1. Price
Generally speaking, during a bull market, the overall market rises by more than 200%, while Bitcoin rises by 200-300%.
Be especially cautious when Bitcoin has been stagnating for a long time and altcoins have all risen similarly; the market has already severely overextended and overdrawn future value, and one must learn to stop when appropriate.
2. On-chain transaction volume
During a bull market, on-chain transaction volumes typically increase significantly, with capital flowing frequently, but it's worth noting that when prices reach new highs and on-chain transaction volumes begin to decline, this is an important signal of a peak.
For example, in the later stages of the bull market in 2021, although on-chain transaction volumes spiked temporarily, they gradually shrank afterwards, indicating that the willingness of market funds to enter was beginning to weaken.
3. Leverage and lending data
In the DeFi market, leverage and lending data are important indicators for assessing market sentiment:
Surge in borrowing demand: Investors borrow stablecoins to buy mainstream assets in large quantities, indicating high market sentiment.
High liquidation risk: If the liquidation prices of most borrowed funds are close to market prices, it indicates that investors are overly optimistic and leverage risks are increasing.
Typically, when leverage is too high, even slight market fluctuations can trigger a chain liquidation, becoming the starting point for a bull market collapse.
4. New wallet numbers
In the later stages of a bull market, the number of new wallets will increase significantly, and one must be especially cautious when many novices start opening wallet addresses.
For example, at the peak of the bull market in 2021, MetaMask active users exceeded 10 million, after which the market quickly turned bearish.
5. Regulatory policies
The cryptocurrency market is sensitive to policies, and regulatory dynamics often determine market direction.
The ICO ban in China in 2017 and the clearing of mining farms in 2021 directly triggered the end of the bull market. Pay attention to global policy dynamics, such as movements from the SEC in the U.S. and anti-money laundering policies in China.
6. Institutional capital trends
Institutional capital flows are important indicators of a bull market, such as Grayscale's BTC holdings and the net inflow and outflow of ETF funds. If institutional capital starts to reduce holdings in mainstream assets or shifts to other areas, it indicates that the market has entered the late stage of the bull market.
At the end of a market cycle, the speed of capital inflow slows down, and may even turn to outflow, i.e., net selling, which also indicates that the market is about to end. This is an important reference indicator.
7. Market capitalization and valuation
In a bull market, the market capitalization and valuation of many cryptocurrencies may deviate from their fundamentals.
For example, in 2021, DOGE's market capitalization briefly entered the top five, and certain NFT projects were valued at hundreds of millions of dollars. If similar bubble phenomena occur again, it indicates that the market is overheated and may retrace at any time.
8. Comparison of total market capitalization with the global economy
The crypto market can also be measured with the 'Buffett Indicator' for bubbles. When the total market capitalization of the cryptocurrency market exceeds a certain threshold (like 15%) of the global GDP, it indicates that market valuation is too high.
For instance, in 2021, the total market capitalization of the cryptocurrency market once exceeded $3 trillion, while the global GDP was around $85 trillion, corresponding to about 3.5% of the total, indicating that such rapid expansion is a risk signal.
9. Media opinion
Be cautious when mainstream media starts to hype 'there's no peak in the bull market' and 'Bitcoin will reach $1 million'. Media hype is usually a reflection of overheated market sentiment and is an important signal of a peak.
10. Significant pullbacks or fluctuations
In a bull market, while cryptocurrency prices continue to rise, if there are sudden drops in a single day or prolonged stagnation, it may be a sign of capital flight.
For instance, at the end of the bull markets in 2017 and 2021, Bitcoin experienced multiple significant adjustments, subsequently entering bear markets.
11. Discussions among people around you
Be cautious when your friends, colleagues, and even family members who have never been involved in cryptocurrency start discussing buying Bitcoin or altcoins. A concentration of retail investors entering the market often signifies the end of a bull market.
In 2017 and 2021, this phenomenon was very obvious, with the last buyers being those 'latecomer' novice investors.