"Bitcoin hit a new high"...Cryptocurrency, the real bull market is not yet here

▲ Bull Market

Bitcoin (BTC) has monopolized market attention by setting new highs, but an analysis suggests that the overall cryptocurrency market has not yet entered a full-fledged economic expansionary bull market.

Dan Gambardello, host of the cryptocurrency YouTube channel Crypto Capital Venture, stated in a video uploaded on May 20 (local time) that a comparison of Bitcoin's weekly fractal since May 2017 with the altcoin market capitalization chart (excluding stablecoins) showed that the two markets still share the same long-term cycle trend. Gambardello explained that Bitcoin and altcoin highs, lows, and bear market entry timings generally coincided in past cycles. However, in this cycle, while Bitcoin broke new highs multiple times, the altcoin market failed to break its previous highs, leading to a widening disparity within the market.

Gambardello emphasized that although the conflict between Bitcoin maximalists and altcoin investors has intensified recently, there is no need to view the two asset classes as necessarily competing. He said, “Bitcoin and altcoins are assets with different opportunities and investment rationales.” In the uptrend of last November, the market anticipated the start of altcoin season, but altcoin market capitalization remained stuck at its previous high, continuing a sideways trend. Bitcoin, on the other hand, showed relative superiority by recording additional new highs.

Gambardello analyzed that while Bitcoin's rise could technically be called a bull market, from a macroeconomic perspective, a true economic expansionary bull market has not yet begun. He explained, “Bitcoin has not yet experienced a bull market during an economic expansion phase.” The cryptocurrency market has not moved as it did in the past, amidst a confluence of the Federal Reserve's record liquidity withdrawal, quantitative tightening, and a decline in the manufacturing Purchasing Managers' Index. Gambardello believes that altcoins, like the Russell 2,000 index for small and medium-sized stocks in traditional financial markets, could show strong upward momentum during an economic expansion phase when liquidity is supplied.

Recent 18-month returns offer a different perspective on the “Bitcoin dominance” theory. Since the uptrend in early November last year, Bitcoin has risen by approximately 13%, and Ethereum (ETH) has increased by about 14%. Although Bitcoin created several new highs during this period, the return based on current prices is not significantly different from Ethereum's. In contrast, many altcoins, including Chainlink (LINK), either declined or remained in a sideways range during the same period. Gambardello attributed the different trajectory of this cycle compared to the past to liquidity suppression and macroeconomic uncertainty.

Altcoin market capitalization has entered a short-term support test zone. Gambardello explained that the Fibonacci 61.8% to 78.6% retracement zone, which he presented on May 11, is currently acting as actual support. The critical zone is between $960 billion and $980 billion. If this zone breaks, further decline could open up to $900 billion to $936 billion, which aligns with the sell-off zone in February. He warned that if it drops to this zone, altcoin investor sentiment could worsen even further than it is now.

Bitcoin has currently descended from the top of its ascending channel and is testing support near the 50-day moving average. An analysis suggests that a significant directional move is imminent as volatility compression occurs, with the 20-day, 50-day, and 200-day moving averages converging. The downside support zone is between $68,000 and $71,000, and the rebound confirmation levels are $79,000 and $81,000. For altcoin market capitalization, recovery to $1 trillion is the primary rebound condition, and breaking through $1.1 trillion, where the 200-day moving average is located, has been presented as the key criterion for a bullish reversal.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*