The phenomenon of “artificial market suppression” : After a strong rally in the current bull market cycle, there is a situation of “artificial market suppression”, which is speculated to be a cooling measure taken by large market participants to extend the bull market cycle. This situation did not occur during the bull market cycles of 2017 and 2021.
The characteristics of the adjustment periods are different: In the middle of the bull market cycle in 2017, there was an adjustment period of 7 to 8 months, while in the early 2021, due to the COVID-19 pandemic, there was an adjustment period that lasted for as long as one year. The bull market cycle of 2024-2025 entered in 2024 and experienced two sharp pullbacks after strong rises, namely from March to November 2024 and from January to April 2025. During the adjustment period, altcoins performed poorly, and market sentiment was greatly affected.
Analysis of the viewpoint that this bull market cycle ended with a huge bubble
Historical experience and market rules: Historically, bull markets in cryptocurrencies often go through stages of rapid rise and bubble formation. For instance, in 2017, the price of Bitcoin soared from around $1,000 at the beginning of the year to nearly $20,000 by the end of the year. Subsequently, the market bubble burst and the price dropped significantly. In 2021, Bitcoin also reached a record high, and then experienced a significant adjustment as well. The cryptocurrency market is highly volatile and speculative. Investor sentiment is easily influenced by market conditions. In the later stage of a bull market, there is often excessive optimism and blind following of the trend, which can drive the formation of a huge price bubble.
Current market sentiment and capital inflows: At present, the sentiment in the cryptocurrency market is relatively optimistic. The price of Bitcoin once reached a record high, and the launch of the US Bitcoin spot ETF has greatly lowered the purchase threshold of Bitcoin and broadened the channels for capital inflows. As of November 11, 2024, the asset size of the US spot Bitcoin ETF has reached 84 billion US dollars. The inflow of a large amount of capital may further push up market prices and intensify the formation of bubbles.
Policy and macroeconomic factors: US President-elect Donald Trump holds a positive attitude towards cryptocurrencies. After taking office, he may introduce policies beneficial to the cryptocurrency industry, which has enhanced the confidence of market investors. In addition, the improvement of market liquidity during the Federal Reserve’s interest rate cut cycle is also conducive to the development of financial markets, including the cryptocurrency market. These policies and macroeconomic factors may, to a certain extent, boost the price of cryptocurrencies, providing fertile ground for the formation of bubbles.
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