The Crypto Speculation Index suggests a reset of the bullish Bitcoin market.

A key indicator shows that prevalent speculation during the first quarter has dissipated. This decline in speculation could indicate a healthier market and potential future increases in the price of Bitcoin. Bullish markets tend to pause during periods of excessive optimism, only to resume once speculative excesses have been cleared.

Capriole Investment's speculation index indicates that speculative excesses from the first quarter have decreased, suggesting a potential renewed rise in the price of Bitcoin. The index, which measures the percentage of alternative cryptocurrencies (altcoins) with 90-day returns higher than Bitcoin's, has stabilized below 10%, down from its peak of nearly 60% in January. Bitcoin reached new all-time highs above $70,000 in the first quarter and has since settled around $60,000.

According to Coingecko, there are currently over 14,800 altcoins. Most of these coins lack liquidity and any use case, making them purely speculative instruments, with volumes closely tied to Google Trends, an indicator of retail investor interest. Outperformance of altcoins compared to BTC is seen as a sign of speculative mania.

Speculative corrections serve as alignment mechanisms, helping to realign asset prices with fundamentals and temper excessive speculation. This creates a healthier long-term environment. Since 2019, a speculation index below 10% has coincided with the start of strong Bitcoin rallies, as observed in the first half of 2019, late 2020, and the second half of 2023.