Crypto Market Cycle Analysis: When Will the Bull Run End?

The cryptocurrency market is currently in an active growth phase, with Bitcoin's price increase driving the overall market upward. However, investors are generally concerned about when this bull run will end and when the best time to lock in profits will be. By analyzing market cycles and liquidity changes, perhaps the answer can be found.

The financial market generally experiences cyclical fluctuations, and the cryptocurrency sector is no exception. These cycles reflect the transfer of liquidity between different assets and the changes in investor behavior over time.

The Four Stages of the Cryptocurrency Bull Run Cycle

Phase 1: Fund inflow into Bitcoin

Each bull run usually starts with new funds entering the crypto market through Bitcoin. Institutional investors, hedge funds, and cautious retail investors view Bitcoin as the safest and most reliable way to enter the crypto space. As the most recognized and liquid crypto asset, Bitcoin becomes the first choice for both newcomers and large funds. This influx of funds drives up the price of Bitcoin, setting the tone for the entire market.

Phase 2: Funds Shift to Large Altcoins

As Bitcoin starts its bull run, investors (, including large hedge funds and companies ), are beginning to turn to major altcoins like ETH, SOL, and BNB in pursuit of higher returns. Bitcoin's dominance is starting to decline, marking the beginning of a comprehensive altcoin market. For example, during the 2021 bull run, after Bitcoin peaked in March, the total market cap of altcoins grew by 95% within 2 months.

Phase 3: Medium Market Cap and Popular Tokens in Focus

As market confidence and enthusiasm increase, investors are turning their attention to smaller tokens that are considered to have high potential. They are speculating on mid-cap projects, hoping for 10x or even 100x returns. Market volatility is intensifying, and feelings of greed and FOMO are emerging. Some tokens are making huge profits, but there are also some that disappear quickly.

Phase Four: Meme Coins Dominate

When rationality gives way to frenzy, meme coins become the new darlings of the market. These types of tokens lack fundamentals, with prices driven entirely by emotion, celebrity endorsements, and social media hype. A surge in meme coin activity often signifies that market frenzy has reached its peak, indicating that the cycle has topped out and the risks in the crypto market are too high.

Historical data shows that a decline in the market value of meme coins often signals an impending drop in the entire crypto market. In October 2021, the total market value of meme coins began to decline, and after Bitcoin reached its last peak in early November, it subsequently fell.

Why Meme Coins Indicate the End of the Bull Run Cycle

Meme coins signify the final phase of the crypto market bull run, reflecting a shift in investment philosophy from rationality to frenzy. At this point, fundamental analysis gives way to pure emotion, primarily greed. Meme tokens, which have almost no practical use, begin to dominate trading volumes simply because they have gone viral on social media or are favored by the community.

This pattern repeats itself during every major bull run. 2017 was a carnival of low-quality ICO projects, and in the second half of 2021, SHIB skyrocketed by 1200% in a short period before starting to decline at the end of October. Bitcoin followed suit and also dropped two weeks later, providing a great warning signal for investors.

Every time an encryption craze arises, it is accompanied by excessive participation from retail investors, a sharp decline in Bitcoin's dominance, ultimately leading to a crash in the entire market prices. Memecoins often attract the last wave of liquidity, with these funds primarily coming from inexperienced investors, indicating that the market has become overheated.

Current Market Condition Analysis

From the perspective of the overall crypto market capitalization, it has currently broken through both the cup and handle pattern and the head and shoulders pattern, both of which are bullish signals, with a target level at $4.15 trillion. This indicates that there is about 15% potential growth space left in the crypto market. The total market capitalization of altcoins, excluding Bitcoin, also shows a similar trend, with a target market capitalization of $1.8 trillion, which could allow for a potential growth space of 37%.

The market capitalization of meme coins undergoes an adjustment and growth cycle every four years, with prices retracting by more than 80% before increasing by thousands of percentage points. It is currently exiting the adjustment phase and is expected to further grow to 1 trillion USD, approaching the edge of a frenzy cycle. This is a positive signal for the existing crypto market and a great opportunity to lock in profits.

However, in this round of the bull run, meme coins may not lead the hype. Instead, real-world assets (RWA) may become the new speculative hotspot. Several well-known trading platforms are laying out plans for tokenized stocks and securities trading, indicating that RWA could become the next major narrative to trigger market fervor.

From a technical perspective, the total market value of RWA previously corrected by 86% and then surged by 4500%. The current correction has reached 93%, and the price is breaking through this stage, indicating the potential for another 300% increase to reach a market value of 1 trillion dollars. If meme coins were the speculative peak of the last cycle, then RWA may be the profit-taking signal of this cycle.

Conclusion

The crypto market experiences cyclical changes, largely depending on the process of funds flowing from large-cap projects to small-cap projects. While it is impossible to predict the exact tops and bottoms, understanding the structure of bull run cycles helps to grasp the best entry and exit points. Investors should pay attention to fund flows, identify trends and signs of euphoria, and always maintain a reasonable profit-taking plan.