Crypto Debate Rages: Bear Market Or Cycle Shift?

As November trading commences, a debate is emerging regarding whether the cryptocurrency market is entering a new bear phase or preparing for its next expansion. Crypto investor Lark Davis highlighted a recent analysis by prominent analyst Sykoledic, who dismissed the notion of a forming bear market given current macroeconomic conditions.

Sykoledic emphasized that bear markets typically do not begin when global liquidity is expanding. He pointed to several significant liquidity injections as evidence, including a $1 trillion balance in the U.S. Treasury General Account, a 100 billion yen stimulus from Japan, a 900 billion yuan injection by the People’s Bank of China (PBOC), and a recent $50 billion addition to the Federal Reserve’s repo markets.

Sykoledic argued that the current crypto cycle has progressed under restrictive liquidity, explaining why Bitcoin has been the only asset to reach new highs through adoption and institutional acceptance. He stated that altcoins have lagged because they rely on abundant liquidity to perform well.

“Liquidity is coming to the system and it’s coming in droves,” he said, noting this expansion is inevitable given the global financial environment. He linked current global trends to a delayed rally in crypto markets, referencing surging stock prices fueled by the AI boom, topping-out gold prices amid easing geopolitical tensions, and declining trade risks.

“If you are calling for a bear market, you need to understand the liquidity situation,” Psykoledic wrote, describing the current market conditions as the “total opposite” of what causes real downturns.

Supporting this viewpoint, on-chain data indicates underlying strength within major crypto ecosystems. Analyst Leon Waidmann noted Ethereum’s total value locked (TVL) has risen to $379 billion, a 16-fold increase since 2020.

Despite Ethereum’s relatively soft price performance, this growth in liquidity, lending, and staking points to solid fundamentals and limited downside risk. The market is closely watching these indicators as November unfolds.

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.