Crypto Market Cycle Analysis: When Will This Bull Run Peak?

The cryptocurrency market is showing a booming trend. The rise in Bitcoin prices has driven the entire market higher. However, a common concern among investors is: when will this bull run end, and when is the best time to lock in profits? Analyzing market cycles and capital flows may provide us with some insights.

Periodic fluctuations in the financial market are a common phenomenon, and the encryption currency sector is no exception. These cycles reflect the flow of funds between different asset classes and the changing patterns of investor behavior over time.

Typical Stages of the Cryptocurrency Bull Run Cycle

Phase 1: Fiat currency inflow into Bitcoin

Each bull run usually begins with new funds entering the crypto market through Bitcoin. Institutional investors, hedge funds, and cautious individual investors often view Bitcoin as the safest and most reliable way to enter the encryption space.

As the most recognized and liquid encryption asset, Bitcoin has become the first choice for beginners and large funds. This influx of capital has driven up the price of Bitcoin, setting the tone for the entire market.

Stage 2: Funds shift from Bitcoin to large altcoins

As the Bitcoin market strengthens, investors (including large hedge funds and enterprises) are beginning to turn their attention to mainstream altcoins such as ETH, SOL, and BNB in pursuit of higher returns. Bitcoin's market dominance is starting to decline, marking the arrival of a full-blown altcoin season.

For example, during the 2021 bull run, after Bitcoin peaked in March, the total market cap of altcoins grew by 95% in the following two months, reaching its peak in May.

Phase 3: Capital flows into medium market cap and popular project tokens

As market confidence and enthusiasm grow, investors are turning their attention to smaller, less liquid tokens that are considered to have high potential. Speculators are beginning to bet on medium-cap projects, hoping for returns of 10 times or even 100 times. Market volatility is increasing, and greed and the mentality of chasing prices are starting to spread. While some tokens have brought substantial returns, others have quickly fallen into silence.

Phase Four: Meme Coins Dominate the Market

When rationality gives way to frenzy, meme coins like DOGE, SHIB, and PEPE often become the focus of the market. These tokens lack substantial fundamentals, and their prices are entirely driven by emotions, celebrity effects, and social media hype. A surge in the activity of meme coins usually signals that market frenzy is about to peak, indicating that the risks in the crypto market have become too high.

According to data from the previous cycle, the peak market value of meme coins often marks a turning point for the entire crypto market. In October 2021, the total market value of meme coins began to decline, and after Bitcoin reached its last peak in early November, it immediately started to fall.

Why Meme Coins Indicate the End of the Bull Run Cycle

Meme coins mark the final stage of the crypto bull run, as they reflect a shift in investors from rational decision-making to irrational frenzy. At this stage, fundamental analysis gives way to pure emotion-driven (mainly greed). Some meme tokens, which have almost no practical value, begin to dominate trading volume simply because they have gone viral on social media or are favored by certain communities.

Historical data shows that this pattern repeats during every major surge. In 2017, the market was dominated by low-quality ICO projects with no substantial products. In the second half of 2021, SHIB soared 1200% during the second wave of the crypto market surge and began to decline at the end of October. This decline came two weeks earlier than Bitcoin's drop in early November, providing investors with an important warning signal.

Every time a new encryption craze arises, it is accompanied by excessive participation from retail investors, a sharp decline in Bitcoin's dominance, ultimately leading to a crash in the overall market prices. The meme coins from past encryption crazes attracted the last wave of liquidity, which often came from inexperienced investors seeking quick profits, indicating that the market has overheated.

Current Market Situation Analysis

From the overall crypto market capitalization perspective, the market seems to be breaking through important technical patterns. These patterns suggest that there may still be about 15% potential growth in the crypto market. The situation in the altcoin market (excluding Bitcoin) is similar, with a potential upside of about 37%.

As for the market capitalization of meme coins, we have observed a cycle of adjustments and growth occurring every four years. Prices typically retrace by more than 80%, followed by growth of thousands of percentage points. Currently, the market capitalization is emerging from the adjustment phase, so further growth can be expected until it reaches new highs. This is a positive signal for the existing crypto market, while also reminding investors to consider locking in profits in a timely manner.

However, in this round of bull run, meme coins may not become the leading characters in the hype. Instead, a new investment narrative may emerge: the tokenization of real-world assets (RWA). Several major trading platforms are actively laying out in this area, including launching tokenized stock trading in Europe and the U.S., and offering tokens representing private equity.

From a technical analysis perspective, the total market value of RWA, after experiencing a deep correction, is showing the potential to rise another 300%. If meme coins defined the peak of the last cycle, then RWA may become an important indicator in this cycle.

Conclusion

The development of the crypto market shows cyclical characteristics, and these cycles largely depend on the flow of funds from large-cap projects to small-cap projects. Although it is impossible to accurately predict market tops and bottoms, understanding the structure of the bull run cycle helps investors grasp better entry and exit opportunities in the crypto market. Closely monitoring the flow of funds, identifying market trends and signs of excessive enthusiasm, and always maintaining a clear profit-taking strategy are key to success in the highly volatile crypto market.