The ups and downs of the crypto market are never absent; every round of the bull market captivates countless investors' hearts. To navigate this revelry and exit unscathed, understanding the evolution of the bull market cycle is crucial.
The four-step evolution of the crypto bull market: the flow of funds hides the cycle's secrets.
The advancement of the crypto bull market is essentially a migration of funds between different assets. From conservative to aggressive, from rational to frenzied, each step depicts the changing market sentiment.
Step 1: Fiat currency flows into Bitcoin, the 'stepping stone' of the bull market.
The starting point of every bull market almost invariably revolves around Bitcoin. As the most recognized and liquid asset in the crypto market, Bitcoin acts as a 'safety net,' attracting institutional investors, hedge funds, and cautious retail investors. The continuous influx of new funds drives up Bitcoin's price, setting a bullish tone for the entire market — this is a clear signal that the bull market has started.
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Step 2: Funds shift towards large altcoins, marking the beginning of the 'altcoin season.'
When the upward trend of Bitcoin stabilizes, investors begin to be dissatisfied with 'steady returns' and turn their attention to high-market-cap altcoins like ETH, SOL, and BNB. These coins not only have a certain market foundation but also greater potential for appreciation. At this point, Bitcoin's market dominance will gradually decline, signaling the formal arrival of the 'full altcoin season.'
For example, in the 2021 bull market, after Bitcoin reached a peak in March, the total market cap of altcoins surged by 95% in May, two months later, showcasing a 'chase the rise feast.'
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Step 3: Medium market cap and speculative tokens become the new favorites, and risks begin to rise.
As market confidence skyrockets, investors' appetites grow larger. Tokens with medium market caps and weaker liquidity, but labeled as 'high potential,' become new targets for speculation. People are looking forward to 10-fold, or even 100-fold returns, while greed and FOMO (Fear of Missing Out) spread, intensifying market volatility.
At this stage, some people make a fortune, while others get trapped by blindly following trends — many tokens lack substantial value; they rise quickly, fall even faster, and can even vanish into thin air.
Step 4: Meme coin frenzy, the 'final revelry' of the bull market.
When rationality is replaced by frenzy, the bull market reaches its final stage: Meme coins dominate the market. Coins like DOGE, SHIB, and PEPE lack fundamental support; their prices are driven solely by sentiment, celebrity endorsements, and social media hype.
Historical data has long proven that the madness of Meme coins is often a warning sign of a market peak. In October 2021, after the total market cap of Meme coins reached its peak, it began to decline; two weeks later, Bitcoin also hit its last peak before entering freefall mode. The ICO chaos of 2017 and the rapid drop of SHIB after a 1200% surge in 2021 all follow the same logic: inexperienced retail investors rush in with 'quick money,' and the market is already overheated.
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Current market: The upward trend is not over, but signals have emerged.
The cycle of the crypto bull market is never random; the flow of funds from Bitcoin to large altcoins, then to medium and small market cap tokens, and Meme coins (or this round's RWA) essentially reflects the evolution of market sentiment from rationality to frenzy.
No one can accurately predict the top, but understanding the cycle phases, closely monitoring fund flows, and identifying frenzy signals can help you formulate a reasonable exit plan. In the crypto market, greed is a trap, and clarity is armor — don't let the end of revelry become your entry moment.
