Crypto Speculation Index Slide Suggests Bitcoin Bull Market Reset

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Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Bull markets are observed to stall during periods of excessive optimism, only to resume after the speculative froth has been cleared.The speculation index, which measures the percentage of alternative cryptocurrencies with 90-day returns greater than bitcoin, has stabilized below 10%, down significantly from the January high of nearly 60%. Bitcoin, the leading cryptocurrency by market, hit new record highs above $70,000 in the first quarter and has since cooled to $58,000.

As of this writing, more than 14,800 altcoins exist, according to data source Coingecko. Most of these coins are illiquid and struggle to prove their use cases. Hence, altcoins are generally seen as speculative instruments, with volumesGoogle Trends, an indicator of retail investor interest, and altcoin outperformance relative to BTC is seen as a sign of speculative mania.

That has been the case in the crypto market. Since 2019, a below-10% speculation index has coincided with the beginnings of sharp bitcoin rallies, as observed in the first half of 2019, late 2020, and the second half of 2023.in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence.

 

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