The long-held belief in the predictable four-year cycle of the cryptocurrency market, characterized by distinct phases of accumulation, uptrend, distribution, and downtrend, is being challenged. x.com/tradebutwhy/status/1820142275143352373″ target=”_blank” rel=”nofollow”>disputed By noted analyst Jordan Fish, better known as Cobie, who articulated an argument that challenges this traditional view, suggesting that the concept of a cyclical market may no longer be valid.
Cobie sparked a debate on x (formerly twitter) with his statement: “Ironically, (the bull market) hasn’t even started yet.” This statement was met with disbelief by some, such as Maher Abdelsala, who commented: “Bro, people think you’re serious lol.” Cobie clarified his stance, stating: “I’m serious! I’m increasingly liking the argument that this isn’t even a ‘cycle’, really, but more like 2019 with leverage and ETFs.”
The end of the traditional crypto cycle?
Cobie’s perspective is based on the notion that the structural dynamics of the cryptocurrency market have fundamentally changed. He draws parallels to market conditions in 2019, but with significant differences influenced by the proliferation of leverage and the introduction of bitcoin and ethereum spot exchange-traded funds (ETFs). “Was 2019 a new ‘cycle’ or was it part of the bear market?” Cobie mused. “I floated this idea to a few people in March, but they all told me I was an idiot, which I am, but it was still pretty rude to say it to my face.”
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The introduction of ETFs and the increased use of leverage have brought new complexities to the market. These instruments have changed the way capital flows in and out of the crypto ecosystem, creating a less predictable and more fragmented market landscape. Cobie emphasized: “Of course, if we’re in 2019 and we’re thinking about 2024, it doesn’t mean that 2020 will play out the same way, because structurally a lot of things are different now with ETFs and high FDVs and so on, it’s probably too hard to pattern match too much about the future.”
Cobie’s analysis suggests that the current market exhibits a high degree of dispersion, with different assets behaving differently rather than moving in unison as seen in previous cycles. This dispersion makes it difficult to identify a single driving force or pattern that governs the entire market. “I think this cycle is so different than any other cycle that it’s probably best to stop thinking about cycles altogether,” Cobie said. “It’s clear that there isn’t a single guiding thread that drives everything forward like there was before.”
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This view is reinforced by the performance of certain cryptocurrencies. For example, Cobie cites Chainlink (LINK) and Dogecoin (DOGE) as examples where traditional hype and subsequent price appreciation may no longer apply. He explained: “I think there’s a very good chance that things like that will never reach new highs again and that LINK could continue to exist as a highly successful oracle without the price appreciation.”
The echo bubble phenomenon
In the context of market maturity, Cobie referenced the concept of the “echo bubble,” popularized by renowned trader GCR (Global Coin Research). The echo bubble theory posits that a smaller bubble follows the bursting of a larger one, as seen in 2019 following the massive rally in 2017. Cobie expressed surprise at GCR’s recent market behavior, noting, “I actually found it quite odd that GCR kept talking about the echo bubble when it was bullish at the lower peak, but then when things started to get silly, it just bought the dogwithhat nft and broke its pause to come and tell people not to sell.”
Overall, Cobie believes the market is currently in a “multi-month or quarter-long recovery period” for bitcoin. He expects bitcoin to trade within a range of $45,000 to $70,000, with the possibility of a brief breakout to new highs. However, he is bearish on the future of many altcoins, particularly those that have survived multiple market cycles. “I definitely think all the memecoin theses have suddenly marked an intermediate top for overall risk appetite, and everyone has been conditioned to maximize buying as soon as they think we’re ready to try again.”
He anticipates that many of these older altcoins will “slowly fade away and become irrelevant” as speculative investments. This outlook suggests that the market’s risk-on paradigm, characterized by rapid and extensive price increases, may not resume anytime soon. He concludes: “In short, I think we need a lot more time before the (real) risk-on paradigm starts again and I expect there will be more declines before that happens.”
At the time of writing, bitcoin was trading at $51,104.
Featured image from iStock, chart from TradingView.com