365int
Sandeep Nailwal, co-founder of Polygon, asserts that the traditional four-year cryptocurrency market cycle, historically influenced by Bitcoin’s halving events, has become less pronounced due to the maturation of the crypto asset class and increased institutional participation.
Evolving Market Dynamics
Nailwal highlights that while speculative activity has decreased amid current high U.S. interest rates and low liquidity, a rebound is anticipated once rates are reduced and the Trump administration establishes its policies. He observes that previous cycles experienced up to 90% drawdowns, but expects future fluctuations to be around 30-40%, reflecting a more mature and professional market environment.
Influence of Institutional Involvement
The entry of institutional investors has introduced significant capital and stability, diminishing the dramatic peaks and troughs characteristic of earlier market cycles. Nailwal suggests that as the market continues to evolve, capital will likely rotate from larger-cap assets into smaller-cap assets during prolonged bull runs.
Additional Factors Affecting Market Cycles
Analysts also point to other elements disrupting the traditional four-year cycle, such as President Donald Trump’s executive order establishing a Bitcoin strategic reserve and the introduction of cryptocurrency exchange-traded funds (ETFs). These developments have legitimized crypto in the eyes of institutional investors, leading to new capital flows and reduced volatility.
