Why This Crypto Bull Run Might Not Live Up To The Past: Analyst

In
a
detailed
analysis
shared
with
his
788,000
followers
on
X
(formerly
Twitter),
renowned
analyst
Pentoshi
has
forecasted
a
more
restrained
outlook
for
the
current
crypto
bull
run,
suggesting
that
it
may
not
mirror
the
explosive
growth
seen
in
previous
cycles.
His

insights
provide
a
deep
dive
into
the
underlying
factors
that
could
temper
the
market’s
performance.

Why
Crypto
Investors
Have
To
Expect
Diminishing
Returns

Pentoshi
began
his
analysis
by
stating,
“This
cycle
should
have
the
largest
diminishing
returns
of
any
cycle,”
attributing
this
prediction
to
several
key
market
conditions.
Primarily,
he
noted
that
the
base
market
capitalization
for
cryptocurrencies
has
increased
significantly
in
each
successive
cycle,
setting
a
higher
starting
point
that
makes
further
exponential
growth
increasingly
challenging.

“Each
cycle
has
set
a
floor
about
10x
the
previous
lows
in
terms
of
market
cap,”
Pentoshi
explained.
He
provided
a
historical
context,
recounting
that
when
he
entered
the
crypto
market
in
2017,
the
market
cap
for
altcoins
was
only
around
$12-15
billion,
a
figure
that
ballooned
to
over
$1
trillion
during
peak
periods.
He
argued,
“That
growth
isn’t
repeatable,”
pointing
out
that
the

decentralized
finance
(DeFi)
sector,
which
was
then
nascent,
played
a
significant
role
in
driving
previous
cycles’
exceptional
returns.

Another
significant
factor
Pentoshi
highlighted
is
the
dramatic
increase
in
the
number
of
altcoins
and
the
corresponding
market
dilution.
“Today,
however,
there
are
a
lot
more
alts,
and
a
lot
more
dilution,”
he
remarked,
indicating
that
the
proliferation
of
new
tokens
spreads
investment
thinner
across
the
market,
reducing
the
potential
for
individual
tokens
to
achieve
substantial
price
increases.

Pentoshi
also
touched
upon
the

demographic
shifts
in
crypto
ownership.
He
contrasted
the
early
days
of
crypto
adoption,
when
approximately
2%
of
Americans
were
involved
in
the
market,
to
the
present,
where
over
25%
of
Americans
have
some
form
of
crypto
investment.
“It
just
requires
more
capital
to
move
the
markets,
and
there
will
continue
to
be
a
lot
more
alts,
spreading
it
out
further,”
he
noted,
emphasizing
the
logistical
and
financial
challenges
of
replicating
past
growth
rates
in
a
much
more
saturated
market.

An
often-overlooked
aspect
of
market
dynamics,
according
to
Pentoshi,
is
the
role
of
token
liquidity
and
its
impact
on
price
stability.
He
detailed
that
recently,
tokens
amounting
to
about
$250
million
were

unlocked
daily,
though
not
necessarily
sold.
“Assuming
they
all
got
sold,
that
is
the
inflows
you’d
need
just
to
keep
prices
stable
for
24
hours,”
he
explained,
highlighting
the
delicate
balance
required
to
maintain
current
market
levels,
let
alone
drive
prices
upward.

Looking
forward,
Pentoshi
was
conservative
in
his
expectations
for
the
Total3
index,
which
tracks
the
top
125
altcoins
(excludes
Bitcoin
and
Ethereum).
He
estimated,
“My
best
guess
is
that
this
cycle
we
don’t
see
Total
3
go
2x
past
the
21′
cycle
ATH.
So
2.2T
max
for
Total3.”
This
projection
underscores
his
broader
thesis
that
while
the
market
continues
to
offer
daily
opportunities,
the
era
of
“easy,
outsized
gains”
might
be
behind
us.

Pentoshi
concluded
his
analysis
with
advice
for
investors,
suggesting
a
more
cautious
approach
to
market
participation.
“If
you
believe
the
cycle
is
50%
over,
you
should
be
taking
out
more
than
you
are
putting
in
and
building
up
some
cash
and
buying
other
assets
with
lower
risk
in
the
meantime,”
he
advised,
stressing
the
importance
of
securing
gains
and
diversifying
holdings
to
mitigate
risk.

Reflecting
on
the
psychological
aspects
of
investing,
he
added,
“Most
people
never
really
learn.
Because
if
you
can’t
control
your
greed,
and
defeat
it,
you
are
destined
to
give
back
your
gains
repeatedly.”
His
parting
words
were
a
reminder
of
the
cyclical
and
often
predatory
nature
of
financial
markets,
urging
investors
to
secure
profits
and
protect
themselves
from
foreseeable
downturns.

At
press
time,
TOTAL3
stood
at
$635.565
billion,
which
is
still
more
than
-43
%
below
the
last
cycle
high.

Featured
image
from
iStock,
chart
from
TradingView.com

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