Why This Cycle Feels Broken, Memecoins & Macro | Ben Cowen
In today's episode of Bankless, we welcomed back Ben Cowen, founder of Into the Cryptoverse, to delve into the perplexing state of the current crypto market. Despite Bitcoin soaring to $100,000, the sentiment in the market feels anything but euphoric. So, what’s going on?
A Different Kind of Cycle
At the core of our discussion was the Advanced Decline Index (ADI), a metric that Ben has been using to gauge the breadth of the market's performance. Unlike the bull run of 2020-2021, where a rising ADI indicated broad-based growth across a range of cryptocurrencies, this cycle tells a different story. While Bitcoin has surged, many altcoins remain underwater compared to their 2021 highs. The ADI has been in a downtrend since 2021, suggesting that the gains in market capitalization are concentrated in a narrow band of assets—primarily Bitcoin.
This market "breadth" problem is not just a technicality. It impacts the broader crypto ecosystem, including jobs and funding within the industry. Many crypto-native businesses, from layer 1 protocols to decentralized application developers, are feeling the strain as their tokens struggle, even as Bitcoin climbs higher.
Memecoins: A Symptom of a Deeper Issue?
One of the standout themes of our conversation was the role of memecoins in today's market dynamics. While memecoins have always had a place in the crypto ecosystem, the current meme coin mania seems to be exacerbating the problem of capital misallocation. As Ben pointed out, the relentless minting of thousands of meme tokens daily—52,000 in a single day, according to Pumped.Fun—could be a sign of a market that's lost its way.
Investors chasing quick gains in these highly speculative assets might be contributing to the "bad vibes." When money flows into what Ben describes as the "altcoin casino," it detracts from projects with real utility and innovation. This misallocation of capital can stymie the growth of meaningful technologies and dampen the long-term potential of the space.
The Macro Backdrop: Waiting for Quantitative Tightening to End
A significant part of our discussion revolved around the macroeconomic environment. The Federal Reserve's ongoing quantitative tightening (QT) appears to be a significant headwind for altcoins. According to Ben, previous cycles showed that alt season typically aligns with a shift away from QT and towards more accommodative monetary policies. However, with QT still in place, the liquidity that fuels broader market rallies just isn't there.
Ben speculated that until there's a clear reason for the Fed to pivot—such as a broader market scare—the crypto market might remain stuck in this pattern. Bitcoin could continue to dominate, but the broader industry might not see a true "alt season" until monetary policy shifts.
Is There a Silver Lining?
While the conversation largely focused on why this cycle feels "broken," there were glimmers of hope. Ben noted that when markets finally do turn, they often move quickly and catch many by surprise. For those holding Ethereum or other quality altcoins, the message was one of cautious optimism—if quantitative tightening ends, we could see a resurgence in altcoin performance.
For now, however, the message is clear: the market might feel off because it is off. Between narrow market breadth, meme coin distractions, and a tough macroeconomic backdrop, this cycle might not be the euphoric bull run that many had hoped for. But understanding why can help investors navigate what's next—and position themselves for when the tide finally turns.
Tune in to the full episode for all of Ben's insights, and stay Bankless!