Bitcoin Bull Market Resets

Bull markets are known to stagnate during periods of excessive optimism, only to resume once the speculative exuberance has dissipated

This key indicator indicates that the speculative frenzy prevalent in the first quarter has subsided.

The crypto speculation index of Capriole Investments indicates that the speculative excesses that were predominant during the first quarter have subsided, suggesting that there is a possibility of a resurgence in bullish price action in bitcoin (BTC) the most valuable cryptocurrency by market value.

The conjecture index, which quantifies the extent to which alternative cryptocurrencies (altcoins) have generated returns greater than bitcoin over 90 days, has reached a plateau of less than 10%, a substantial decline from the January high of nearly 60%. In the first quarter, Bitcoin, the most popular cryptocurrency by market capitalization, achieved new record highs exceeding $70,000. Subsequently, it has declined to $58,000.

According to data source Coingecko, over 14,800 altcoins exist at this time. Most of these coins are illiquid and cannot demonstrate their use cases. Therefore, altcoins are generally perceived as speculative instruments, with volumes closely associated with Google Trends, an indicator of retail investor interest. Altcoin’s outperformance compared to BTC is considered a symptom of speculative mania.

Speculative washouts function as corrective mechanisms, thereby regulating excessive speculation and ensuring asset prices align with fundamentals. Consequently, they establish the foundation for a healthier environment in the long term.

This has been the case in the cryptocurrency market. In the first half of 2019, late 2020, and the second half of 2023, the onset of acute bitcoin rallies has been synchronized with a speculation index below 10% since 2019.