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Cryptocurrency market analyst Dan Gambardello has questioned whether the traditional 4-year crypto market cycle could be breaking down.
He suggested that current market conditions may not follow historical patterns. Responding to a social media comment that there are “only 7-8 months left” in the current cycle without profit-taking levels being reached, Gambardello challenged the assumption saying,
“Why only 7-8 months left? What if the 4 year cycle is broken and we are in new times?”
Fed Liquidity Data Points to Potential Altcoin Season
Gambardello’s analysis centers on the relationship between Federal Reserve monetary policy and cryptocurrency market performance, particularly for altcoins.
“Last time they did this, the end of quantitative tightening, Bitcoin dominance collapsed. If history repeats, alt season is coming,” Gambardello noted.
The chart shows that when Fed liquidity expands, Bitcoin’s market dominance tends to decline as altcoins outperform.
The analyst pointed to the Fed balance sheet’s years-long reduction phase, which has “been sucking all the liquidity from these markets.” He argues that this contraction has been particularly challenging for altcoins.
With the Federal Reserve expected to begin slowing its balance sheet reduction in April before eventually moving to expansion, Gambardello sees a potential catalyst forming. He emphasized,
“If you’re just completely doubtful of crypto and this space, I think if you could focus on one data point, it would be this one.”
Ethereum Reaches Key Technical Level as Potential Macro Bottom Forms
Gambardello identifies Ethereum as an example of the current altcoin market structure and a potential leading indicator for the alternative cryptocurrency market.
His technical analysis focuses on several metrics suggesting Ethereum may be forming a macro bottom despite current market uncertainty.
The crypto analyst highlighted that Ethereum has reached what he terms a “historical buy zone” based on its two-year moving average indicator.
This technical development happens as Ethereum’s monthly Relative Strength Index (RSI) enters what Gambardello describes as a “bottoming out zone.”
On the weekly timeframe, Gambardello has been monitoring a busted pattern in Ethereum’s chart.
This formation happens when price breaks out of a pattern, pulls back to retest the pattern boundary, and then moves strongly in the opposite direction of the initial breakout.
In Ethereum’s case, he believes this could manifest as a pullback to a previously broken triangle pattern before resuming an upward trajectory.
If this pattern plays out as Gambardello anticipates, he suggests it could serve as the altcoin bull market indicator.
Market Patience Required Despite Current Frustration Levels
The disconnect between current market conditions and Gambardello’s bullish outlook has created challenges for the analyst’s audience engagement.
He acknowledges that his optimistic view has become less popular as market frustration grows.
Despite these challenges, Gambardello maintains his positive outlook while emphasizing the need for risk management and patience.
He recognizes the possibility of continued volatility and potential further downside in the near term.
Referencing a social media post suggesting that the next leg up in crypto markets could begin in April when the Federal Reserve’s quantitative tightening slowdown commences, Gambardello called it “not a bad thesis” based on historical precedent.
The post highlighted that the crypto market cap has fully retested its 2021 highs, with most gains made since the Trump election victory having been erased along with leverage and retail participation.
