- The Advance Decline Index shows a market where fewer cryptocurrencies are thriving while most struggle to recover.
- Unlike past cycles, market growth is concentrated in fewer assets like Bitcoin and Ethereum with less broad participation.
- Extended consolidation and weaker trends highlight why this crypto market cycle feels slower and less predictable.
A recent analysis by Benjamin Cowen highlights why the current cryptocurrency market cycle feels so different from past ones. Using a chart that compares the Advance Decline Index (ADI) of the top 100 cryptocurrencies with their total market cap, Cowen shows how market dynamics have shifted.
The Downtrend in the Advance Decline Index
The ADI, which measures the number of cryptocurrencies gaining versus those declining, has been falling consistently since 2021. Even though Bitcoin has reached the significant milestone of $100,000, the ADI’s decline signals weakness across the broader market. During the 2020 to 2021 bull run, the ADI rose alongside the market cap, which indicated widespread growth across many cryptocurrencies.
However, this time the ADI’s downward trend suggests that growth is concentrated in only a small number of cryptocurrencies, while the majority are struggling to gain momentum. The chart shows a clear difference between the 2020 to 2021 cycle and the current one, as the ADI and market cap are no longer rising together. In the earlier cycle, the ADI increased along with total market capitalization, showing broad participation in the market rally.
Since 2021, however, the ADI has declined sharply even as the total market cap has climbed, which indicates uneven growth where only a few major assets like Bitcoin and Ethereum are driving the recovery while most other cryptocurrencies lag behind.
Insights from the Community
The discussion also includes a perspective from Sahil RoyKhan, who noted that the market has stayed longer in a range where the MVRV Z-score is between 1 and 3. In past cycles, the Z-score would typically spike to 7 or 8 near the top of a bull run. This observation supports the idea that the current cycle is stretching out with less extreme peaks, which makes it feel much slower and different compared to earlier cycles.
The declining ADI and the extended Z-score range reveal a market that is less balanced and more concentrated in a few top assets. These trends help explain why investors feel uncertainty despite Bitcoin’s success. Cowen’s analysis shows how the ADI is a key metric for understanding broader market behavior and for tracking potential changes in the cryptocurrency landscape.
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