There are different opinions among analysts and KOLs on what stage the current market is in. Jason Choi, co-founder of Tangent, recently indicated on X that signals of market peak in 2021 have reappeared. These signs include:
– Market has reasons to remain bullish: there are credible reasons to continue holding long positions.
– Large venture capital funds completing fundraising: typically, the LPs of these funds are late-cycle participants, meaning they often join the market near its peak.
– Scams targeting mainstream markets emerging: the recent phenomenon of celebrities launching coins is a prime example.
– Price stagnation: market prices have been stagnant for three months without significant fluctuations.
– High Open Interest (OI) in futures contracts: OI has been consistently high recently.
– Stagnation in stablecoin inflows: inflows of stablecoins are beginning to decrease, which may indicate a slowdown in new funds entering the market.
However, Jason Choi also acknowledges limitations to these peak signals. For example, while OI is high, it does not show a clear bias towards bulls, an Alt season has not yet emerged, and relaxed regulatory policies are favorable to the market, among other factors that investors need to consider when making investment decisions.
On the other hand, regarding the phenomenon of many institutional investors expressing bullish views in the market, Jason Choi believes that fund managers tend to maintain a bullish stance on cryptocurrencies when facing market peaks. This is because their main task is to manage and maintain the investment allocation of institutional investors in cryptocurrencies, rather than their cash positions. This means their main focus is on cryptocurrency investments, not holding cash.
Furthermore, if fund managers choose to avoid risks during market peaks (for example, selling before the “obvious” catalyst like an ETH ETF appears) but make a wrong judgment, they may lose their jobs as a result. However, if they choose to continue holding risk positions, even if the market declines, no one will blame them because choosing to maintain risk exposure during a generally bullish market is considered normal operation. In conclusion, Jason Choi summarizes:
