Image is AI generated
There is a lot of confusion on the current status of the crypto market. The prices went up, and the expectations were high, but what happened did not develop into a full-blown bull market, like the ones of 2017 and 2020. If you remove the emotional aspects from the matter and analyze the current market in light of the past, it’s obvious that something important is lacking.
There is this theory that I came across in a particular crypto community on telegram. It is known as the three laws of the bull market. The explanation of the three laws clearly points out why the bull run in this circle did not look like it. History has clearly shown that in order to achieve the possibility of the bull market, the three conditions must be present at the same time. If any of the conditions are missing, the markets may move, but they will never explode.
The first is that there is a new narrative that offers new hope. In the previous cycles, this narrative took the form of ICOs and subsequently the narrative of DeFi. However, in the current cycle, the only narrative that can be considered relevant is that of AI tokens. Meme coins are no longer in the running in any serious way, and narratives that have been recycled have not been able to pull in new money.
The second law: old technology, new playbook. Every major cycle has been based on concepts developed several years prior, but applied correctly for the first time. The creation of Ethereum was by no means new, long before ICOs gained popularity. Concepts of DeFi were researched and developed well before they gained widespread popularity. Currently, the field of crypto applied to artificial intelligence is more of the former than anything else. The science behind artificial intelligence isn’t new, but the process of crypto integration has seen further development.
However, where this cycle falls short is in the third law, which is the power of new asset creation on a mass scale. This is the engine that drives the excitement throughout the market. In the past, new assets could be made easily and on a massive scale during the previous bull cycles. This made it possible for the story of new wealth to shift from one asset to another, attracting new supporters. This engine is not strong in the current market.
Without the third law, there will be no viral trend. Even if prices begin moving, they cannot sustain their momentum. This is why what people expected to be a bull market remained shallow. There was market movement, but the engine was never ignited. If one regards the current cycle from this perspective, it is easier to understand why the expectations were not met.
The crypto market did not disappoint people due to an absence of interest. It disappointed people due to an incomplete setup required for an actual bull run. Unless all three laws come into play again, especially law number three, any corrective rally in the market will not exceed boundaries.