As the crypto market cap has fallen to historic levels seen during the 2022 bottoms, there is a perception that the present crypto market could recover from here, given that the sell-off comes to an end.
However, if the 2022 and current conditions are brought into a common denominator, the stress levels present then and now are different, says the analyst. As such, he stated that predicting a bottoming market is ‘shooting arrows in the dark.’
The 60-day market cap change has dropped below -$3 billion, a significant level in the crypto market. This is the second time that the parameter has crashed below this level after the year 2022, when the market saw its bottom.
During this time, Bitcoin was $16K. With the crypto market cap change reaching these historic levels, crypto researchers suspect that this could be the bottom, given that the sell pressure dies. However, others had different opinions.
Pinpointing the market bottom is shooting arrows in the dark
Analyst Lavneet Bansal stated that every time Bitcoin pulls back, the market rushes to declare either a bottom or a grand structural reason for the drop.
The recent $3B USDT contraction is being framed as a 2022-style signal, but that ignores scale, USDT was ~$67B back then versus ~$185B today, and total stablecoins have more than doubled. In percentage terms, this is not the same level of stress.
Analyst Lavneet Bansal
He further added, “Trying to pinpoint the exact bottom or assign a single cause to falling prices is often just shooting arrows in the dark.” Markets are complex, and neat reasoning usually arrives after the move, not before it.
Crypto moves in unison with business cycle and liquidity
Synchronizing with Bansal’s view, another analyst, Michael van De Poppe, mentioned, “Crypto doesn’t move independently anymore; no, it’s connected with all the other markets and is being treated as a risk-on asset. As a matter of fact, a very risky risk-on asset.”
Unlike Moreno, who considered only one factor – the market cap – Poppe considered the business cycle (Purchasing Managers Index) and the liquidity cycle along with Bitcoin prices in unison, as shown in the chart below.
He concluded that 2025 should have technically been the year that the prices should have blown out. Although there was growth in crypto fundamentally during this year, this has not been translated into prices.
One reason that the crypto market did not blossom was because asset managers were allocating capital towards gold and silver. With a spike in volatility within markets, they were forced to sell other assets to balance the risk parameters.
However, once the volatility in the commodity market exhausts, “that’s the moment the allocations are going to be pushed more towards Bitcoin,” said Poppe.
