The rise of Bitcoin exchange-traded funds (ETFs) is reshaping the crypto market’s structure and volatility cycles, according to a new report by analysts at Singapore-based investment firm Signum Capital. While institutional adoption of Bitcoin has introduced greater price stability, altcoins remain exposed to extreme volatility, signaling a growing divergence between the leading cryptocurrency and the broader crypto landscape.
Institutionalization is Changing the Rules
Spot Bitcoin ETFs, now widely adopted by traditional financial institutions, have effectively transformed Bitcoin into an investable asset class, analysts say. This shift has provided greater liquidity and tempered Bitcoin’s wild price swings, marking a departure from the crypto market’s earlier, more speculative behavior.
“While Bitcoin is experiencing increased price stability, altcoins remain as volatile as ever, still subject to reflexive cycles of euphoria and panic,” the Signum Capital report noted.
The analysts argue that the traditional four-year cycle—largely driven by Bitcoin’s halving events—is beginning to break down. Instead, the market is now dominated by shorter, fragmented bursts of outperformance and underperformance, influenced by liquidity flows, investor positioning, and shifts in macroeconomic sentiment.
A Macro-Driven Market
As evidence of this transition, Signum Capital pointed to the August 2024 market downturn, which saw synchronized declines across both equities and cryptocurrencies. The catalyst, they argue, was the Bank of Japan’s surprise rate hike, which triggered widespread volatility by unraveling the popular yen carry trade—a strategy used by investors to profit from borrowing in low-yielding yen to invest in higher-return assets.
“The idea of fixed four-year crypto cycles may no longer hold true,” the analysts wrote. “Instead, we are seeing shorter, more fragmented periods of outperformance, driven by macro shifts, regulatory changes, and fast-moving narratives.”
Staying Agile in a Fast-Changing Landscape
In today’s rapidly evolving crypto environment, analysts are urging investors to remain engaged, even during downturns. They caution that while volatility may discourage some, those who closely follow emerging narratives and market trends are best positioned to capitalize on short-term shifts.
That sentiment was echoed earlier this month by CryptoQuant CEO Ki Young Ju, who predicted that Bitcoin may experience bearish or sideways movement over the next 6–12 months. Ju cited on-chain data indicating a bearish trend, with fresh liquidity waning and new whales offloading BTC at lower prices.
“Every on-chain metric signals a bear market,” Ju stated in a recent post on X (formerly Twitter).
Outlook
As Bitcoin continues to mature into a more stable, institutional-grade asset, analysts expect volatility to increasingly concentrate in the altcoin space, driven by speculative flows and ever-changing investor sentiment. In this new paradigm, agility, information, and timing are likely to separate successful crypto participants from the rest.
