A bull market generally goes through three stages
Phase 1: Valuation Driven
The market has been in a bear market for a long time, and the market valuation is very low. When there are favorable expectations on the on-site fundamentals or off-site funding, prices begin to stop falling and rise. For example, the expectation of stopping interest rate hikes and cutting interest rates in the early stage of this bull market led to price increases. The bitcoin price rose from 155,000 to 73,000 and then ended its rise. After the first wave of increases, there will often be a longer period of time or a larger adjustment.
Because it takes time to implement and implement policies, economic data, performance, etc. may not be good during this process.
With the disclosure of data and overall performance, funds will find that the implementation effect is not as expected, or because the adjustment time is too long, pessimistic expectations will be further increased. Therefore, the market will continue to fluctuate and weaken repeatedly.
Phase 2: Fundamentals Driven
When the market adjusts to a certain extent, fundamental data begins to gradually pick up, and the pessimism in the market gradually subsides. The key point is whether the fundamental data shows a clear bottoming out and an unexpected recovery. The turning point of performance can be observed through the release of macroeconomic data and the performance measurement of institutions. Although there will be a certain time difference between the turning point of performance and the turning point of the market, they are generally consistent. At this time, there will often be industries with better performance leading the rise, and localized market conditions. After the rise, market confidence will be restored, and volume will be restored, and a new wave of index and securities market conditions may be ushered in.
Stage 3: Emotionally Driven
The market has been rising for a long time. The higher it rises, the faster it rises, and the faster it reaches the top. In this process, there may be a situation of index shrinkage divergence. Policies begin to gradually turn, but market sentiment is still very excited. If the policy turns, it may not be the top, but it is also the early stage of the top. You can consider withdrawing in batches. Combined with the double top or divergence on the technical side, the success rate of escaping the top can be further improved.
Therefore, according to the above judgment, the bull market is still there. The bottom of the valuation of altcoins, the implementation of policies (interest rate cuts), and the increase in volume are all signals. Now is still the first stage driven by valuation. But even a bull market has a rhythm, and it will not rise all the time. Moreover, due to the hype about interest rate cuts, the increase and speed of this round are very fast, so the adjustment is very drastic. In history, after the first wave of index increases, the big cake may have an adjustment range of 20 points or even more;
The Federal Reserve began cutting interest rates in September. We now need to wait for the real effect of the rate cut to be implemented, so that the market's liquidity can increase and the fundamentals of the cryptocurrency circle can be significantly improved. For example, the DEFI field will begin to significantly improve the efficiency of traditional finance, stocks will be tokenized, and stablecoin payments will be widely used in real life. Only then can the bull market continue to rise.
