Analysts’ Visual Recap As Crypto Markets Bounce 12%

The total crypto market cap is back above $2 trillion after an epic crash that wiped $500 billion from the space in less than a week.

The number fell to $1.83 trillion on August 5 as Bitcoin fell below $50,000 and Ethereum fell 23% in a day below $2,200.

However, that total cap figure has gained 12% since that drop, returning to $2.06 trillion at the time of writing.

Is it time for a recovery?

However, crypto markets have fallen to a six-month low, but analysts are already talking about a recovery. In a post on X on August 6, MN Consultancy founder Michaël van de Popp said: “This correction today may ultimately lead to the bear trap of this cycle.”

He added that the mass capitulation event resulted in $1.2 billion in leveraged positions being removed from the markets.

Meanwhile, Crypto Capital Venture founder Dan Gambardello opined:

“A lot of people think it’s the end of crypto, and I’m sitting here patiently waiting for the bull market to start, still with the forecast.”

Primitive Crypto founder Dovey Wan said “the dump tastes like a mix of March 20, 2020 and May 20, 2021.”

March 2020 was the pandemic-induced swan back event, and May 2021 saw a mid-upward correction due to increased leverage.

This dump tastes like a mix of March 20, 2020 and May 20, 2021

– Taste of March 2020, the macro was caught off guard. Ask about the marco fund and those deep in JPY trade in Hong Kong, most didn’t expect it at all. Some Chinese focused risk on hedge funds and they fell sharply last week…

— Dovey “Rug the fiat” Wan (hiring) (@DoveyWan) August 5, 2024

Trader Alex Krüger echoed the sentiment in a post on X on August 6, saying it was closer to March 2020.

“Since the altcoins are almost all dead now, let’s start again with the new easing cycle… without waiting for the wild performance of 2020-21.”

On this occasion, the crypto crash was not caused by anything related to cryptography. Macroeconomic factors, particularly due to central bank action in Japan, sent shockwaves through mainstream markets around the world.

However, crypto, being a riskier asset class, suffered bigger losses. With this in mind, crypto markets could recover faster than traditional ones.

Comparison with previous cycles

Others, like veteran trader Peter Brandt and ITC Crypto founder Benjamin Cowen, compared the big dump to previous cycles when previous dips occurred.

Brandt said the same thing happened after the 2016 mid-halving when BTC rallied 27% and compared that to the 26% correction after the 2024 mid-halving.

Cowen compared this to the market cycle of 2019, when crypto assets rose in the first half of the year and fell in the second half.

Bitcoin has now corrected 33% from its all-time high to its 2024 low, just below $50,000. Compared to previous cycle pullbacks of 50% or more, it’s still very minor.

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