In past cycles, capital flow had a fairly predictable pattern:

1) New capital first enters the Bitcoin (BTC) market.

2) Subsequently flowing into Ethereum (ETH) and blue-chip tokens in search of higher returns.

3) Eventually entering the small and micro-cap token market, attracting retail investors to chase 'life-changing returns'.

However, the capital flow patterns of this cycle have changed significantly. The current crypto market can effectively be divided into two ecosystems: institutions and retail investors.

Institutional ecosystem

Mainly accessing BTC and ETH through spot ETFs. So far, funds have primarily flowed into BTC, pushing its price nearly 40% above the last all-time high (ATH). As the BTC market approaches saturation, institutional funds may seek higher returns, with ETH ETFs becoming almost the only option. In this shift, a large amount of capital will turn towards ETH ETFs, and this flow of funds could cause the relatively illiquid ETH market to react quickly in price (similar to when the ETH spot ETF was initially approved, when the price skyrocketed by 15% that day).

The price increase of ETH may further spill over into the blue-chip token market, as crypto-native companies with actual ETH holdings will begin to proactively position themselves for the upcoming token season (Alt-Season). Currently, the capital rotation in ETH seems to be very close, but the exact timing still needs to be observed.

Retail funds completely skip BTC and ETH.

Retail investors are no longer involved in BTC and ETH, and are gradually shifting their profits to higher-risk assets. They realize that, from the perspective of 'life-changing returns', they have missed the best opportunities in BTC and ETH, so they can only significantly increase their risk appetite.

In the real world, people are struggling: inflation is pressing people down, high taxes, a stagnant job market, and high living costs leave most people unable to invest or save for retirement. They are indifferent to BTC and ETH, instead skipping these 'rich man's coins' (BTC, ETH, and blue-chip tokens), downloading the Phantom wallet, and diving headlong into the seemingly endless world of 'Memecoins', trying to find a 'lottery' that can change their fate. But most will only encounter failure and ultimately exit the crypto space completely.

Funds flow directly into Memecoins, completely bypassing considerations of technology or practicality.

Currently, the altcoin market has not generated new wealth inflows; it is merely a redistribution of wealth through PvP. Although Memecoins initially emerged as fairly launched 'anti-establishment' altcoins, they have now transformed into highly manipulated scams.

The current 'Memecoin casino' will self-consume. Top Memecoins may survive and perform well, while the rest will gradually be forgotten; this is just a massive game of 'passing the parcel', where over 95% of participants will end up with losses.

The impact of capital flows into major tokens (such as SOL, AVAX, etc.) is that they will require massive venture capital, institutional funds, and retail inflows to trigger a new round of altcoin markets. This may happen after capital spills over from BTC and ETH when institutions and whales begin to seek higher-risk assets to accommodate newly acquired returns. Recently, whale wallets have begun to net sell BTC.

MicroStrategy is the driver of this bull market, and perhaps also its terminator.

MicroStrategy's ($MSTR) premium over its net asset value (NAV) is skyrocketing, reflecting strong demand for Bitcoin in the traditional financial market. However, as the cycle nears its end, this premium is likely to reverse and turn into a discount. Pay attention to this indicator; it could signal a cycle reversal. Despite calls for a 'super cycle' at the peak of a bull market, there will inevitably be a massive bear market decline that follows.

For those who can recognize these signals, this may become an excellent opportunity to short the market, but it will not appear in the short term.

The sentiment of retail investors is the best indicator.

The market is filled with pessimistic voices about Ethereum and altcoins having 'no market'. However, this is precisely a perfect contrarian indicator.

Despite Ethereum's underperformance, I still firmly hold my position in it while maintaining long-term holdings in altcoins (some performing well, others poorly). Whenever everyone focuses on Bitcoin's price increase and abandons their positions in altcoins and Ethereum, it will only be when they frantically chase BTC at a local top that the real market for altcoins and Ethereum will arrive.

In previous cycles, capital entering the crypto space faced various obstacles, such as difficulties in deposits and withdrawals, uncertain regulations, pending legal cases, and excessive caution from trading platforms and crypto companies. Now, this situation has undergone a complete transformation. The launch of spot ETFs and regulatory clarity not only opens the floodgates for capital entering the crypto space but also provides opportunities for funds looking to invest in crypto startups.

Everything is in place... No one could foresee that so many positive factors would coincide at such a perfect timing. This bull market has the most explosive potential in history, including altcoins and Ethereum. Be patient! Once the big bull market kicks off, the scale of capital inflow will be immeasurable.

The development of this crypto bull market is filled with unpredictable factors. However, there is always one thing that is easy to predict in each cycle: the inevitable emotional reactions of retail investors: the latest overhyped project is so great, buy! The old undervalued project is too boring, sell! Altcoins are cool, buy Bitcoin! Ethereum is not doing well, sell! Perfectly acting as a contrarian indicator. Ultimately, 95% of retail investors will lose money. Be sure to become part of that 5%, and contrarian thinking is key.