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

The crypto market is ushering in a new growth phase, driven by the rise in Bitcoin prices, which has strengthened the overall market. However, investors are generally concerned about when this bull run will end and when the best time to lock in profits is. By analyzing market cycles and the levels of capital flow, we may be able to find the answer.

Market cycles are a common phenomenon in the financial sector, and the crypto market is no exception. These cycles reflect the flow of funds between different asset types and the patterns of investor psychology that change over time.

The Four Stages of the Cryptocurrency Bull Run Cycle

Phase 1: Fiat Currency Flow into Bitcoin

Each bull run usually begins 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 realm of encryption. As the most recognized and liquid crypto asset, Bitcoin has become the preferred choice for both newcomers and large capital. This influx of funds drives up the price of Bitcoin, setting the tone for the entire market.

Phase 2: Funds shift from Bitcoin to large altcoins

After the bull run of Bitcoin is established, investors (including large hedge funds and companies) begin to turn their attention to major altcoins such as Ethereum, Solana, and BNB in pursuit of higher returns. Bitcoin's dominance in the market starts to decline, marking the beginning of a full altcoin season. For example, during the 2021 bull run, after Bitcoin peaked in March, the total market capitalization of altcoins grew by 95% in the following two months.

Phase 3: Capital flows into medium market cap and popular concept tokens

As market confidence and enthusiasm increase, investors are starting to focus on smaller, less liquid tokens that are considered to have high potential. They speculate on mid-cap projects, hoping for returns of 10 times or even 100 times. Market volatility intensifies, and greed and FOMO psychology emerge. Although some tokens achieve huge gains, there are also some that disappear quickly.

Phase Four: Meme Coins Become the Focus

When rationality gives way to frenzy, meme coins become the new darlings of the market. These tokens lack fundamentals, and their prices are entirely driven by emotions, celebrity endorsements, and social media hype. The surge in meme coin activity often signals the peak of euphoria, indicating that the cycle has reached its zenith and the risks in the crypto market have become too high.

Historical data shows that the peak market value of meme coins usually marks the beginning of a downturn in the entire crypto market. For example, in October 2021, the total market value of meme coins began to decline, and shortly after Bitcoin reached its last peak in early November, it started to decline.

Why Memecoins Indicate the End of the Bull Run Cycle

Meme coins mark the final phase of the crypto bull run, as they reflect a shift from rationality to frenzy among investors. At this point, fundamental analysis gives way to pure emotion (primarily greed). Meme tokens, which usually lack practical value, begin to dominate trading volumes simply because they go viral on social media or are favored by the community.

Historically, this pattern has repeated during every major uptrend. In 2017, there were low-quality ICO projects lacking product support, while in the second half of 2021, SHIB surged 1200% during the second wave of the bull run. These phenomena often indicate that the market is about to peak.

Each new wave of crypto market frenzy is accompanied by excessive participation from retail investors and a sharp decline in Bitcoin's dominance, ultimately leading to a drastic drop in prices across the market. Meme coins attract the last wave of liquidity, with these funds primarily coming from inexperienced investors seeking quick profits, indicating that the market has overheated.

Current Market Condition Analysis

From the perspective of the overall crypto market capitalization, the market is breaking through the cup and handle pattern and the head and shoulders pattern, both of which are bullish signals. The target market cap is at the level of $4.15 trillion, indicating that there is about 15% potential growth space left in the market. The altcoin market (excluding Bitcoin) has a similar situation, with a target market cap of $1.8 trillion after breaking through the cup and handle pattern, representing a potential growth space of about 37%.

Meme coins' market value shows a four-year cycle of adjustment and growth. It is currently emerging from the adjustment phase and is expected to further grow to around 1 trillion dollars, nearing the edge of a frenzy cycle. This is a positive signal for the existing crypto market and may also be a good opportunity to lock in profits.

However, in this round of bull run, meme coins may no longer be the leading stars of the speculation frenzy. On the contrary, the tokenization of real-world assets (RWA) may become the new market focus. Several well-known trading platforms are currently or planning to launch tokenized stock trading services, which could become an important narrative to spark a new wave of enthusiasm.

From a technical perspective, the total market value of RWA previously retraced by 86% and then surged by 4500%. The current retracement has reached 93%, and the price is breaking through this phase, indicating the potential to rise another 300% to reach a market value of 1 trillion dollars. If meme coins were the speculative climax of the previous cycle, then RWA may signal the profit-taking phase of this cycle.

Conclusion

The cryptocurrency 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 accurately predict the tops and bottoms, understanding the structure of the bull run cycle helps in grasping the best entry and exit points. Investors should closely monitor the flow of funds, identify market trends and signs of euphoria, and always maintain a clear profit strategy.