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Is the crypto bull market over?
The second half of February turned turbulent for investors, with both traditional and crypto markets experiencing significant downturns as risk-off sentiment took hold.
Investors reacted to weakening economic indicators—including signals pointing to potentially lower US GDP this quarter—and rising geopolitical tensions in Eastern Europe and the Middle East, prompting a move away from risk assets. Traditional safe havens such as gold and US treasuries saw inflows, reinforcing the market’s sensitivity to macro uncertainty.
In addition to being impacted by these macro factors, crypto assets faced headwinds from news about the largest exchange hack in history, memecoin craziness, and a perception the US administration isn’t moving fast enough with its crypto-related initiatives. This was quite a lot of negative newsflow in a short period of time, and as a result crypto suffered, with bitcoin (BTC) hitting a three-month low last week, trading over 20% off its most recent all time high.
So, have these events effectively killed the crypto bull market?
The short answer is no. We don’t see any signs recent events are dragging down the bull market and while short-term volatility can be unsettling, it also serves as a reminder that these phases of crypto cycles rarely move in a straight line. Historical bull runs have always included periods of heightened volatility and sharp corrections. The 2020–2021 rally, for example, saw multiple pullbacks of 20% or more before BTC ultimately reached new highs. The current situation is part of the natural market cycle rather than a definitive trend reversal.
BTC performance, volatility, and corrections since 2010
Let’s go a little deeper into recent events why they do not impact the long-term case for crypto.
Long-term holders are “hodling”
If you look at where bitcoin’s recent selling pressure is coming from, it’s from traders and the most very short-term holders. If we look at BTC’s Spent Volume Average Band, a metric that shows how long the coins were held that are being sold, it’s very clear the overwhelming majority of BTC sold in the last week was short-term trading activity. In fact, almost 90% of the selling activity from February 21 to February 26 was BTC held for less than a month.
Recent BTC selling pressure is from trading activity
We can also see from looking at this data that the average holding period for BTC investors is nearly five years. In other words, long-term holders of BTC do not react to near-term events.
BTC holding period has increased over time
But what should investors make about the recent exchange hack, the ongoing memecoin frenzy, and the perception that President Trump might not deliver on his crypto promises? A few thoughts on these events and why I don’t think they will have a lasting impact on the investment case for the crypto asset class.
• Bybit hack: This exchange breach last week resulted in the loss of 401,000 ETH (approximately $1.3 billion), sending shockwaves through the crypto community. While Bybit has reassured users that losses will be covered, the attack has reignited security concerns, particularly as exchange-related hacks have declined in recent years. Hashdex was not impacted by this event given the very strict vetting criteria we have in place for all of the third parties we interact with, including custodians and exchanges. However, while the incident serves as a stark reminder of the importance of vetted custody solutions, we do not see the hack having a long-term negative impact on the fundamentals we believe are driving opportunities in the crypto asset class.
• Memecoin madness: The recent market decline can also be attributed in part to a liquidity shift driven by the memecoin craze. Tokens such as TRUMP, which saw heavy trading during the presidential inauguration, and LIBRA, which surged this month following the controversy surrounding Argentina’s President Javier Milei, have drawn significant market attention and raised concerns over who benefits from this type of activity. While memecoins often generate short-term excitement, some investors worry that capital has been diverted away from more productive sectors of the crypto economy, increasing overall market vulnerability. This is certainly a valid concern and I believe that the short-term memecoin activity helps make the case for investing in an institutional quality index like the Nasdaq Crypto Index, which has strict criteria for vetting crypto assets. There will continue to be a lot of noise in the crypto space for the foreseeable future, and we think investors are well-served by being able to track a benchmark that has a methodology built to eliminate this type of superfluous activity.
• Trump’s delays: During his campaign, President Trump expressed significant support for crypto, even proposing the US consider a bitcoin stockpile. However, there is a perception among some that his administration has not moved fast enough on this initiative and others. These developments take time—including the important work underway at the SEC’s Crypto Task Force—and we have strong conviction that the regulatory landscape for crypto will continue to dramatically improve in the US in the coming months and years.
Where do we go from here?
Bitcoin’s recent price action has pushed it below its $90,000–$110,000 trading range, and some technical indicators suggest a potential move lower if selling pressure persists. However, there are key levels that could serve as support.
Options market data from Deribit shows that the highest open interest for BTC options is at the $80,000 strike price, indicating that this level could act as a floor in the near term. Historically, such areas of high open interest tend to provide price support as traders hedge positions and market makers adjust exposure.
If macroeconomic conditions stabilize or there is more favorable news toward crypto from the US government, we could see BTC recover to the $90,000–$105,000 range in the coming weeks. In other words, the bull market is fully on track and bitcoin remains in line with performance in previous phases.
Regardless of what happens with near-term prices, the structural fundamentals of the crypto market remain strong, and nothing in the past week suggests a major shift in the broader bull cycle. Institutional adoption continues to progress, with increasing interest in spot bitcoin ETFs and broader integration of blockchain technology in traditional finance. The long-term trajectory remains positive, but as with any market, patience and risk management are key.
As history has shown, bull markets rarely move in a straight line, but investors with a clear, long-term strategy are best positioned to navigate this volatility and capitalize on future opportunities.
Dogecoin’s performance and staying power across multiple market cycles suggest it is not “just another one of those memecoins”.
Over the past decade, DOGE has outperformed even Bitcoin, delivering over 133,000% in returns, nearly 1,000x BTC’s gains in the same period. Despite deep drawdowns during bear markets, Dogecoin has shown remarkable structural resilience.
Following each major rally, it has consistently formed higher lows, a pattern of long-term appreciation and compounding strength.
Historically, Dogecoin has closely mirrored Bitcoin’s movements, often peaking a few weeks after. While 2024 saw Bitcoin dominate headlines following landmark ETF approvals, DOGE still followed its trajectory, though it has yet to stage its typical delayed breakout.
As macro uncertainty continues to fade and momentum returns to the market, retail participation is likely to accelerate, setting up conditions in which Dogecoin has historically thrived.
At the same time, regulatory clarity around Dogecoin has improved. The SEC recently confirmed that most memecoins are not considered securities, comparing them to collectibles. Additionally, they clarified that proof-of-work rewards, like those earned from mining DOGE, also fall outside that scope. These developments further legitimize Dogecoin’s role in the ecosystem, potentially setting the stage for its next paw up, especially as it now holds a firm base around $0.17, nearly 3x its pre-rally level before reaching a new all-time high in the last cycle.
In addition to its long-term performance, Dogecoin stands out as an asset that behaves asymmetrically, offering investors a rare source of uncorrelated returns across both traditional and crypto portfolios. With an average correlation of just 15% to major assets, DOGE’s price action remains largely detached from broader macroeconomic trends, reinforcing its value as a true diversification tool.
Dogecoin demonstrates significant independence within the crypto market, with its correlation to Bitcoin at only 31% and to Ethereum at 37%. This divergence stems from unique capital flow dynamics, where higher-beta assets like DOGE tend to rally after blue-chip crypto assets reach major milestones.
While Bitcoin slowly evolves into a digital store of value and Ethereum powers decentralized infrastructure, Dogecoin remains largely a cultural asset, thriving on narrative momentum and crowd psychology, offering explosive upside when risk appetite surges.
For investors seeking an upside without mirroring the behavior of core holdings, Dogecoin offers a compelling case. Its ability to decouple from market trends while tapping into more speculative surges makes it a powerful, though unconventional, addition to a portfolio with wildcard potential.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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