As the current bear market in crypto continues to deepen, Bitcoin has fallen by 78%, and Ethereum by 82%. Yet elsewhere in the crypto market, many altcoins are down by as much as 96% or more.
In a recent video, Elliott Wave International Currency & Crypto Analyst Jason Soni sheds some light on why this occurs and what this could mean for various cryptocurrencies.
Breaking Down Why Some Crypto Assets Crash More Than Others
Bitcoin price has retraced by more than 78% from all-time highs set back in 2021. Ethereum, the second-largest cryptocurrency by market cap, saw an approximately 82% retracement from peak to trough thus far.
As you move down the ranks of cryptocurrencies, the total drawdown figures deepen. Cardano, for example, suffered a 92% collapse compared to the top two cryptocurrencies. Solana, once pegged to disrupt Ethereum, dropped by a staggering 96%.
In a new video entitled “Looking at Opportunities for the Next Crypto Bull Market,” Elliott Wave International Currency & Crypto Analyst Jason Soni touches on why – theoretically – this discrepancy exists.
According to Soni, newer altcoins in their first cycle will see the deepest retracement. As cryptocurrencies mature, and go through more boom and bust cycles, retracements are less steep, like we’ve seen with Bitcoin and Ethereum.
ETH 2018 versus ADA 2022 | ETHUSD on TradingView.com
Bitcoin Sets The Standard For Bear Market Corrections
In the video, Jason Soni used a comparison between many newer altcoins today following a similar trajectory and total drawdown as 2018 Ethereum. With each new cycle, new participants join and liquidity in each asset increases, reducing volatility over time and resulting in less and less in terms of max drawdown.
This is perhaps the most visible with Bitcoin. Following Bitcoin’s first major bull market, the first ever crypto asset retraced by 96%. In the second bear market ever in crypto, BTC retraced by 86%. During the 2018 bear market, Bitcoin sank by a grand total of 84%. A softer landing yet might still be possible during this bear market.
Considering the severity of the drawdowns in most cryptocurrencies and the extreme negative sentiment, it could mean that the end of the bear market is near. At this point, Soni recommends avoiding “social media sentiment” at all costs and says to instead “focus on the patterns.”
The video, “Looking at Opportunities for the Next Crypto Bull Market,” is offered exclusively through Elliott Wave International’s Crypto Trader’s Classroom, which delivers three new in-depth lessons each week from top Elliott Wave analysts. Many instructional videos include specific crypto charts and trading setups, using Elliott Wave Theory. You can learn more about Elliott Wave International’s Crypto Trader’s Classroom by clicking here.