at the start of 2025 everyone was expecting Bitcoin to go up only and that ethereum and altcoins would follow suit well uh this hasn't really happened Bitcoin has been chopping sideways and ethereum and Els have been absolutely collapsing and this has left everyone wondering what's going on with the crypto Market with some arguing that the top is in others arguing that altcoins will never rally and a few arguing that the bull market is still coming and that's why today we're going to figure F out what's been going on with the crypto Market explain why the
price action has been so unexpected and what could come next for Bitcoin ethereum and altcoins my name is Nick stay tuned let's start with an interesting chart from crypto analytics firm kaito what you're looking at is the total market cap of all cryptos and the sentiment of crypto investors shown in green as you can see the total market cap hasn't fallen that much but sentiment has collapsed to levels not seen since 2023 so why is sentiment so low when the total crypto market cap is still high the answer is that the market cap does not
accurately reflect the broader crypto Market most of the total market cap is accounted for by Bitcoin ethereum stable coins and a few altcoins that have performed very well like xrp for example almost every crypto has been struggling most notably ethereum with e BTC C value fall into levels not seen since way back in 2021 of course this begs the question of why almost every crypto has been struggling and whether this trend is going to continue or if it's going to reverse to find the answers all we need to do is look at the factors that
affect crypto prices broadly speaking there are two macro factors and crypto factors macro factors include things like liquidity interest rates and geopolitics and crypto factors include things like Leverage in CI and defi regulations that change Market structure and crypto specific catalysts like central banks adding crypto to their balance sheets obviously the macro factor that everyone has been obsessing about over the past year or so has been liquidity which can be simply understood as the amount of money in the markets and the economy the reason why everyone has been so obsessed with liquidity is because it's
high highly correlated to crypto prices what's strange is that although the FED is still technically tightening Global liquidity has basically been going up only since 2023 and this is according to the global liquidity measure from Bitcoin magazine Pro and this indicator is consistent with analysis by liquidity experts such as Michael how who believe that liquidity will continue Rising until the end of the year and this is strange because although this rise in global liquidity has been supportive of bitcoin's price it seems that this liquidity has had a hard time flowing into altcoins contrary to popular
belief this is not due to the spot Bitcoin ETFs because all they did was make it possible for New Pools of capital to invest in Bitcoin in other words the spot Bitcoin ETFs did not take anything away from the crypto Market They just added another way for investors to access Bitcoin specifically they have made it easy for macro liquidity to flow into Bitcoin which would explain why the correlation between Bitcoin and stocks has increased and if you haven't noticed stocks have been rallying too and this is significant because it suggests that macro factors are not
the main reason why everything outside of Bitcoin stable coins and a few altcoins has been struggling if the macro was truly bearish then Bitcoin and stocks would also be struggling too but they're not logically this suggests that crypto factors are the primary reason why most cryptos have been struggling and this makes sense when you consider that crypto factors are essentially the supply side of the equation whereas the macro factors are the demand side both factors need to be bullish for crypto to rally and this is according to macro analyst Lynn Alden who's been closely tracking
both the crypto and macro factors if you watched our summary of her analysis of the effects of liquidity on crypto you'll know know that crypto factors are what cause crypto prices to deviate to the upside and to the downside put differently macro factors like liquidity are important but crypto factors tend to take over when prices get into the extremes and by the way guys if you enjoying this video so far then smash that like button to let us know and don't forget to subscribe and ping the notification Bell as well to make 100% sure you
don't miss our next one now to quickly recap crypto prices are fundamentally driven by a combination of macro factors and crypto factors macro factors do not appear to be the primary reasons why most cryptos have been struggling and this suggests that crypto factors are the main reasons for the Divergence between Bitcoin stable coins altcoins like xrp and effectively every other crypto let's start with a classic leverage as I noted earlier there are two types of Leverage CI leverage and defi leverage CI leverage mostly consists of Traders betting that the price of a crypto will go
up or down on exchanges if they bet that crypto prices will go down and prices go up they're forced to buy which causes prices to Rally if they bet that crypto prices will go up and they go down they're forced to sell which causes prices to crash more When Donald Trump won the US election last November lots of crypto Traders started going long I.E betting that crypto prices would go up and that's because Trump had promised to implement proc crypto policies if he were elected proc crypto policies which would primarily benefit altcoins such as stopping
the sec's regulation by enforcement and allowing tradire institutions to interact with crypto protocols never mind the Strategic Bitcoin Reserve that he promised to establish as well so when Trump was in aurated on January 20th this year expectations that he would be quick to pass Pro crypto regul ations were high lo and behold the few crypto executive orders that Trump signed were not what investors expected and it became apparent that it would take a lot more time for crypto policies to pass however this was not sufficient for the crypto Market to crash particularly because there was
still hope that a big Pro crypto policy would be announced and there was also a slow drip of small positive developments to that end this sec's repeal of an anti-crypto called Sab 121 is one example here fast forward to the first weekend of February when Trump announced that he would slap Canada and Mexico with unprecedented tariffs that created lots of uncertainty for investors and this was enough for catalysts to trigger a wave of Liquidations in crypto which totaled around $10 billion according to biit in plain English the Tariff fears in the first weekend of February
caused crypto prices to drop to the point that they triggered an automated sell-off of over $1 billion across the crypto market and what's crazy is that this figure does not include everyone who Panic sold nor the defi liquidations just the Traders on centralized exchanges on the defi front meanwhile hundreds of millions of dollars of crypto collateral was sold mostly eth for context eth is the primary form of collateral used in defi ethereum holders will use their eth as collateral to borrow stable coins to speculate on other altcoins if the value of this e collateral Falls
it is automatically sold to ensure that the protocol remains solvent which can of course trigger more defi liquidations although there are rumors that eth crashed because some Pro ethereum hedge fund went insolvent the combined selling pressure from liquidations on exchanges and liquidations in defi were likely the primary reasons why eth fell so badly as it did earlier this month the fact that everyone has been bearish on eth made things actually worse as it meant that demand wasn't there to meet the supply if you think about it this has been true of most altcoins it's not
that demand has been lacking per se it's that altcoin supply has been rising relative to the available demand in ethereum's case there has been more competition which means that the aggregate demand in the crypto Market which you'll recall is driven by macro factors like liquidity has been flowing into other altcoins besides eth and this ties into another much bigger crypto Factor that's been causing altcoins to underperform and that's the fact that there has been a growing supply of altcoins relative to the current crypto demand and this so-called altcoin dilution is believed to be the primary
reason why most cryptos have been underperforming so far to put things into perspective around 40 million tokens have been launched on the biggest chains since the 2021 bull market and this insane figure which comes from June analytics does not seem to include nfts nor all the tokens minted on the smaller chains while it's true that most of these tokens are meme coins with zero value it doesn't change the fact that they've been sucking liquidity from other altcoins and if you watched our recent summary of okx Dex report you'll know that billions of dollars of liquidity
are locked in low value pools for meme coins this is thanks to pump. fun whose mcoin Launchpad locks the liquidity of pools of mem coins that become big enough to be automatically listed on the radium decks hundreds of thousands of mem coins have met this threshold resulting in billions of dollars of liquidity being locked in in any case the key takeaway is that mean coins not only sucked billions of dollars of liquidity from other altcoins but have permanently locked a portion of this liquidity in Dex pools the Silver Lining is is that this is bullish
for soul because all of this mem coin liquidity is pulled against Soul which is now locked on that note the growing supply of altcoins relative to the current crypto demand has created extreme competition among altcoins for attention and capital and this is something that mcoin Guru mad mamadov has highlighted and why he believes that memecoins will continue to outperform the only problem with that thesis is that it has been arguably invalidated over the last few weeks and that's because mem coins have experienced some of the largest losses and the same is true for cryptos in
other narratives that were hot last year such as AI for example and this is not surprising given how liquidity in crypto moves for reference it's believed that liquidity first moves into Bitcoin and eventually it rotates into larger altcoins like ethereum and then into smaller altcoins and eventually more speculative assets like nfts as many have pointed out it seems that this liquidity went straight from the first base to the third this time around it went into BTC and then skipped everything else and went straight into mem coins and speculative AI tokens this is fascinating because it
suggests that there's another crypto Factor at play which is influencing these liquidity flows a factor that's played an even bigger role than the short-term liquidations or long-term dilution as far as we can tell this Factor seems to be regul ations that changed crypto Market structure those of you who were active in the previous crypto bull market might recall that most crypto exchanges did not require kyc and this made it very easy for investors around the world be they retail institutions or otherwise to access altcoins however this started changing at the end of 2021 with the
kyc Crackdown the result is that it has become much harder for liquidity to flow into altcoins VI centralized exchanges at the same time the user experience on decentralized exchanges and even crypto wallets has improved substantially neither of these two require kyc to use which makes it easier for liquidity to flow to them the catch is that not all blockchains can provide the high speeds and low costs that users have become accustomed to now surprise surprise the result is that most of this liquidity has been flowing into decentralized exchanges and crypto Wallets on scale of blockchains
namely salana and on salana the tokens that have been rallying the most are mean coins which has resulted in lots of liquidity flowing into mean coins on salana in lie of altcoins on other chains and this underscores the importance of crypto Market structure and it explains why everything outside of BTC stable coins and select altcoins has been underperforming it's been harder for liquidity to flow into other cryptos and this relates to the crypto factor that could cause the rest of the crypto Market to catch up to BTC stable coins and a few altcoins that have
continued to rally and as you might have guessed this crypto factor is a change to crypto Market structure as I just noted kyc regulations and other restrictions have ultimately made it more difficult for liquidity to flow into altcoins via exchanges and other avenues in case you haven't noticed the proc crypto policies currently being rolled out in the US will have the Practical effect of making easier for more liquidity to flow into altcoins not just via exchanges but also via Defi and Via altcoin ETFs which will unlock new sources of liquidity just like they did for
Bitcoin it's worth recounting what happened with the smart Bitcoin ETFs because it's an eily similar story to what we're seeing today with altcoin regulations and ETFs in the Autumn of 2023 specifically late October it became clear that the spot Bitcoin ETFs would be approved and Bitcoin started rallying hard at the start of 2024 specifically January 11th the spot Bitcoin ETFs were listed but their inflows did not meet the high expectations of investors and there was also large outflows from grayscales Bitcoin trust but let's set that aside for now but the result was that it became
a sell the news event and Bitcoin crashed for weeks after about a month though Bitcoin started recovering and more and and more of this macro liquidity began flowing into Bitcoin via the ETFs and this is an understatement as Bitcoin ended up rallying so much that it hit new all-time highs before the harving something that has never ever happened before and this had everyone wondering if it was going to be a Bitcoin only bull market with some speculating that we would see a left translated cycle an early cycle top in other words thankfully this didn't happen
and Bitcoin continued slowly grinding up and to the right almost perfectly in line with global liquidity and I'll remind you that this isn't a coincidence the ETFs made it easier for this liquidity to flow into Bitcoin fast forward to today and it's almost the exact same story in the Autumn of 2024 specifically November it became clear that it would be a landslide victory for Donald Trump and altcoins started rallying hard and that's because Trump had promised to introduce Pro crypto policies something that would be very easy to do given that Republicans had won also the
house and the Senate at the start of 2025 specifically January 20th Trump was inaugurated but his initial Pro crypto policies did not meet such high expectations and the result was that it became a s the news event and altcoins started falling eventually experiencing what some estimate to be the largest liquidation event in crypto's history it's now been about a month since Trump's inauguration so if history repeats then chances are we will see proc crypto regulations passed sooner than later and this is objectively likely when you realize that Trump's Pro crypto policies will be passed through
Congress as their own individual blls and that most of Congress is pro crypto thanks to the lobbying by the crypto industry during the election so if history repeats this could mean that we would see many altcoins start rallying in the coming weeks because of changes to Market structure that will make it easier for liquidity to flow into them these changes include allowing exchanges to list more altcoins allowing us users to use defi protocols which is currently not allowed allowing tradire to integrate with these protocols and approving spot altcoin ETFs make no mistake this is not
going to happen overnight but the process is underway way this process could allow other cryptos to catch up to bitcoin stable coins and the few altcoins that have been rallying come to think of it there's another reason why cryptos like xrp and Litecoin have pumped so much they are some of the most widely supported cryptos which makes it easy for liquidity to flow into them and this brings me to the big question and that's which cryptos will benefit the most if the rest of the crypto Market starts catching up with the majors believe it or
not but the number one answer is ethereum and that's because of that one golden word we've been repeating again and again liquidity ethereum is slow and expensive but it's secure and it's liquid both on chain and offchain whereas Solana's high speed and low costs make it ideal for retail investors ethereum's security and liquidity makes it ideal for institutional investors which have practically been restricted due to crypto regulations specifically institutional investors have been restricted from using ethereum for more things like launching in tokenized real world assets and in case you missed the news Mega Banks like
the Bank of America and asset managers like Black Rock have been pushing Regulators to drop these restrictions on institutions with a pro crypto president a pro crypto Congress and pro crypto appointees in Regulatory Agencies the chances of these restrictions being lifted is objectively high and given how quickly the Trump Administration has been moving on its policies these restrictions will be lifted sooner than later in the interim we were likely to see multiple spot altcoin ETFs approved even though only a few altcoins are likely to get spot ETFs of their own many more could benefit from
the second order effects for example a salana ETF approval will likely boost Soul's price in turn this will result in more salana holders borrowing stable coins against their soul and to use in defi protocols in Solana's ecosystem to bet on cryptos within that ecosystem on the retail front meanwhile centralized exchanges will likely list many more altcoins and restrictions around decentralized exchanges and protocols will likely be eased or even removed entirely in the former case this will make it easier to access altcoins on chains that are more expensive or harder to access in the latter case
it should result in more inflows into other scalable blockchains aside from like sui say did you know that sana's Phantom wallet recently integrated sui probably nothing whatever the case the key takeaway is that the demand side of the equation which comes from macro factors like liquidity appears to be bullish and will continue to be bullish for the foreseeable future once there are changes to crypto factors specifically regulations that change crypto Market structure it will become easier for this demand to find its way into cryptos that have been struggling so far make no mistake this doesn't
mean that every crypto is going to Moon indeed it's likely that Bitcoin is going to continue outperforming the majority of the altcoin market however if you are selective with the altcoins you bet on you could be decently rewarded and to remind you if that's a coin belong to a blockchain that's popular with institutions like ethereum a coin belonging to a blockchain that's popular with retail like salana or if it's a token on a blockchain that's popular with instit tions or retail like ethereum and salana then chances are that it's going to do well even with
a few more altcoins around and if you want help finding buying or trading these cryptos then be sure to check out the coin Bureau deals page where you'll find the top tools you need to make the most of this crypto bull market irrespective of the coins that you choose the link will be down in the description now if you enjoyed that video you can check out our latest one right over here and if you're not subscribed yet to the channel you do that right over here that's me for now see you next time [Music]
