Altcoins Turn Bullish After the Longest Bear Market
For Altcoins, this was absolutely a terrible bear market, with many expectations shattered over the past quarter.
I spent all my time studying the current situation. Various indicators are starting to turn green.
Let's dive deeper ⬇️
Multiple factors driving the market mostly come from outside the crypto realm.
1 - Liquidity is increasing, so #BTC is expected to rise
This is a simple conclusion about BTC price trends. With M2 money supply increasing, BTC as a scarce asset will also rise. Although there are deeper macroeconomic and geopolitical foundations, this is an effective analytical method.
Originally worried that tariffs would trigger inflation, but data proves otherwise. However, tariffs do affect the economy in the short term, so there is a theoretical basis for economic stimulus.
China has launched quantitative easing, Europe has lowered interest rates, and the US is about to cut rates and expand money supply (simply put: the money printer is about to start again).
This is a powerful catalyst for risk assets, likely to drive BTC to a new historical high.
2 - Gold Short-Term Peak, Funds Shifting to Risk Assets
The second important variable is that risk assets have previously performed extremely poorly.
I firmly believe that BTC would not have reached a historical high without ETF approval and Trump's presidency.
The ETF injects new liquidity into the market, significantly pushing up BTC prices due to supply scarcity effects. This logic is simple; understanding it allows one to foresee future trends.
Gold represents safe-haven demand and has outperformed the S&P 500 by 20% since 2022. Crazy is that the gold market has started to peak short-term. I confirm we are in a bull market for safe-haven assets, but there will be a window for risk asset rebounds.
We are at a turning point. Historical data shows that when gold is strong and Altcoins are falling, it often signals good times for risk assets in the next 12-18 months.
Gold's RSI indicator has reached levels unseen since 1980, while ETH/BTC weekly and monthly exchange rates have fallen to historical lows.
3 - USD/CNY and ETH/BTC Correlation is an Altcoin Trigger
My most important indicator is shown in the attached chart:
- K-line represents USD/CNY exchange rate
- Purple line is ETH/BTC exchange rate
Several key data points are worth noting:
- When USD/CNY bottomed in December 2016, ETH/BTC and the entire #Altcoin market subsequently exploded
- USD/CNY bottoming in summer 2019 marked the ETH/BTC bottom and launched a two-year Altcoin bull market
- Altcoin market peaks also correspond with USD/CNY exchange rate strength
From this, several conclusions can be drawn:
First, this month's USD/CNY exchange rate formed a long lower shadow during the tariff turmoil, which is likely the final bottom of the current trend. This also explains the recent Altcoin weakness - the RMB's depreciation over the past few months has led to a crypto market decline.
Second, I reject the four-year cycle theory. The market is more macro-driven, just coincidentally aligning with the four-year cycle historically. With institutional entry, more consideration of macroeconomic factors is needed, which will become increasingly important.
Just as liquidity is the key trigger for BTC, charts like USD/CNY and gold can reflect Altcoin risk appetite.
The #Altcoin market has just experienced the longest four-year bear market in history (previously, the longest bear market in 2016 was only 2.5 years). The situation is turning around, meaning periods of extreme pressure and uncertainty often harbor the greatest opportunities.
The macroeconomic situation is changing, and I expect to see gold pullback, RMB recovery, and #Altcoin explosion.
Can you help? If you like this article, please like and save it, so we can verify these predictions in 6 and 12 months.
