Transcription
Hey everyone, and thanks for dropping back into the cryptoverse. Today, we're going to talk about the advanced decline index for the top 100 cryptocurrencies. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on Into The Cryptoverse Premium at intothecryptoverse.com.
If this cycle continues to feel differently to you than last cycle, it's because it still is. This cycle looks a lot more like what we saw back in, say, like 2016 and 2017, uh, than what we saw in 2020 and '21. And you could argue that one of the big reasons for that is because in 2020 and 2021, we had tons of money printing, we had lower interest rates, and you had a lot of altcoins joining in on the party. But in this cycle, uh, it's almost been completely opposite.
The advanced decline index is, uh, calculated as the number of daily advances minus the daily, the number of daily declines, plus the prior value, the prior index value. And so, if in this case, when you have the total market cap generally going up, but the ADI going down, the implication of that is that only a few assets in the top 100 are actually responsible for the total market cap going up. And that's why we've spent so much time this cycle talking about things like, you know, Bitcoin dominance, and recently we've been talking about ETH dominance, and and combining those into one thing and calling that blue chip dominance, right? And the reason is because so many of these, so many of these other cryptocurrencies just continue to bleed back to Bitcoin for many years, and now also Ethereum.
So, you have a cycle where, so far for this entire cycle, it's been driven by only a few different assets. And if you think about it, even hasn't really contributed that much to it yet. I mean, it's still technically below its prior all-time highs, um, despite the fact that Bitcoin took out its all-time highs a long time ago. When you think about it, this cycle has been full of certain altcoins outperforming Bitcoin for each year, but basically none of them, or at least not many of them, actually durably outperforming Bitcoin. Plenty of altcoins that outperformed Bitcoin in 2022, but those that did likely didn't continue to outperform in 2023 through 2025. And then the ones that did well in, say, 2023 and 2024, like Solana, have been bleeding for, say, the second half of 2024 going into 2025 against Bitcoin. And XRP, right, didn't really do that well against Bitcoin in 2022, 2023, and then for most of 2024, but then at the end of 2024, it started doing better. Recently, it's been Ethereum, right? So, it did poorly, uh, 2022 through early 2025, and now it's doing better.
So, what you've seen is basically a rotation from one sector of the asset class to another, uh, liquidity flowing from this altcoin to that altcoin. And every year, you basically have a different altcoin outperforming Bitcoin, but there haven't really been that many altcoins that have durably outperformed Bitcoin. And so, you have a chart that looks like this where Bitcoin has gone up a lot, right? We're looking at the total market cap, but the total market cap has gone up a lot, but it's primarily due to, to Bitcoin. And anytime that Bitcoin consolidates or isn't really moving, you can see a lot of those altcoins just kind of fade back to Bitcoin and and that liquidity just goes right back into Bitcoin.
So, the liquidity keeps Bitcoin moving from the altcoin market. That's a major source of liquidity for Bitcoin, but you don't really see a lot of that liquidity durably flowing back into the altcoins, which is what people call alt season. That has not happened this cycle. And I mean, it just goes to show you that, and I'm not saying, you know, it's impossible to have something like that again, but it goes to show you like cycles like this, I think, teach good investing practices, whereas cycles like 2020 and 2021 kind of encourage bad investing practices, right? It, it's great in, in, in the time when so many cryptocurrencies are going up and it just feels like everyone's a genius. But what it does is it, it, it teaches people to buy the riskier stuff thinking it's going to outperform Bitcoin. And in that cycle, a lot of them did. But then in the next cycle, it didn't play out like that. And so what it, what it teaches people is that they think that, okay, if they chase an altcoin, they're likely going to get a much better return than Bitcoin. And they keep thinking that throughout so many years, and then they look back on it, and they're like, oh wow, I would have been way better off with Bitcoin.
There's this common, um, you know, idea that if, if someone wants to make money, if they want to get wealthy, they, they don't buy Bitcoin, they buy altcoins instead. But a lot of times what happens is that those altcoins just bleed Satoshis, right? They bleed back to Bitcoin. And sometimes it's not about chasing the next 100x gem. Sometimes it's just about preserving what you have, right? Preserving the Satoshis that you have and and just riding that out for as long as you can. And so I do think that, you know, in future cycles, we'll likely see things play out in very different ways. But just remember the lessons that you've learned this cycle, and even in the future, when we are in a period where altcoins are outperforming Bitcoin, um, just remember that the most likely outcome after that brief window is over is to just continue to see them bleed because the reality is that in the top 100, this metric does just generally go down, right? It generally does go down over a long enough period of time, uh, despite the fact that total market cap goes up. And I think one of the big reasons for that is because Bitcoin keeps lifting the asset class, and only a few altcoins have actually, you know, stuck around for more than one cycle. A lot of them just get cycled in and out, and and they end up just kind of fading into, into irrelevance.
So, just keep in mind this chart. I, I know it, it might not seem, uh, like the most useful chart at times, but this has just been a series of lower highs on the advanced decline index. This is still very different than what we saw in 2020 and 2021, when the ADI was actually trending up, right? In that, in that cycle, you had a lot of cryptocurrencies contributing to the rise in the total market cap of the asset class, but this cycle, it's been the exact opposite. Uh, so just something to think about. Again, if the cycle feels differently to you than 2020 and 2021, it's because in a lot of ways it is. Um, Bitcoin is more so responsible for the gains so far this market cycle, whereas last cycle, it was a lot different. Um, but, you know, I could see a period, uh, potentially later on, maybe, you know, maybe this trend continues, and then perhaps 2027, 2028, or something, maybe, maybe this thing starts to go back up again. But it does go to show you just how, how long, because even in 2017, right, this metric never really went up for that long. I mean, maybe from like March to to June, and then it came back down, and then up again. I mean, you could have made money. I'm not saying you couldn't make money, but the reality is is that Bitcoin went up a 100x that cycle. Um, and so I mean, that was, that was a big, big increase just with Bitcoin. And, you know, this cycle, it just looks a lot different than last cycle. And again, if you feel like this cycle, if it feels like this cycle is different, but you're too afraid to say this time is different, just look at this chart and and recognize that the ADI has been going down since 2021, uh, which is very different than what was going on in 2020 and 2021.
Bitcoin's path is very familiar, right? Bitcoin is doing this cycle basically what it does every cycle. But it's the altcoin market that has, has really been lagging behind for, for many, many years. And it just, I think, is a great, a great way to teach good investing principles that you can hopefully carry with you, uh, for the rest of your investing career.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and again, check out the sale on Into The Cryptoverse Premium at intothecryptoverse.com. I'll see you guys next time. Bye.