Investor Mark Yusko believes that the cryptocurrency market continues to follow a traditional cyclical pattern, despite a significant increase in institutional involvement. He describes the current phase as a “crypto winter,” noting that many had expected the usual four-year cycle to end once major institutions and ETFs started accumulating Bitcoin. However, Yusko argues that price trends still reflect the influence of historical cycles.
He highlighted that last year, institutional investors purchased four times more Bitcoin than was mined, yet prices still fell. This paradox is explained by long-term holders who sold their coins during price rallies, adding supply and counterbalancing institutional demand.
The Influence of Futures Markets on Price Dynamics
Yusko pointed out that Bitcoin's price is no longer primarily driven by spot market transactions. Instead, derivatives markets—especially futures—now dominate trading volumes. Large leveraged positions in these markets can cause rapid price fluctuations and sometimes suppress upward momentum even when underlying demand remains strong.
Potential Bottom Levels for Bitcoin
Drawing from past cycle behaviors, Yusko suggested bear markets typically push Bitcoin toward long-term trend indicators like the 200-week moving average. Given current market conditions, he estimates potential lows could range between high $50,000s and low $60,000s before establishing a solid bottom.
He also observed that this cycle's peak wasn't as far above its estimated “fair value” compared to previous ones, implying this correction might not need to be as severe as earlier downturns.
The Enduring Role of Human Psychology in Crypto Markets
Despite increasing algorithmic trading and institutional activity, Yusko emphasizes investor psychology remains a key driver behind crypto cycles. He explains investors tend to buy during rising prices and sell when liquidity is needed—a behavior pattern contributing to recurring boom-and-bust cycles across the market.
A Catalyst Needed for Market Recovery
Yusko predicts that a sustained rally will likely require strong buying pressure capable of breaking through resistance created by derivatives positioning—potentially triggering a significant short squeeze. Until such an event occurs, he expects ongoing volatility with gradual stabilization rather than an immediate surge back to all-time highs.