The crypto market has been in a state of stagnation, with altcoin investors slowly losing faith in the markets. Altcoin markets have been on a continuous downward trend since May 2021, resulting in the longest existing bear market for cryptocurrencies that has lasted for more than two years. This prolonged decline can be attributed to a combination of major collapses in 2022 and increased regulatory pressure from agencies such as the Securities and Exchange Commission. Traditional finance companies are also showing a keen interest in the market, submitting exchange-traded fund applications. While the current situation might seem discouraging, it does not necessarily mean that the markets will continue to decline.
The Second Stage of Capitulation
Michaël van de Poppe, the CEO and founder of MN Trading, believes that the current phase of the bear market can be described as the “boring stage.” This stage represents the second stage of capitulation and is characterized by a lack of significant movement in the market. However, there is hope for a change in trend, especially with the entry of large institutions into the crypto space. While sentiment is low and Bitcoin pairs are at cycle lows, the involvement of these institutions could potentially spark a reversal in the market.
A Worse Bear Market
According to Will Clemente, the founder of Reflexivity Research, this bear market is worse than the previous two. The realized cap drawdowns, which represent the losses realized from those who bought at the top of the previous market cycles, have been more significant in this current bear market. This indicates that those who invested in Bitcoin at its peak have experienced greater losses compared to previous market cycles.
Record-Low Volume and Volatility
One notable characteristic of the current crypto market is the record-low volume and volatility. The 10-day realized volatility for Bitcoin is nearing levels lower than those of stocks, bonds, and gold. This lack of volatility contributes to the overall tedium in the market, making it difficult for traders to find profitable opportunities. Additionally, the total market capitalization has remained stagnant at $1.2 trillion for the past week due to a lack of significant market movements.
The Stagnation Continues
Bitcoin, which holds a significant influence on the entire crypto market, is currently trading at a six-week low of $29,180. Ethereum, another major cryptocurrency, has also been experiencing a downtrend for the past three weeks. Despite the recent surge in ETH ETF applications, Ethereum has remained range-bound for months, indicating a lack of strong bullish or bearish sentiment.
The crypto market is currently facing a prolonged bear market, causing altcoin investors to lose faith in the market. However, the entry of large institutions and the potential for a change in trend provide a glimmer of hope. With record-low volume and volatility, the market continues to be stagnant and tedious for traders. Whether the market will experience a resurgence or continue its decline remains uncertain. Only time will tell the fate of the crypto market in the coming months.
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