Is the crypto bull market over? Global liquidity and Federal Reserve data reveal that a reversal may be coming

Author: Finish

Compiled by: Shenchao TechFlow

Some experts say that the altcoin season is still far off. Others say that the altcoin season is about to begin.

But what is the reality? I spent 30 hours analyzing all the data, and my findings will surprise you.

First, let's talk about the sentiment of ordinary people. Most are bearish, with 60% disparaging the market, and some even believe that interest in cryptocurrencies is about to fade among retail investors. But what if we look at the $BTC chart?

Since February, $BTC has been on a steady rise, and people believe a super bull market is on the horizon. Yet, $BTC is now declining, and everyone is saying that cryptocurrencies are nonsense.

However, the chart shows that we are in a 15-week consolidation phase, and pullbacks are quite common. Therefore, people are not losing interest in cryptocurrencies, but what about altcoins?

The situation for altcoins is dire, with holders losing 80%. But why is this happening? $BTC has broken its all-time high, so why are altcoins performing so poorly?

Let me share some expert opinions.

Crypto OG Miles Deutscher shared an interesting insight: In May, 1 million new crypto tokens were created (excluding Solana), which is double the total number of tokens created from 2015 to 2023.

But why can't the market push all these tokens up?

• (See tweet for details)*

Since the last bull market, the market has become smarter.

Why should people buy a development cost of $5 million instead of $260 million for copy-paste Layer 2 solutions like $ZK, $STRK, and $ZRO?

So, what will happen to altcoins in this super cycle?

Here we can remember the main rules of cryptocurrency:

• New cycle, new altcoins

• No need to buy boring L2 solutions; the key is to predict the next narrative and invest cautiously in potential leaders.

Now, let me share my views on future narratives

RWA (Real World Assets) and DePin (Decentralized Infrastructure Networks):

These areas have received the most funding this year and last year, making them obvious investment choices.

GameFI (Game Finance):

There are some very good games, but they don't have enough players. I expect explosive growth in this area within a year.

Gambling:

Cryptocurrencies are well-suited for this field, but besides memecoins, nothing seems to attract WEB2 users.

Artificial Intelligence (AI):

It seems late, but who knows what OpenAI will create in a year, so following this narrative is crucial.

Now, let's understand when the next wave of growth will occur.

One way to indicate this is the global liquidity index.

If we compare the chart below with cryptocurrency charts, we can see similar trends.

According to the chart, a massive pullback is expected within 6-18 months.

Another way to indicate altcoin season is to simply track the Federal Reserve's total balance sheet.

When the Fed starts buying assets, it means a huge influx of liquidity, which will also affect cryptocurrencies.

Currently, the Fed is only selling assets, but a reversal is imminent.

Once you look at the first two charts, we can use the rainbow Bitcoin chart to get a clearer picture.

As you can see, we are in the "big sell-off zone," which means it's worth looking for entry points now.

But don't put all your money in; only invest 10-15% of your entire portfolio, and if we drop further, buy more.

If you still have doubts about cryptocurrencies, here’s the final proof: The U.S. government is ready to support the growth of cryptocurrencies.

After the U.S. president supports cryptocurrencies, are you still bearish?

• (See tweet for details)*

Summary

• Retail investors will not lose interest in cryptocurrencies.

• The market is tired of copy-paste projects and is waiting for new altcoins to emerge.

• Investors are losing interest in repetitive Layer 2 solutions and are looking forward to new, promising altcoins.

• GameFi, gambling, RWA, DePin, and AI are worth watching.

• Global liquidity and the Federal Reserve's reserves are key to crypto growth.