The belief that the four-year crypto market cycle has become less pronounced is being increasingly affirmed due to the involvement of major institutional investors and other factors.
Impact of Institutional Investors
Polygon co-founder Sandeep Nailwal observes that due to the maturation of cryptocurrencies as an asset class and institutional participation, the traditional four-year cycle has become less pronounced. He noted that speculative activity has decreased due to high interest rates and low liquidity, but expects it to rebound once rates are lowered. While the traditional 90% drawdowns remain possible, he believes they will be less pronounced and more mature, especially for Blue Chip cryptocurrencies. CITE_NA
Alternative Factors
US President Donald Trump's executive order establishing a Bitcoin strategic reserve contributes to the cycle change, while the pro-crypto policies of the administration legitimize cryptocurrencies in the eyes of institutional investors. Additionally, the advent of ETFs on cryptocurrencies is also altering the cycle, locking capital in investment vehicles and preventing its free rotation. Macroeconomic pressure and geopolitical uncertainty also have an impact.
Market Implications
Sandeep Nailwal predicts that with the resumption of an uptrend, capital will rotate from large-cap assets to smaller-cap assets. ETFs, as a traditional finance product, do not allow for effective capital penetration into different assets, impacting liquidity and market drivers.
Thus, the involvement of major players and other factors significantly alters the dynamics of the cryptocurrency market, highlighting new trends and opportunities.
