Total crypto market capitalization has topped $2 trillion again following an epic slump wiping $500 billion out of the space in less than a week.

The figure fell to $1.83 trillion on August 5 as Bitcoin tumbled below $50,000 and Ethereum tanked 23% in a day to below $2,200.

However, that total cap figure has gained 12% since that dip, returning to $2.06 trillion at the time of writing.

Time For a Recovery?

Nevertheless, crypto markets have fallen to a six-month low, but analysts are already talking about a recovery. In a post on X on Aug. 6, MN Consultancy founder Michaël van de Popp said, “This correction today can ultimately lead to the bear trap of this cycle.”

He added that the massive capitulation event caused $1.2 billion in leveraged positions to be wiped out of the markets.

Meanwhile, Crypto Capital Venture founder Dan Gambardello opined:

“Many people think it’s the end for crypto, and I’m sitting here waiting patiently for the bull market to begin, still right on schedule.”

Primitive Crypto founder Dovey Wan said that “the dump feels a mix taste of 2020 March 20, and 2021 May 20.”

March 2020 was the pandemic-induced back swan event, and May 2021 saw a mid-bull run correction due to a leverage flush.

This dump feels a mix taste of 2020 March 20 and 2021 May 20

2020 march flavor, macro was caught off guard. Ask around marco fund and those who are deep in JPY carry trade in HK, most didn’t expect it at all. Some China focused hedge fund risk off and de-lev a lot last week…

Dovey Rug the fiat Wan (hiring) (@DoveyWan) August 5, 2024

Trader Alex Krüger echoed the sentiment in a post on X on Aug. 6, stating that it was closer to March 2020.

“As altcoins almost all dead now, so we start afresh with the new easing cycle without expecting the wild performance of 2020-21.”

The crypto crash this time around was not driven by anything crypto-related. Macroeconomic factors, especially due to central bank action in Japan, sent shockwaves through traditional markets across the world.

However, crypto, being a higher-risk asset class, suffered greater losses. With that in mind, crypto markets could bounce back faster than traditional ones.

Comparing to Previous Cycles

Others, such as veteran trader Peter Brandt and ITC Crypto founder Benjamin Cowen, compared the big dump to previous cycles when previous plunges occurred.

Brandt said that the same thing happened after the 2016 halving when BTC retraced 27% and compared it to the 26% correction after the 2024 halving.

Cowen compared it to the 2019 market cycle, when crypto assets surged for the first half of the year and tanked for the second half.

Bitcoin has now corrected 33% from its all-time high to its 2024 low of just below $50,000. Compared to previous cycle pullbacks of 50% or more, it is still very minor.