The cryptocurrency market has been dragged into an emotional state that even experienced investors describe as “one of the darkest periods in history”. Bitcoin’s sharp retreat from $126,000 to $77,000 deeply shook not only the prices but also the collective belief of the market. According to DeFi analyst Ignas, the current atmosphere is even more oppressive than the 2018 bear market, the COVID-19 crash and the FTX crisis. Behind this view lies not only the technical indicators, but also the fact that the basic narratives of crypto are being questioned.
Bitcoin’s Macro Hedging Narrative
Bitcoin has long been positioned as a “macro hedge” against inflation and the traditional financial system. Spot ETF approvals, regulatory clarity and institutional adoption were seen as the pinnacle of this narrative. However, at this stage, Bitcoin’s sharp decline damaged the credibility of the narrative. Ignas emphasizes that Bitcoin’s decline in value while other macro assets are rising weakens the “digital gold” narrative.
In addition, the security risks that quantum computers may pose in the future have brought existential discussions for Bitcoin back to the agenda. Investors who trusted the narrative promoted by giant institutions like BlackRock now face tougher questions. A similar questioning of trust occurred in the gold market recently; The fact that gold remained flat while US bond yields rose showed that the perception of a safe haven has been redefined on a global scale. This further raises doubts about Bitcoin’s macro role.
Crisis of Belief in the Altcoin Market
What is happening on the altcoin front points to a collapse of faith beyond price declines. Ignas states that in previous crises, investors turned to Ethereum and major altcoins again, but the same reflex was not seen in this cycle. According to market participants, many altcoins are priced well above their fundamental value.
In the case of Ethereum, valuation discussions stand out. The slowing of the network’s innovation rate and rival blockchains gaining share in corporate spaces call into question the current value of ETH. In parallel with this picture, the increase in blockchain investments in company shares instead of tokens in the USA is also noteworthy. For example, in a fintech acquisition announced last week, the token economy was completely excluded while investing in technology, which made existing token holders nervous.
Capitulation, Fear, and Prolonged Depression
On the technical side, capitulation signals are becoming clearer. Analyst Rain says that there have been liquidations exceeding 2 billion dollars in the last month and that this is similar to previous bottom regions. According to CoinMarketCap data, the Fear and Greed Index is at the level of 15, that is, in the “extreme fear” zone. Historically, these levels have often heralded periods of plateauing and subsequent recovery.
However, this time it is thought that the “depression phase” may last longer. While geopolitical uncertainties strengthen the tendency to avoid risk, criticism of decentralization projects is increasing. Still, Rain reminds us that the underlying crypto infrastructures remain intact and developers continue to work during this quiet period.
