When will this bull market peak? 7 indicators to help you determine when to get out

Author: Five Fireballs Master

Source: Vernacular Blockchain (ID: hellobtc)

In the second half of last year, people often asked: Is it a bull market now? Today, no one has asked this question. Even the most obtuse people know that we are in a bull market.

Now more people are asking: When should we get off the train? In other words, are we at the beginning, middle, or end of the bull market? There is basically no correct answer to this question, because almost no one knows. Anyone who swears to tell you the conclusion is either not knowledgeable enough or a liar.

This article will not tell you the conclusion either, because if you tell me the conclusion, you will most likely be slapped in the face in the future. This article aims to tell you some indicators for reference, and I hope it will be helpful when you get off the bus in the future.

01 BTC previous high

I still remember when Bitcoin fell back to more than 20,000, a group of people jumped out of the car in fear. A senior boss thought it was quite funny and posted a Weibo saying: "These people are like they have been waiting for a long time for the feast, but left in a hurry after eating the appetizer, and the rest of the meal has not even started yet."

This is actually a much more reliable reference than K-line or any other indicator. According to the previous 4-year cycle theory of Bitcoin, breaking through the previous high should be a sign of the beginning of the bull market, not the end.

Under the premise that the previous high was 20,000 US dollars, selling at less than 30,000 US dollars, or starting long-term short selling at this time, are all manifestations of serious deviations in the understanding of the cryptocurrency market and even the financial market cycle theory.

So has Bitcoin, which is worth $60,000, reached its peak? It’s hard to say, but according to the previous cycle theory, the price and market value that are three times the previous high seem to be lower, whether it is a linear decrease or an exponential decrease in the first two rounds. This is why most institutions or bigwigs conservatively see BTC at $80,000-100,000 in this bull market, and aggressively see it at $150,000-200,000 or even higher.

From this perspective alone, we seem to be in the middle of a bull market. If we use ETH as an indicator and look at ETH’s previous high of $1,500, the current ETH of $2,000 is more like a beginning, and may not even be considered the middle of a bull market.

02 BTC share

Every bull market peak in history ended with Bitcoin’s share reaching a low point.

This is easy to understand. In a bull market, everything is booming, even many junk projects with no fundamentals can be hyped up. Therefore, the market value of altcoins is getting higher and higher, and the growth rate is getting faster and faster. In contrast, the market value and price growth of BTC will be much slower, so BTC’s share of the entire cryptocurrency market value will reach a low point.

At the peak of the bull market on January 13, 2018, BTC accounted for 32.45%. Currently, BTC accounts for 53.3%. Judging from this indicator, we seem to be in a relatively safe bull market stage.

However, it is important to remember that in the last bull market, BTC reached 66% of the market capitalization when it was close to 20,000 US dollars on December 7, 2017. Then, in just one month, it plummeted by 32.45% in various altcoins, announcing the end of the bull market.

I don’t know if Niu Mo’s script this time will be a repeat of last time.

03 Altcoin issuance and market value

There are several notable characteristics in the middle and late stages of each bull market:

1. The rise in prices of many copycat stocks is completely unreasonable. They have no fundamentals but often increase by several times or even dozens of times. They keep pushing the stock price up until you are convinced or can’t help but get on board.

2. The valuations of many copycat products are exaggerated, and those of celebrity copycat products are even more exaggerated, with market capitalizations of hundreds of millions or even billions of US dollars, but there are not many users. They think they are expensive and dare not buy them.

3. New projects emerge in an endless stream, making you feel dazzled and overwhelmed. It is impossible for non-full-time professionals in the industry to keep up with them.

In the second half of last year, the data basically spoke for itself. Leading DeFi projects such as AAVE, Uniswap, SNX, etc., whether looking at the number of users or TVL, were all supported by real data, and the price increases were "reasonable and well-founded."

The current copycats have entered the "unreasonable trouble" stage. It is no longer important whether there is fundamental and data support. Every day, new projects are listed in various WeChat groups and Telegram groups. The market value is hundreds of millions of US dollars as soon as they go online, even if there is no user yet...

From this perspective, we appear to be in the middle to late stages of a bull market.

04 Bitcoin trading platform balance

There is a notable feature at the end of a bull market: a lot of bitcoins flow into trading platforms and begin to cash out. It is precisely because these people cash out that prices fall, and the bull market ends and the bear market comes.

If you look at this indicator, the bull market seems to be going on for a long time, because Bitcoin is now flowing out of the trading platform, and the amount of Bitcoin in the trading platform has been decreasing in the past year.

If we use this indicator as a guide, it is not an exaggeration to say that we are still in the early stages of development.

05 ETH/BTC volatility

This is a relatively alternative indicator. In the last bull market in 2017, ETH/BTC fluctuated almost like a roller coaster, with the highest volatility reaching 15%. In this bull market, the volatility of ETH/BTC has remained below 5% for a long time.

The reason may be that the fundamentals of ETH were too poor in the last bull market, and it was basically reduced to an 1CO tool. However, this round relies on strong data support such as DeFi and NFT, and begins to fall in the same period as BTC.

So this indicator may no longer work in this bull market, but based on past experience, the tightening volatility of ETH/BTC usually means that we are at least still a long way from the end of the bull market.

06 Jiang Zhuoer Bitcoin 60-Day Index

This should be an index that many people are familiar with. It was created by Jiang Zhuoer. The logic of creating the index is that when a bull market reaches the end, market sentiment is fanatical, bubbles are serious, and short-term price increases exceed the speed of new entrants and new funds entering the market, the bull market bubble will burst and the bear market will begin.

This process can be described in mathematical terms as "the 60-day cumulative increase" being too high. According to historical data from previous bull markets, the 60-day index in 2017 was 140%. We just broke through 100% in February, but now, because BTC has been sideways for a long time, it has fallen by 35%.

So it feels like if a bear market comes, there has to be another 100% increase, otherwise the 105% in February was the peak of the bull market? This is really hard to convince people. In any case, when the 60-day index approaches or even exceeds 100%, you need to be vigilant.

07 Google Search Index

This is also a very commonly used index, reflecting the public's concern about Bitcoin. Generally speaking, when the search index soars, it is one of the signs that the bull market has reached its end.

Except for January and February, it seems that we are still far from the end of the bull market in 2017.

08 Summary

This round of bull market may be the most confusing. In the last round, except for BTC, everyone was just making empty promises. Blockchain had no real applications, and there was nothing that could go beyond the circle, so the bears were justified. It was a big bubble that would burst with a poke.

In this round, BTC has begun to be truly recognized by institutions and traditional financial circles in addition to those in the industry. Large companies such as Tesla have begun to allocate, many pension funds have begun to purchase, ETFs are not far from being approved, Coinbase is about to be listed, ETH has also found its own direction, and DeFi has been proven to be effective.

Innovations are constantly happening every day. The number of users, locked-up volume, and accumulated revenue are all growing. Even ETH cannot handle it all and has to overflow to other chains. NFT is starting to “go viral” through crypto art and NBN Topshot.

The hot topics include Uniswap V3, Op and ZK's Layer2, Polkadot's parachain auction, and Dfinity's redefinition of blockchain applications and world computers...

Hot spots come one after another. Eternal bull market? No one really knows. All we can say is don’t dream that you can sell at the highest point. It is always right to stop profit, at least you should get out the principal first.

For example, you can sell some bitcoins at 60,000, some at 80,000, and then some at hundreds of thousands. You can use the money to buy a house, a car, a watch, or a bag to improve your life, or you can exchange it for a mining machine or stablecoin to mine to give you a steady stream of follow-up income. In short, don't go all in to welcome the end of the bull market.

After all, this may be the last round of dividends that ordinary people can participate in.

Where has the bull market progressed to? What do you think? Feel free to share your views in the comment section.