When Capital Underestimates Fundamentals: Lessons from the Current Cryptocurrency Market Cycle

Matrixport has made an interesting observation about the current crypto market dynamics: capital flow is now the dominant factor in determining trends, rather than fundamentals or adoption. This is clearly reflected in a rather “meme-tiring” phenomenon – since a massive influx of approximately $100 billion into the market, Ethereum (ETH) has surged from $2,600 to $4,500. However, as this capital flow begins to slow down, prices also reverse course.

Changes in Market Logic

Compared to previous cycles, when people were concerned about whether blockchain had real-world applications, the market is now entirely driven by the speed and direction of capital flow. Ethereum is currently trading at around $3.14K, and this price level vividly reflects the market’s dependence on new capital influxes.

Matrixport notes that the market is highly sensitive to fluctuations in capital flow. The moment capital starts to weaken, prices are affected immediately. This applies not only to Ethereum but also paints a broader picture for the entire cryptocurrency market.

Implications for 2026

With this awareness, monitoring capital movement becomes a key tool for forecasting future trends in the cryptocurrency market. Instead of focusing solely on news or technology, investors should pay attention to the capital roadmap – that is the true “compass” of the market in the current phase.