Ether price outperformed historical records in 2021 cottage season

In a bear market, people sell cottage coins to lean towards the relative safety of bitcoin; in a bull market, people embrace risk and cottage market cap shares naturally expand.

The cryptocurrency market always switches between the bitcoin bloodsucking market and the cottage coin swarm market. Under this classification, the market can be divided into bitcoin market and cottage market, even for ethereum, which also belongs to the latter, although it is a little different.

The cryptocurrency-dominated market is what we call “cottage season”. Ether’s rapid rise since this year has put 2021 firmly into cottage season so far, while the fourth quarter of last year was a bitcoin-led bloodsucking market. For investors seeking to maximize returns in a bull market, the timing of potential transitions between such cycles is important.

Ether price outperformed historical records in 2021 cottage season

Source: CoinDesk Index and Coin Metrics
The chart above shows the returns of Bitcoin and Ether in bull and bear markets. Bitcoin remains the benchmark for all cryptocurrencies, so we use its price to define the beginning and end of bull and bear markets.

The method is simple: entering a bull or bear market is defined as a 20%+ change in bitcoin price, followed by at least 90 days without a return to the price level before the change. It provides us with a way to determine the current market state of bitcoin with a little patience, and by extension, the entire cryptocurrency ticker category. the CoinDesk index uses the same method of determination.

As you can see from the chart, as of May 2, the current cycle is not out of step with past patterns. the price of ETH at $4,000 brings ETH’s return since the bottom in mid-March 2020 to about 340%. This is still within the pattern of the cottage season bull market set in 2017. But at 55,000 BTC, the price gap between the two puts the cryptocurrency market in 2021 on the cusp of any cottage season precedent.

A new benchmark?

One problem with this chart is that it measures the return of Ether over the Bitcoin market cycle. That’s fine for now, because Ether may be rising, but Bitcoin is still the benchmark. But if the cottage season gap between Ether and Bitcoin widens further, we could start to see an erosion of Bitcoin’s viability as a market benchmark.

A more fundamental trend is the change in bitcoin’s market cap share, something we’ve noted before. Bitcoin’s market cap share is the ratio of Bitcoin’s market cap to the total market cap of all cryptocurrencies. Ether’s move this week has pushed bitcoin’s market cap share below 45%, hitting a low set in 2018.

The long-term decline in bitcoin’s market cap share is a grind between bulls and bears of one step forward and two steps back. In a bear market, people dump cryptocurrencies to lean into the relative safety of bitcoin; in a bull market, people embrace risk and cryptocurrency market cap share naturally expands.

Ether price outperformed historical records in 2021 cottage season

Source: CoinDesk Index and CoinMarketCap
If this trend continues, eventually we will look to broader data sources as market benchmarks, such as the CoinDesk Digital Large Cap Index. This will drive cryptocurrencies more in line with the stock market. Imagine if Apple, the largest stock in the S&P 500 Index, had as large a percentage of the market cap as Bitcoin does, it would be a $16 trillion company.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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