Polygon Founder Claims Crypto’s Four-Year Cycle is Broken

The traditional four-year crypto market cycle, a familiar pattern for seasoned traders and investors, is undergoing a significant transformation. This shift, according to Polygon co-founder Sandeep Nailwal, is attributed to the increasing maturity of crypto as an asset class and the substantial influx of institutional investment.

In a recent interview on Cointelegraph’s Chain Reaction, Nailwal highlighted the dampening effect of high US interest rates and low liquidity on speculative activity within the crypto market. However, he anticipates a resurgence once interest rates are lowered and the political landscape stabilizes.

Nailwal acknowledges the potential for future drawdowns (30-40%), and the continued influence of the Bitcoin halving. However, he emphasizes a notable reduction in the severity of the historical four-year cycle, stating:

\”We’ve seen 90% drawdowns historically, which is typical in crypto. I believe those drawdowns will be less pronounced, reflecting a more professional and mature market, especially for blue-chip crypto assets.\”

Nailwal predicts that once the market resumes its upward trend and a prolonged bull run ensues, capital will flow from larger-cap to smaller-cap assets.

Related: BTC dominance steadily rising since 2023, is altseason now a relic?

Factors Reshaping the Crypto Market Cycle

Several factors are contributing to the disruption of the traditional four-year cycle. President Trump’s executive order establishing a Bitcoin strategic reserve, coupled with pro-crypto policies from his administration, has significantly increased institutional interest and legitimized crypto in the eyes of mainstream finance.

The emergence of crypto exchange-traded funds (ETFs) has also played a role, influencing asset prices and potentially reducing market fluidity due to the nature of ETF investments.

Furthermore, macroeconomic pressures and geopolitical instability continue to exert influence, as investors shift towards safer assets during times of uncertainty.

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