To see through the cycle is to maintain clarity during the most frenzied times in the market. Any major trend, whether it's AI, MEME, or something else...
It has never been an overnight explosion. It follows a clear and brutal rule:
One, Secret Period: Opportunities are happening, but almost no one knows.
Only a very few can sense the signs of a trend at this stage.
They may be top builders in the industry, or smart money with insider information.
Or perhaps it’s just a few retail investors with independent judgment, not swayed by the crowd.
These individuals have the ability to understand and find the environment and timing that will trigger asset appreciation.
The investment environment at this time is very quiet, with much skepticism and negative news.
The mainstream is still mocking and ignoring, while prices slowly climb.
Smart money is quietly building positions, not showing off.
Because they know: real opportunities are never noisy.
Two, Awakening Period: Smart capital accelerates entry, and some retail investors start to follow suit.
With the occurrence of a certain event, such as technology landing, data improvement, application expansion, etc.
More and more people are starting to hear that this direction might work. But at this stage, there are still many skeptics.
At this stage, due to a few individuals making their first profit (there may be several selling stages, each higher than the previous one), a brief selling phase may occur, while some smart individuals take advantage of this selling period to increase their positions.
Next, as prices begin to accelerate upward, the structure becomes stronger.
Industry media begins to report, influential figures start analyzing the logic. Retail investors begin to get involved but remain cautious and hesitant. Most people feel, 'it's gone up too much, I'll wait a bit longer.' This stage is often just the beginning of a major upward wave.
Three, Frenzy Period: A nationwide FOMO, blind entry; this is the peak stage of trend development.
The price curve is steeply rising, market discussions are explosive, everyone is eager to seize this 'once-in-a-lifetime investment opportunity', and everyone thoughtlessly believes that future prices will continue to rise as they did in the past. Although public expectations are irrational, this stage is not about logic, but about psychology and human nature. More capital inflow further pushes up asset prices, creating higher expectations. The higher the price, the more investment.
A large number of media, KOLs, and bloggers start to educate you on why this direction will succeed.
People no longer analyze fundamentals, only care about whether they can double their money.
Everyone is rushing in, no one is considering risks. But in this new wave, what ordinary retail investors fail to notice is that smart money and many institutional investors are quietly exiting and selling assets. Some legends of 'getting rich overnight' and human greed further fuel the market frenzy. Many people, with no knowledge of the market and fundamentals, also join in, investing all they have and using leveraged financing to invest, further driving up prices.
At this time, the project's fundamentals can no longer keep pace with valuation speed, but emotions override everything.
This is the easiest stage to make money, but also the easiest stage to incur massive losses.
Four, Crash Period: The story collapses, faith shatters.
Madness cannot last, the story comes to an end, and funds begin to flee.
During this time, there are attempts to deny a crash, with many trying to convince the public that this is just a temporary pullback. Some believed it, but not for long.
As prices continue to plummet, the wave of selling spreads, and emotions shift from 'why isn't it rising' to 'how much lower can it go'.
Overnight, narratives collapse, funds bleed out, the smart money that entered first quietly withdraws, and the latecomers are trapped at high positions, cutting losses, going bankrupt, and falling silent.
But truly smart people will, at this stage, look for the next 'Secret Period'.
Everyone can identify where they generally are in this stage.
It's the quietly laid out smart money.
Or are they being pushed by public sentiment?
Whether you can see through the structure of the trend determines whether you will reap the benefits early.
Or are they the ones who take over to clean up the mess in the end?
The market won't tell you the answer, but the rhythm of the trend doesn't lie.
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