Crypto Debate Emerges Over Potential Bear Market

As November trading commenced, a debate has intensified regarding the possibility of a new bear market in cryptocurrency. Analyst Lark Davis highlighted a discussion surrounding comments from prominent analyst Sykoledic, who dismissed concerns of a downturn.

Sykoledic argues that a bear market is unlikely given the current macroeconomic conditions, emphasizing a favorable liquidity environment. He cited several factors supporting his view, including the U.S. Treasury General Account holding $1 trillion, a 100 billion yen stimulus in Japan, a 900 billion yuan injection by the People’s Bank of China (PBOC), and $50 billion added to Federal Reserve repo markets.

Sykoledic explained that the ongoing crypto cycle has progressed under restrictive liquidity, largely explaining why Bitcoin has achieved new highs through adoption and institutional acceptance. He noted that altcoins, typically reliant on ample liquidity, have consequently lagged.

He anticipates a significant influx of liquidity into the system, stating that it is inevitable given global financial trends. He linked recent global trends, including surging stock markets driven by AI, easing geopolitical tensions impacting gold prices, and declining trade risks, to a shift favoring risk assets like cryptocurrencies.

Psykoledic cautioned those predicting a bear market to consider the prevailing liquidity situation, labeling it as the “total opposite” of conditions that typically trigger market downturns.

Supporting this positive outlook, on-chain data reveals structural strength within key crypto ecosystems. Analyst Leon Waidmann pointed out that Ethereum’s total value locked (TVL) has risen to $379 billion, representing a 16-fold increase since 2020.

Despite Ethereum’s comparatively muted price performance, this growth in liquidity, lending, and staking activities signals robust fundamentals and suggests limited downside risk.

This positive sentiment underscores the ongoing discussion surrounding the long-term health and potential future direction of the cryptocurrency market.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.