Q3 sentiment remains bearish; BTC dominance hits highest level since April 2021
The CMC Crypto Fear and Greed Index, which measures market sentiment based on the price and trading activity of several large-cap coins, is at 53 (Neutral). Q3 market sentiment has been consistently bearish, within the range of 26 (Sept. 07) and 63 (July 22).
The CMC Altcoin Season Index is currently at 29. BTC dominance at 56.8%, the highest since April 2021.
Stablecoin Market Cap Hits ATH, Signaling Massive Secondary Liquidity
Stablecoin market cap hits all-time high of $160 billion, representing a massive amount of liquid capital waiting to be deployed; stablecoin market cap in April 2021 was just $62 billion - current size 2.5x similar market sentiment
Bull Market Progress: 40.66% â Are We Breaking the Cycle?
We are currently ahead of historical trends, signaling a potential shift in traditional market cycles. Historically, Bitcoin bull markets tend to peak between 518 and 546 days after the halving event. However, this time around, Bitcoin is accelerating by approximately 100 days, suggesting that the next peak could arrive sooner than expected â potentially between mid-May and mid-June 2025.
Despite this initial acceleration, there are signs of a slowdown in eco/infrastructure growth, which could indicate that broader market dynamics are evolving. Whether this is an anomaly or the beginning of a longer-term shift in market behavior remains to be seen. Will Bitcoin continue to follow historical patterns, or are we witnessing a fundamental shift in the crypto cycle?
Proof that there may not be another four-year halving cycle for Bitcoin?
Several factors suggest that Bitcoin may be breaking out of its traditional four-year cycle, potentially entering a âsupercycleâ driven by institutional adoption, ETFs, and changing market dynamics. One such indicator is the Correlation with Traditional Assets. Bitcoinâs price movements are increasingly correlated with gold and technology stocks, suggesting its integration into broader financial markets. This correlation indicates that Bitcoin is being treated more like a traditional financial asset, potentially breaking its isolated four-year cycle. Second, the Shift in Market Participants means that the profile of Bitcoin investors has changed dramatically: companies such as MicroStrategy and Semler Scientific have added Bitcoin to their treasuries, signaling growing institutional adoption; hedge funds are increasingly viewing Bitcoin as a performance differentiator in their portfolios; and debates over Bitcoinâs potential role as a strategic reserve asset could further cement its âDigital Goldâ status driven by political considerations.
Q3 Sees Bearish Market Trends, But Q4 Set for Stronger Performance
Bitcoinâs Q3 2024 performance has been mixed, with negative returns in August (-8.6%) interspersed between modest gains in July (+2.95%) and September (+11.39%). This bearish trend aligns with historical Q3 patterns, which often show volatility and negative returns.
However, historical data suggests that the fourth quarter could bring a reversal:
- October has averaged a return of 22.90% over the past decade.
- November and December typically show positive returns (averages of 46.81% and 5.45%, respectively).
- 2024 has already shown strong performances in previous quarters (February +43.55%, March +16.81%).
While past performance is no guarantee of future results, the combination of Q4âs historic strength and the overall bullish trend heading into 2024 suggests that Bitcoin could be poised for a robust end to the year despite Q3âs bearish metrics.
Sector performance in Q3
19 out of 52 sectors experienced positive growth in market capitalization in Q3, TRON ecosystem, media sector, and Stablecoins were the most prominent sectors for growth. AI sector saw significant recovery in Q3.
Despite the market rally at the end of Q3, there are still 16 sectors that saw market cap losses of over 10% in Q3, falling as much as 40%. These sectors have struggled in the Q3 bear market, namely DeFi and infrastructure-related sectors such as Lending & Borrowing: -36.51%; Yield Aggregator: -12.73%; Storage: -39.21%; Interoperability: -26.05%; Privacy: -30.75%; and Governance: -17.61% (decline)
There appears to be a shift from DeFi projects and infrastructure to more speculative and consumer-focused sectors such as AI, media, and memes in the last quarter.
