is an overview of what may happen in this cycle and how investors can prepare for it.
Initial Phase of Bull Run: Explosive Growth of $BTC
The first phase of the bull cycle may witness the explosion of Bitcoin ($BTC). This will be the time when retail investors notice that their altcoins are not growing alongside, leading to panic selling at a loss. As the sentiment of despair spreads, long positions will close and short positions will open. This situation can create a temporarily pressured phase for the market before altcoins start to grow.
How Will Altcoins Grow?
When Bitcoin has reached a peak or attention has stabilized, the flow of capital will begin to shift towards altcoins. However, one should not expect strong growth figures like 30x or 50x across the board. In this cycle, figures between 5x and 10x will be ideal and welcome. The reason for this is the continuous increase in the number of coins in the market, reducing the rate of those that experience explosive growth.
While there will be coins that rise sharply to 50x, they will be very rare, almost like "finding a needle in a haystack". Coins with fewer investors and no real utility often have the highest potential for significant increases due to speculative factors.
Performance of Coins that Have Reached Peaks
Looking back at the past, coins like Stellar (XLM) and $XRP achieved extraordinary growth of up to 500x in 2017. However, in 2021, their profits dropped to between 10x and 20x. In the current cycle, this figure may decrease even further. This reflects market saturation and the fragmentation of capital flows into more projects, reducing the strong growth of popular coins.
Impact on Investors and Markets
Altcoins will definitely participate in this bull cycle because otherwise, retail investors will seek profits in other channels like precious metals. This could lead to a depreciation of the US dollar and increase inflation. Additionally, if there is only a single $BTC bull run without consensus from altcoins, interest in exchanges like Binance and others will sharply decline. This is not what exchanges want, as they need active participation and transactions to maintain revenue and market vitality.
Asynchronous Price Growth Path of Altcoins
An important point to note is that this bull cycle may not occur synchronously across the entire market. For example, some coins like Solana (SOL) and Doge may have completed most of their growth cycles early. As retail investors begin to panic sell at a loss and shift capital to more established coins, that may be when other groups of coins, such as those related to staking of $ETH and DeFi, start to grow. Next, money may flow to layer 1s, then to BNB Chain and fan tokens.
The order of these stages may change, but it is important to understand that growth will occur in waves and not all coins will peak at the same time.
Conclusion
The current bull cycle of the cryptocurrency market is occurring with distinct nuances. Bitcoin will play a leading role and act as a catalyst to drive altcoin momentum. However, the profits that investors can expect will be more reasonable, ranging from 5x to 10x. Smaller, lesser-known coins may have the greatest opportunity to break out, but finding them will be a significant challenge. Investors need to be cautious, diversify their portfolios and monitor developments to not miss opportunities in the upcoming growth waves.