1. Price
Generally speaking, during a bull market, the market rises more than 2 times and Bitcoin rises 2-3 times.
When Bitcoin has been trading sideways for too long and the altcoins have all risen to a similar level, you must be extra careful. At this point, the market has seriously exceeded and overdrawn its future value, and you must learn to stop when appropriate.
2. On-chain transaction volume
During a bull market, on-chain transaction volume usually increases significantly and funds flow frequently. However, it is worth noting that when the price reaches a new high and the on-chain transaction volume begins to decline, it is an important signal of peaking.
For example, in the late stage of the bull market in 2021, although the on-chain transaction volume surged in the short term, it gradually shrank afterwards, indicating that the willingness of market funds to enter the market began to weaken.
3. Leverage and lending data
In the DeFi market, leverage and lending data are important indicators for judging market sentiment:
Surge in lending demand: Investors are borrowing stablecoins to buy mainstream assets in large quantities, indicating that market sentiment is high.
High liquidation risk: If the liquidation price of most borrowed funds is close to the market price, it means that investors are overly optimistic and leverage risk is increased.
Usually, excessive leverage can lead to a chain of liquidations when the market fluctuates slightly, which can become the starting point for a bull market crash.
4. Number of new wallets
In the later stages of the bull market, the number of new wallets will increase significantly, and many novices will enter the market, especially retail investors who need to be extra careful when opening a large number of wallet addresses.
For example, at the peak of the bull market in 2021, the number of MetaMask active users exceeded 10 million, and then the market quickly turned bearish.
5. Regulatory policies
The cryptocurrency world is a policy-sensitive market, and regulatory dynamics often determine market trends.
China banned ICOs in 2017 and cleaned up mining farms in 2021. These policies directly led to the end of the bull market. Pay attention to global policy trends, such as the SEC's movements in the United States and China's anti-money laundering policies.
6. Institutional Funding Trends
The inflow and outflow of institutional funds is an important indicator of the bull market, such as Grayscale's BTC holdings and the net inflow and outflow of ETF funds. If institutional funds begin to reduce their holdings of mainstream assets or turn to other areas, it means that the market has entered the late stage of the bull market.
At the end of the market, the inflow rate of funds will slow down, or even turn into outflow, which means net selling, which also means that the market is about to end. This is an important reference indicator.
7. Market value and valuation
In a bull market, the market capitalization and valuation of many currencies will deviate from fundamentals.
For example, in 2021, DOGE's market value once ranked among the top five, and some NFT projects were valued at hundreds of millions of dollars. If a similar bubble phenomenon occurs again, it means that the market is overheated and may fall back at any time.
8. Market capitalization vs. global economy
The cryptocurrency world can also use the "Buffett indicator" to measure bubbles. When the total market value of the crypto market exceeds a certain threshold (such as 15%) of global GDP, it means that the market valuation is too high.
For example, in 2021, the total market value once exceeded 3 trillion US dollars, while the global GDP was approximately 85 trillion US dollars, corresponding to about 3.5%. This rapid expansion is a risk signal.
9. Media opinion
When mainstream media start hyping up "bull market has no ceiling" and "Bitcoin reaches $1 million", you should be cautious. Media hype is usually a reflection of overheated market sentiment and an important signal of a peak.
10. Large pullback or shock
In a bull market, the price of currency continues to rise, but if there is a single-day plunge or a long period of sideways fluctuation, it may be a precursor to capital flight.
For example, at the end of the bull markets in 2017 and 2021, Bitcoin experienced several major adjustments, followed by a bear market.
11. Discuss with people around you
When your friends, colleagues, and even family members who have never touched cryptocurrencies are discussing buying Bitcoin or altcoins, be careful. The concentrated entry of retail investors is often a sign of the end of the bull market.
This phenomenon was very obvious in 2017 and 2021, and those who finally took over were these novice investors who "came to their senses late".
