Bitcoin’s (BTC) recent narrow price range between $94,000 and $100,000 has perplexed many market participants.
While the largest cryptocurrency historically exhibits strong directional moves followed by months-long consolidations—often described as stair-step price movements—this phase feels distinctively different. Typically, consolidations are followed by a breakout; however, the current range has narrowed significantly from December’s $90,000-$110,000.
Attendees at last week’s Consensus Hong Kong echoed this sentiment, with several key market makers and industry figures suggesting that the rampant memecoin frenzy is a major contributor to the stagnant behavior observed in BTC and the broader altcoin market. Many noted a stark resemblance to the uninspiring price action from seven years ago.
“The market has been very saturated with memecoin launches, and crypto natives are kind of exhausted by this,” stated Evgeny Gaevoy, CEO of leading market maker Wintermute, during the conference.
Tokens such as President Donald Trump’s TRUMP and the LIBRA token, promoted by Argentine President Javier Milei, have drawn liquidity away from more established cryptocurrencies. Gaevoy indicated that traders have opted to invest in these newer tokens at the expense of traditional coins.
This stagnant price behavior for BTC mirrors the period from September to October 2018, when the price range tightened over subsequent weeks and settled between $6,000 and $6,400.
However, the current scenario differs significantly. The 2018 consolidation occurred in the shadow of a bear market, following a steep decline from bitcoin’s then-record high of nearly $20,000. In contrast, BTC is currently only about 12% below its all-time high.
Presidential Memecoins
In an interesting turn of events, just three days before his inauguration on January 20, Trump introduced his official token, TRUMP, which achieved a market cap of over $12 billion within just 48 hours. However, its decline was swift, as the market cap plummeted to nearly $3 billion by early this month, according to data from Coingecko.
What’s noteworthy is that the total cryptocurrency market capitalization stayed largely unchanged at nearly $3.5 trillion during this boom-bust cycle. This indicates that the memecoin movement did not significantly attract new capital into the market; instead, the funds simply relocated from BTC and other coins like Solana’s SOL.
Moreover, while some wallets that invested early enjoyed substantial profits, an estimated 800,000 investors lost a total of $2 billion after selling at a loss or holding their investments through the crash, according to Chainalysis.
A similar pattern unfolded with the LIBRA fiasco earlier this month, which resulted in a loss of $251 million in investor money, ultimately becoming a net wealth destroyer for the crypto market.
This has likely influenced opinions like that of Abraxas Capital Management’s founder, Fabio Frontini, who argued for a potential ban on memecoins, addressing the rapid-fire discussion at the “Views from Wall Street to Crypto” session at Consensus.
Jason Atkins, chief commercial officer at Auros, emphasized that the siphoning of liquidity by memecoins from other market segments highlights the fragility of the current liquidity pool.
“It is evident that adoption remains at an early stage,” Atkins stated in an interview. “The participant base is still relatively small, and the susceptibility of one high-profile token launch to disrupt the entire market signals a lack of depth and stability. These attributes are essential for attracting increased institutional interest.”
Institutional investors are actively exploring pathways to engage with the crypto space but remain cautious. They are keen on witnessing a more mature and stable market capable of handling larger volumes without being upended by speculative, meme-driven activities.
Bitcoin’s Direction
Opinions regarding Bitcoin’s future trajectory are divided. Many attendees at Consensus expressed concerns that the meme frenzy, combined with BTC’s unusual stability, is unhealthy. They argued that such range-bound price behavior typically concludes with a downward move, reminiscent of what was seen in 2018.
On the other hand, Gaevoy from Wintermute pointed out that the saturation of memecoins is overshadowing positive developments on the regulatory front.
“People don’t necessarily recognize that we are witnessing numerous positive shifts, especially regarding regulation. We’ve overlooked the detrimental influence of the SEC and CFTC over the past few years, which has lessened. I believe this positive change isn’t being adequately reflected in current pricing, so I remain optimistic,” Gaevoy stated.
Altcoin ETFs?
Regulatory changes are also influenced by shifts in U.S. administration and the departure of Gary Gensler from the SEC.
Multiple issuers have filed SEC applications for spot exchange-traded funds (ETFs) linked to popular altcoins such as Solana’s SOL, XRP, dogecoin (DOGE), and litecoin (LTC).
To date, the SEC has approved only spot Bitcoin and Ether ETFs, relying on CME’s surveillance system for Bitcoin and Ether futures to mitigate concerns about price manipulation. Notably, broader altcoins do not enjoy this privileged status yet.
Gaevoy views this as a remnant of previous SEC leadership, expressing confidence that top ten tokens—excluding stablecoins—will see approval in the future.
In summary, the interplay of market sentiment, regulatory changes, and the influence of memecoins underscores the complexity of Bitcoin’s price dynamics and the path ahead for the cryptocurrency market.
