Crypto market cycle analysis: When will the current bull run end?

The crypto market is currently on an upward trend, with Bitcoin prices rising and driving the overall market up. However, a common concern among investors is: when will this bull run end, and when should profits be realized? By analyzing market cycles and capital flows, we may be able to find an answer.

The market cycle in the financial sector is a recurring phenomenon, and the crypto market is no exception. These cycles reflect the flow of funds between different asset types, as well as the patterns of investor behavior that change over time.

The Main Stages of the Cryptocurrency Bull Run Cycle

Phase 1: Fiat Currency Flowing into Bitcoin

Each bull run usually begins with new funds entering the crypto market through Bitcoin. Institutional investors, hedge funds, and cautious individual investors view Bitcoin as the safest and most reliable gateway into the encryption space. As the most recognized and liquid encryption asset, Bitcoin becomes the preferred choice for newcomers and large capital. This influx of funds drives up the price of Bitcoin, setting the tone for the entire market.

Phase 2: Funds flow from Bitcoin to large altcoins

As the Bitcoin bull run begins, investors are starting to shift their attention to large altcoins like ETH, SOL, and BNB in pursuit of higher returns. Bitcoin's dominance in the market is starting to decline, marking the onset of a full-fledged altcoin season. For instance, during the 2021 bull run, after Bitcoin peaked in March, the total market cap of altcoins grew by 95% over the next two months, reaching its peak in May.

Phase 3: Fund flows to medium market cap and popular project tokens

As market confidence and enthusiasm increase, investors shift their attention to smaller, less liquid tokens that are believed to have high potential. They speculate on mid-cap projects, hoping for 10x or even 100x returns. Market volatility intensifies, and greed and FOMO mentality begin to spread. Although some coins achieve enormous profits, others quickly disappear.

Phase 4: Meme coins become the market focus

When rationality gives way to frenzy, meme coins like DOGE, SHIB, and PEPE become the new favorites in the market. These tokens lack substantial fundamentals, with prices driven entirely by emotions, celebrity effects, and social media hype. The surge in meme coin activity often indicates that market euphoria has peaked, signaling that risks in the crypto market have become too high.

According to the data from the previous cycle, the decline in the market value of meme coins often indicates that the entire crypto market is about to drop. In October 2021, the total market value of meme coins began to decline, and after Bitcoin reached its last peak in early November, it immediately started to fall.

Why Meme Coins Indicate the End of the Bull Run

Meme coins represent the final stage of the crypto bull run, reflecting a shift in investment from rationality to frenzy. At this point, fundamental analysis gives way to pure emotional driving (mainly greed). Usually lacking practical use, meme tokens begin to dominate trading volume solely due to social media popularity or community support.

Historically, this pattern has repeated during each major bull run. 2017 was the year of low-quality ICO projects lacking products, while the second half of 2021 saw SHIB start to decline after a 1200% surge at the end of October. Bitcoin began to fall in early November, providing investors with about two weeks of warning.

Every new wave of encryption enthusiasm is accompanied by excessive participation from retail investors, a sharp decline in Bitcoin's dominance, and ultimately leads to a crash in the entire market prices. Memecoins from past booms attracted the last wave of liquidity, which often came from inexperienced investors, indicating that the market had become overheated.

Current Market Condition Analysis

From the overall crypto market capitalization perspective, the market has broken through the cup and handle pattern and the head and shoulders pattern, both of which are bullish signals, targeting a market value of around $4.15 trillion. This indicates that the crypto market has about 15% potential growth space. The situation for altcoins (excluding Bitcoin) is similar; after breaking through the cup and handle pattern, the target market value can reach $1.8 trillion, with a potential growth space of about 37%.

The meme coin market is undergoing a four-year cycle of adjustment and growth. Each adjustment exceeds 80%, followed by growth of several thousand percentage points. Currently, the market is emerging from the adjustment phase and is expected to further grow to around 1 trillion USD, nearing the edge of a frenzy cycle. This is a positive signal for the existing crypto market and could also be a good opportunity to take profits.

However, in this round of bull run, meme coins may not become the focal point of speculation. Instead, a new narrative may emerge: the tokenization of real-world assets (RWA). Several well-known trading platforms and investment platforms are launching or planning to launch tokenized stocks and private equity products, demonstrating the immense potential in this area.

From a technical analysis perspective, the total market value of RWA experienced a 86% correction before rising by 4500%. The current correction has reached 93%, and the price is breaking through this phase, showing the potential for another 300% increase to reach a market value of 1 trillion USD. If meme coins represented the speculative peak of the previous cycle, then RWA may become the profit signal of this cycle.

Conclusion

The crypto market exhibits cyclical changes, which largely depend on the flow of funds from large-cap projects to small-cap projects. While it is impossible to precisely predict the tops and bottoms, understanding the structure of bull run cycles helps to grasp better entry and exit opportunities in the crypto market. Investors should closely monitor fund flows, identify market trends and signs of euphoria, and always maintain a clear profit strategy.