I usually have the habit of reviewing research reports from major institutions, which is more reliable than the KOLs who make claims without basis in the market. Macroeconomic reports from large institutions are usually very important because institutions can take a comprehensive view of the market from an industry perspective, with professionals analyzing for us.
Grayscale's newly released report (Current Status of the Crypto Cycle) analyzes what stage the cryptocurrency cycle is in and predicts what changes the market will undergo in the future.
Compared to the lengthy report itself, I have summarized the content into three points:
(The following is my interpretation; for the complete report — message me on Twitter: Grayscale Report)
Judgment one: The crypto bull market has only gone halfway.
Grayscale's report analyzed multiple data indicators and found that Bitcoin's cyclical indicators are still below historical price peaks. At the same time, Bitcoin and other cryptocurrencies can be viewed as digital commodities, similar to traditional goods, and they may exhibit certain price momentum.
Therefore, assessing on-chain data and altcoin positioning indicators is crucial for investors' risk management. According to Grayscale's research, current market indicators align with the mid-stage of the cryptocurrency cycle: for instance, indicators like the MVRV ratio are significantly above cyclical lows but have not yet reached the previous market peak levels. As long as the market fundamentals (such as application adoption and broader macroeconomic conditions) are supported, Grayscale believes the crypto bull market could last until 2025 or even beyond.
In conclusion, Grayscale believes we are currently in the mid-stage of the cryptocurrency market cycle.
Judgment two: Bitcoin declines, altcoins rise.
According to Grayscale's analysis, the cryptocurrency market far exceeds Bitcoin itself, with signals from other sectors also providing important references for judging market cycles. In particular, the relative performance between Bitcoin and other crypto assets will become especially crucial in the coming year.
In the last two market cycles, Bitcoin's dominance (i.e., the proportion of Bitcoin in the total cryptocurrency market cap) typically peaks about two years after the bull market begins. After that, Bitcoin's market share starts to gradually decline, a change that occurs around the second year of each cycle. Notably, the market share of altcoins usually begins to rise within two years after Bitcoin's dominance starts to decline. Therefore, Grayscale believes that if this trend continues, investors should pay attention to the performance of other crypto assets and overall market indicators to judge whether the market valuation is approaching cyclical highs.
In summary, Grayscale emphasizes that as Bitcoin's dominance declines, the rise of altcoins often becomes the new driving force in the market two years later. Investors should remain sensitive to these dynamics to more accurately grasp changes in market cycles.
Judgment three: This bull market is different from previous ones.
The current crypto bull market shows many differences compared to past cycles. One of the most significant changes is the approval of spot Bitcoin and Ether exchange-traded products (ETPs) by the U.S. market, attracting $36.7 billion in net capital inflow and facilitating the inclusion of these digital assets into traditional portfolios. This change has profound implications for the popularity and recognition of crypto assets.
Moreover, Grayscale believes that the recent U.S. elections may bring more regulatory transparency to the market, helping to establish the long-term position of digital assets in the world's largest economy. This shift is markedly different from the past — there was a time when market observers were skeptical about the long-term prospects of crypto assets. Therefore, Grayscale believes that the valuation of Bitcoin and other crypto assets may no longer follow the traditional four-year cycle pattern as it did in the past.
Overall, these new changes indicate that the crypto market may have entered a stage different from the past, and investors should pay attention to these potential long-term impacts to more comprehensively assess market trends.