This crypto market cycle is different. That’s what everyone has been saying. Even those who’ve kept quiet feel like it’s true. As a result, it’s slowly becoming the consensus view. But why is that? What exactly is it about this market that makes it feel so different? And more importantly, does this mean that the top is in or does it mean it’s still coming? Today we’re going to take a look at why this cycle feels different, why it may not be as different as it seems, and what comes next. My name is Nick, and you’re watching the Coin Bureau. Historically, the crypto market has followed a 4-year cycle. This 4-year cycle is driven by a combination of crypto factors and macro factors. On the crypto side, it’s the Bitcoin having wherein the supply of new BTC is cut in half every four years. On the macro side, it’s the global liquidity, aka money supply cycle, which is driven by debt refinancing, wherein debt needs to be refinanced every four to 5 years. This creates a 4-year cycle wherein crypto prices rise for 1 to two years with the largest gains coming at the end of this bullish period followed by 2 to three years of prices falling with the largest losses happening in the first year of this bearish period. In fact, prices have historically bottomed roughly one year after they hit new all-time highs. And this bottom is typically caused by a big default on crypto debts. On the flip side, crypto prices have historically hit their cycle tops roughly 18 months after the Bitcoin hing and are preceded by a parabolic phase lasting 2 to 3 months. For reference, the last Bitcoin hovering took place in April last year. Based purely on this, this theoretically means that prices could hit their cycle top sometime in October this year with the parabolic phase happening sometime over the summer. But of course, this doesn’t seem evident to the average crypto investor. And that’s because of another historical fact. The crypto bull market would begin with BTC rallying. Eventually, this capital would rotate into altcoins starting with ETH and eventually to other altcoins further down the risk spectrum. So far, we haven’t seen this rotation. In fact, we’ve seen quite the opposite with ETH and altcoins continuing to fall. This is the primary reason why so many people feel like this cycle is different. The massive disconnect between Bitcoin and altcoins. If you look at BTC’s chart, it literally looks exactly like what you’d expect at this stage in the cycle. By contrast, ETH and most other altcoins haven’t surpassed their 2021 cycle highs. In fact, ETH and most major altcoins look like they’re on the brink of completely breaking down with most other altcoins grinding to new bare market lows when crypto is supposed to be in a bull market. Obviously, there have been exceptions like XRP, but it’s clear that there’s been next to no altcoin rotation so far. And this is where things get interesting because the narrative for why there has been no altcoin rotation has changed quite a bit over the last year. First, it was because only Bitcoin had spot ETFs, meaning that most inflows would go into BTC. After the spot Ethereum ETFs were approved in mid 2024, though, it became clear that the market structure wasn’t the issue because there still wasn’t any capital rotating into ETH. Then the narrative for why altcoins underperformed was because there were too many altcoins. specifically memecoins. And if you watched our video about crypto dilution though, you’ll know this is a myth. While it’s true that there are tens of millions more altcoins compared to just a handful in 2021, most have zero economic value. The number of altcoins with economic value has only grown by about 40% since 2021. And this goes handinhand with another narrative used to explain why altcoins had underperformed. and that’s that all the retail investors are already here. And if you watched our recent video about retail investors though, you’ll know this too is a myth. Although it’s true that there are millions of crypto investors already, the number of crypto investors are still only 20 to 30% of the level of stock investors. These facts suggest there must be another reason why altcoins have been underperforming. There must be another reason why this cycle feels different. believe it or not, but one of the biggest contributors to this phenomenon could actually be existing crypto investors. But before we get into that, recap, the main reason why this market cycle feels so different is because there’s been no rotation from Bitcoin into altcoins so far. Historically, there should have been much more rotation into altcoins by this stage in the cycle. The fact that altcoins have continued to grind lower instead is ultimately why everyone feels like the cycle is different and everyone is looking for reasons why. Well, here’s a reason nobody is talking about. Most people who invested in crypto over the last year are familiar with the 4-year cycle. They know that prices tend to rise after the Bitcoin hovering. They know that rallies get bigger and bigger in the 18 months after the h havinging. They know that altcoins will see bigger gains than BTC because most new investors that come will be retail who buy alts. So here’s a question for you. If you’ve bought crypto over the last 12 to 18 months, why did you do it? What was the catalyst that incentivized you to start investing in crypto? Chances are that the answer is related to the spot bitcoin ETFs. either Black Rockck filing for a spot ETF over the summer of 2023, the prospects of the ETF approval rising in late 2023, or the ETF listing and resulting rally in early 2024. If you answered yes, here’s another question for you. Which cryptos did you buy because of these catalysts? Did you buy Bitcoin or did you buy altcoins instead because Bitcoin had already rallied a lot and you knew that altcoins would eventually follow suit? Chances are that you probably bought altcoins because you most likely knew that altcoins would yield higher returns than BTC. If you answered no, the chances are you’re in the minority because the charts suggest that most crypto investors did exactly that. Most invested heavily into blue chip altcoins in early 2024, presumably because they knew that altcoins would pump more than BTC and that new retail investors would eventually arrive to buy their bags. There’s just one problem. They were way too early to the party. To refresh your memory, altcoins have historically seen their biggest gains towards the end of the bull market phase of the cycle, which you’ll recall has historically peaked around 18 months after the Bitcoin hovering. You’ll also remember that altcoins historically rose leading up to this blowoff top phase, and that the opposite has happened so far. News flash, that’s because most early buyers came in early 2024. You see, the reason why altcoins historically rose leading up to the blowoff top phase of the bull market was because in previous cycles, there still weren’t many investors who knew about the 4-year cycle. The result was that most investors would only start allocating as prices started rising and the FOMO started to kick in. This time around though, most early investors started allocating super early. And what’s fascinating is that you can see this in many of the charts of blue chip altcoins. They all saw massive gains in early 2024 and then crashed over the summer. Notably, it seems that most early investors were expecting this crash. They were comfortable with it because their expectation was that new retail investors would arrive by the end of 2024 and start buying their bags just like the end of 2020. And when Trump got elected in November 2024, it seemed guaranteed new retail investors would arrive and start buying altcoins. But this didn’t happen. Instead, capital started flowing into meme coins. And this is also fascinating because it could also have very well been a consequence of crypto whales tempting all these early altcoin holders into dumping their alts and aping into the only thing moving which was memes. The result is that the late 2024 rally for altcoins was smaller than the early 2024 rally. And I’ll reiterate that this was for three reasons. First, most early investors had allocated the most in early 2024, meaning they didn’t have as much to allocate in late 2024. Were it not for the spot Bitcoin ETFs, these early investors would have been the ones buying in late 2024 because of the Trump election. Second, some early investors started selling their altcoins either to buy memecoins or because the rally wasn’t as big as they expected and they were terrified at the prospect of holding altcoins at a loss for another 2 to 3 years. And third, new retail investors did not arrive in size, which caught early investors by surprise. But it’s not surprising in retrospect. New retail investors don’t typically arrive until the end. Oh, sorry. I just had to why so many early investors expected retail investors to arrive in the end of 2024 was because that’s what happened at the end of 2020. But there’s another peculiar detail there, too. Even though many believe that the pandemic stimulus checks is why the crypto market behaved the way it did in the previous cycle, this doesn’t seem to be the case, as not much stimulus actually went into crypto. What the pandemic did, however, was lock people in their homes and leave them with nothing to do. In other words, it gave them more time to do other things like read up about crypto and stocks. As such, it wasn’t the extra money printing that caused so much retail interest in crypto, per se. It’s the fact that they had the time to pay attention to crypto. And the result was also something historically abnormal. If you look at the 2017 cycle, you’ll notice that there was a gradual runup in altcoin prices with a 2 to threemonth parabolic phase that started in late 2017 and ended with a blowoff top in early 2018. This is arguably what a normal cycle is supposed to look like, and that’s because it’s the most similar to what you see in most other asset cycles per the famous Wall Street cheat sheet, as you can see right over here. But if you look at the 2021 cycle, you’ll notice that it looks very different. Uh there was a big first leg higher in late 2020 and early 2021, followed by a big crash and then a second big leg higher in late 2021. In our view, this big first leg higher could have been because new retail investors started arriving earlier than the 2017 cycle just because they had more time to pay attention to crypto during the pandemic. It’s a similar story this time around with early investors arriving much earlier than in previous cycles because they’re more familiar with the 4-year cycle. As for those new retail investors, well, uh, history suggests they won’t arrive until that 2 to 3 month parabolic phase sometime over the summer of this year. But all the early investors assume they would arrive in late 2024 just because that’s when they arrived in the last cycle. Put simply, this cycle feels different because early investors arrived earlier than usual because they were familiar with the 4-year cycle and expected new retail investors to arrive earlier than usual because that’s what happened in the 2021 cycle. The result is that these early investors have been gradually selling out of the altcoins they mostly bought in early 2024, creating the disconnect that we see with Bitcoin and altcoins. Put differently, the reason why altcoins have been crashing so much against BTC is because early investors have been slowly selling out of altcoins they bought in early 2024. As far as we can tell, most early investors are truly terrified at the crypto markets entering another 2 to threeyear bare market, particularly since many of these early investors are still holding on to their altcoin bags from the 2021 cycle. And as always, the narrative has followed the price action. I’ll remind you what some of these narratives were. Spot Bitcoin ETFs preventing rotation, then altcoin dilution resulting in smaller gains, and then all the retail investors already been here and been out of money. Though there is some truth to each of these, neither of these narratives has really stuck. And that’s because they’re not really very big factors. Even the macro narratives haven’t really stood up to scrutiny. Now, many have argued that high interest rates and QT means that altcoins can’t rally. But that’s exactly what happened in 2017. The Fed was actually raising interest rates that entire year and was also doing QT, albeit to a lower degree. To be clear, there’s no denying that bearish macro catalysts like tariff threats have hurt crypto prices in the short term. But who are the ones panic selling altcoins because of tariffs? It’s not new retail investors because most of them still haven’t arrived. It’s not institutions because most of them still can’t invest in altcoins in size. And this suggests that the panic sellers are early investors from 2024 and experienced crypto retail from 2021. So this begs the question of what comes next and this is where things get truly fascinating. Let’s imagine for a second that this cycle was going exactly the way that existing investors expected. New retail investors started arriving in late 2024. Most altcoins hit new all-time highs and started correcting before another big move higher. What would come next? In theory, it would be another big move higher. In reality, however, it probably would have gone a bit differently. If we’re correct about the fact that most existing investors are experienced crypto retail from the 2021 cycle and those who invested in altcoins in early 2024, then chances are that most of them would have been itching to sell as soon as the new buyers came in. Believe it or not, but this could have seriously limited this cycle’s altcoin season. And this might sound a bit funny, but I’ll repeat that this is hypothetical. If the crypto cycle had progressed as most investors expected, they all would have started selling altcoins in late 2024 as new retail investors arrived to buy their bags. The practical effect of this would have been altcoins pumping less than in previous cycles because there would have been lots of sell pressure from existing holders. What actually happened was that experienced crypto retail from the 2021 cycle and those who invested into altcoins in early 2024 expected new retail investors to arrive in late 2024. But they didn’t. Not even with Trump getting elected, not even with Gary Gensler gone. Not even with the muted strategic Bitcoin reserve. On paper, it was the perfect setup, but in practice, it wasn’t enough for new retail to show up. The outcome has been an unprecedented amount of capitulation from current crypto investors. And this capitulation has happened mostly in altcoins, hence why they have decoupled so much from Bitcoin. And this might sound crazy, but this is actually the perfect setup for altcoin gains. Most of the sellers have already sold, and this not only means less selling pressure, but also more potential buying pressure. Let’s play a complete thought experiment and assume a scenario where altcoins start rallying hard sometime over the summer. By this point, most existing crypto investors would have completely capitulated, meaning they only hold BTC or no crypto at all. At first, they probably wouldn’t think much of it. Maybe it’s just a dead cat bounce before the bare market really kicks in, just like the analysts have been saying. After all, this cycle is different, right? Well, yes and no. History doesn’t repeat, but it does rhyme. Every crypto cycle has been slightly different, but in this context, all everyone is wondering about is the altcoin season, which requires lots of new investors to arrive. The fact of the matter is that it’s still too soon to say that this won’t occur. Again, cycle tops historically occurred around 18 months after the hing and we’re not even 12 months in. So again, let’s go back to that thought experiment and consider a scenario where altcoins start rallying hard sometime over the summer. At first, existing crypto investors wouldn’t think much of it and would assume it’s another sell the news event. But now consider that all of those bullish crypto catalysts promised from the Trump administration start coming to fruition like the spot altcoin ETFs. All of a sudden, there’s a new surge of investors, not just retail, but also institutions because the spot altcoin ETFs mean that they can allocate to altcoins, too. What do you think all of the existing crypto investors who capitulated would do if this happened? Perhaps we’re mistaken, but we’re pretty sure they would buy. They would buy every single altcoin they sold and then some. This would cause prices to pump even more, bringing in even more new investors and tempting even more investors who sold out to buy back in all within the same 2 to 3 month period. All of a sudden, the script is flipped and it feels like crypto is going to go up only when of course it can’t. And that, ladies and gentlemen, is exactly how a blowoff top in crypto will occur. Make no mistake, nobody knows for sure when it will happen. and there’s absolutely no guarantee that it will, but historical cycles suggest it may. It goes without saying that the altcoins with the closest ties to the Trump administration are likely to see the biggest gains. As it so happens, we have a video about that right over here. That’s all for today’s video, guys. Don’t forget, if you’re not subscribed, you can do that right over here. That’s me for now. I’ll see you next time.
