Large-cap and small-cap behaviour across Bitcoin's cycles

Across Bitcoin's completed cycles, the two buckets behave differently in a consistent direction. During the late stage of a Bitcoin advance, the large-cap bucket's ratio to BTC tends to compress while the small-cap bucket's ratio compresses further. The small-cap bucket is the last to participate in an advance and the first to lose ground as the advance matures. The cycle comparison page sets out the phase dates this description rests on.

During the early stage of a recovery, the pattern reverses. The small-cap bucket's ratio expands further than the large-cap bucket's, and it does so earlier. This is the rotation pattern that the individual asset pages in this cluster describe, seen at the level of the two size groups rather than one asset at a time.

The amplitude difference is the more robust finding. In every completed cycle in the period, the small-cap bucket moved further in both directions than the large-cap bucket, and the large-cap bucket moved further than Bitcoin. That ordering — small cap, then large cap, then BTC — is consistent across the cycles observed, and it is what a liquidity explanation predicts. The liquidity page explains why thinner order books amplify price moves, and the ordering follows directly from it.

The amplitude ordering described above is the finding least affected by survivorship, because it is a statement about how the surviving assets moved rather than about how much an investor would have made. A bucket of assets that all survived can still be compared with Bitcoin on the amplitude of its moves, and the comparison is meaningful.

Any statement about returns is affected, and severely. The small-cap bucket's return over the period is computed from assets that are still listed today. The assets that went to zero are not in the series, and their absence inflates the result by an amount that cannot be estimated from the data available. This is why the page reports direction and relative amplitude and declines to publish a return figure. A return figure from this sample would be a number that no investor could have earned, presented as though it were a description of the market.

The same caveat applies, in weaker form, to the large-cap bucket. Its membership is stable, but stability is itself a selection effect: an asset is in the bucket because it was large at the start of the period, and assets that were large and then collapsed are under-represented. The market capitalisation reference explains why a capitalisation figure is a construction, and why a rank built from it inherits the construction's weaknesses.

The honest summary is that the size effect is real in the sense that the amplitude ordering is visible and consistent, and that its magnitude is not something this page can state. A reader who wants a magnitude should treat any published figure with suspicion unless the author has explained how the failures were handled.