Why Crypto’s Top Assets Lag Risk Markets, According to Analyst Garrett

Bitcoin and Ethereum’s weakness reflects deleveraging and market structure, not a breakdown in long-term fundamentals.

Market analyst Garrett has offered his analysis of why blue-chip crypto coins have lagged precious metals and other risk assets. Moving away from popular short-term price analysis, the analyst pointed to deeper structural market forces as the reason for this trend. According to him, this disparity is driven by market narratives rather than the assets’ fundamentals.

Garrett Says Bitcoin and Ethereum Lag Reflect Crypto Market Cycles, Not Weak Fundamentals

Traders have been left frustrated by the movement of top crypto assets, as many banked on them to track rallies in stocks and commodities. Garrett argues that current conditions reflect a normal phase within a longer cycle rather than a breakdown of core values.

A sharp decline that began last October caused significant losses for leveraged traders, particularly retail participants. In the aftermath of this event, risk appetite dropped as heavy liquidations triggered a defensive market sentiment.

Interestingly, capital rotated into Al-linked stocks across Asia and the United States. At the same time, the fear drove investors to precious metals like gold and silver. Retail investors, who still dominate crypto trading, shifted funds into those markets instead of digital assets.

Garrett explained that crypto assets also face barriers that other asset classes do not encounter. For instance, moving funds between decentralized and traditional finance into digital assets remains subject to regulatory and operational constraints. And this sometimes affects users’ trust. 

Operationally, stocks, commodities, and FX can all be traded from a single traditional brokerage account. Crypto usually requires separate exchanges, wallets, and extra setup, making it less convenient to move money in and out.

Institutional participation in crypto remains limited, as many traders lack strong analytical frameworks. And as such, this allows exchanges, market makers, and speculative funds to shape sentiment. At the same time, ideas like the “four-year cycle” or seasonal curses continue to spread despite weak data backing.

Meanwhile, simple explanations often attract attention. For example, some crypto participants attribute Bitcoin price movements to currency movements, even when no deeper analysis supports such a connection.

Garrett Rejects Bear Case as Bitcoin and Ethereum Hold Long-Term Roles

Bitcoin and Ethereum have lagged most major assets over the past three years, with Ethereum performing the worst during that period. When stretched across a six-year timeframe, the market movement tells a different story. Both assets have outperformed most markets since March 2020, with Ethereum leading.

Garrett argues that short-term weakness reflects mean reversion within a longer cycle and ignoring time horizon leads to flawed conclusions.

The analysts pointed to a similar pattern in silver, which ranked among the weakest risk assets before last year’s short squeeze. Now, the metal leads on a three-year basis, showing that rotation rather than failure explains the move.

According to the analyst, long-term underperformance is difficult to justify as long as Bitcoin retains its store-of-value role and Ethereum remains tied to AI growth and real-world asset use.

Analyst Points to China 2015 Playbook as Crypto Enters Late Deleveraging Stage

Garrett compares current crypto conditions with China’s A-share market in 2015. Back then, a leverage-fueled bull market collapsed into a classic A–B–C decline. After the final leg, prices moved sideways for months before a multi-year recovery.

Bitcoin and broader crypto indexes show similar patterns in structure and timing. Shared traits include high leverage, sharp volatility, bubble-driven peaks, repeated liquidations, and fading volume. Futures markets now show contango, reflected in discounts for crypto-linked equities such as MSTR.

Image Source: X/Garrett

Several macro factors are improving:

• Regulatory is advancing through measures like the Clarity Act.
• Agencies such as the SEC and CFTC support onchain equity trading.
• Monetary policy is easing through rate cuts and liquidity support.
• Expectations for future central bank leadership are turning more dovish.
• Valuations across crypto remain far below prior peaks.

Bitcoin and Ethereum Show Safe-Haven Traits Despite Market Volatility

Garrett rejects the view that Bitcoin and Ethereum behave like pure risk assets, explaining their failure to follow equity rallies. Risk assets tend to move sharply and react strongly to investor sentiment, which applies to stocks, metals, and crypto. 

However, Bitcoin and Ether also show safe-haven traits at times. Due to their decentralized nature, these assets can operate outside traditional systems during periods of geopolitical stress.

As per the expert, negative headlines often weigh more heavily on crypto than on other markets, with trade or military risks blamed for weakness even when other assets ignore them. This creates a gap where digital assets fall quickly on bad news but respond slowly when positive developments emerge.

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