Grayscale analysts view the current market decline as a standard correction within a broader bull trend. They question the inevitability of a deep downturn predicted by the popular four-year cycle theory. Instead of a prolonged crypto winter, the market could see new highs as early as next year.
The October drawdown in Bitcoin prices reached 32%, aligning with historical averages for bull phases. This marks the ninth significant pullback since the bottom in November 2022. Similar declines occur on average three to five times a year and, according to analysts, serve as the cost for the asset’s high returns.
The hypothesis that the price of the leading cryptocurrency must collapse after three years of growth is losing relevance. The current cycle lacked the parabolic surge in price action that typically precedes a crash.
According to the report, market structure has shifted: capital now flows primarily through exchange-traded products (ETPs) and corporate treasuries rather than just retail platforms.
Market indicators offer mixed signals. A high skew in put options points to active risk hedging by traders. Conversely, experts recorded a spike in old wallet activity in late November, which may indicate profit-taking by large, long-term Bitcoin holders.
Resilience of Privacy Coins and AI
Against the backdrop of the general drawdown, privacy-focused assets outperformed the broader market. Monero rose by 30%, Decred added 40%, and Zcash gained 8%.
Interest in the sector was fueled by Vitalik Buterin’s presentation of a new privacy framework and the launch of the Ignition Chain network by Aztec.
The artificial intelligence token sector lost 25% in value but demonstrated fundamental progress. The x402 protocol from Coinbase, enabling payments between AI agents without human intervention, showed explosive growth in usage.
Daily transactions jumped from 50,000 in mid-October to more than 2 million by the end of November. Near Intents technology, which simplifies cross-chain operations, is also gaining traction.
Growth Factors
The infrastructure of regulated instruments continues to expand. Issuers brought the first ETPs for XRP and Dogecoin to market. Total assets under management for US crypto ETPs reached $145 B.
The key macroeconomic factor remains Federal Reserve policy. The probable appointment of Kevin Hassett as Fed Chair increases the odds of further rate cuts.
Such policy weakens the dollar and traditionally supports gold and digital assets. Additional optimism stems from the bipartisan crypto market structure bill introduced by senators in November.
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