In June 2021, when ETH crashed from $4,300 to $2,150, a 50% drop, I chose to sell all my assets.
At that time, I was already exhausted from the high-intensity bull market, and the constant research and work had left me physically and mentally drained. I was desperately longing for everything to come to a halt. When my portfolio shrank by 50%, I thought it was a bear market signal, so I decisively liquidated everything and felt a sense of relief.
However, the market then rebounded quickly, and ETH surged 125% to $4,800. I could only watch from the sidelines, and although I earned some returns by holding stablecoins, I missed out on this rebound.
Now, I feel we are in a similar stage, but this time my mental state is stronger. I choose to hold my assets firmly and wait for the market to recover.
But what if I'm wrong? What if this is the start of a bear market?
The current market sentiment is dominated by fear: the impact of Trump's tariff policies, the stock market being at historical highs, which could trigger a crash and drag down the cryptocurrency market. At the same time, you may have noticed that Warren Buffett is holding a large amount of cash, making you wonder if he knows something we don't. "Smart people" on social media platform X are posting pessimistic predictions, claiming the market is about to collapse.
This is what's known as Goblin Town (a slang term for a market crash).
Nevertheless, I choose not to be overwhelmed by these fears, uncertainties, and doubts (FUD), and hope to share some market data and insights to help everyone analyze the current situation calmly.
Is Bitcoin Still in a Bull Market?
Here are several indicators from CryptoQuant to help determine whether Bitcoin's price is overvalued (expensive) or undervalued (cheap).
MVRV Z-Score Indicator
The MVRV Z-Score measures whether Bitcoin's price is deviating from its historical trend, indicating if it is overvalued (red zone) or undervalued (green zone).
Currently, Bitcoin's price has not entered the overvalued region, but it is also far above the undervalued region.
The market still has upside potential, but it is currently in the mid-cycle, not the early stage.
NUPL (Net Unrealized Profit/Loss)
The NUPL indicator uses unrealized profits to measure market sentiment, whether it is fear, optimism, or euphoria.
Currently, it is in the optimistic/denial phase (~0.48), indicating that the vast majority of holders are still in profit.
Based on historical data, when NUPL exceeds 0.6, the market usually enters the greed/euphoria stage, signaling the approach of a top.
Long-Term Holder SOPR (Spent Output Profit Ratio)
SOPR tracks the behavior of long-term holders, determining whether they are selling at a profit or a loss.
· The current value is 1.5, indicating that long-term holders are realizing profits, but the selling is not aggressive.
· In a healthy market uptrend, it is normal for long-term holders to continue realizing profits.
CryptoQuant P&L Index
This index combines MVRV, NUPL, and SOPR data to assess the overall market valuation.
· It is currently above its 365-day moving average, confirming that the bull market is still ongoing.
· When the index exceeds 1.0, it may signal the formation of a market cycle top.
CryptoQuant Bitcoin Bull/Bear Cycle Indicator
If you only focus on one Bitcoin indicator, I recommend this one. It is a momentum indicator based on the P&L index, used to track Bitcoin's bull and bear cycles.
Bitcoin is currently firmly in the bull market zone (orange), indicating a strong upward market trend.
However, it has not yet entered the overheated bull market zone (red), which historically has often marked the top of the cycle.
Summary - What's Next?
· Bitcoin is currently in the mid-cycle stage of the bull market.
· Holders are gradually realizing profits, but the market has not yet shown extreme euphoric sentiment.
· There is still room for further upside before prices reach overvalued levels.
If history repeats itself, Bitcoin still has the potential to rise further before reaching the major cycle top.
Interestingly, a chart shared by CZ on X (Twitter) reflects my sentiment about the future market direction:
"I don't read charts, but..." - CZ said on X.
Currently, Bitcoin has confirmed its entry into a bull market, but has not yet reached the euphoric levels of past cycle tops. On-chain data suggests the market still has upside potential, but some holders are also starting to realize profits.
The State of Ethereum: Concerning
Over the past two years, ETH has declined 70% against BTC. Just since December 2024, it has already dropped 48%!
Additionally, there are no positive signals in the ETH ETF fund flows.
Is ETH the Most Attractive Risk-Reward Opportunity Right Now?
I shared some thoughts on X, believing that ETH's catalysts are gradually accumulating:
· Changes in the Ethereum Foundation (EF) leadership (Aya's departure, but the new executive director has not yet been announced).
· Starting to expand L1, although currently only adjusting the Gas limit, the change in mindset itself is significant.
· Pectra launched EIP-7702 (simplified approval mechanism) and the EF's Open Intents Framework, which will significantly improve the user experience of L2.
· Community interest in memecoins is gradually waning, and more people are focusing on Ethereum's fundamentals.
· The hype around MegaETH suggests: 1) people are still enthusiastic about innovative L2s, 2) successful L2s further validate the modular concept.
· Base announced it will shorten block time from 2 seconds to 200 milliseconds and launch L3 (similar to the MegaETH concept), although I'm not a fan of Base personally.
· Ethereum is still the best public chain for asset tokenization, with even BlackRock endorsing it.
· ETH's price has already severely underperformed, it's really very low, haha.
The realization of L1 expansion may take years, and improvements in user experience require the support of multiple partners (e.g., Base has not yet joined the Open Intents Framework).
The Future of Ethereum: Bullish or Bearish?
My biggest concern is that ETH may completely miss this bull market and only become a buying opportunity in the next bear market.
However, market sentiment could shift quickly. If the Ethereum Foundation and the broader community can make substantial progress in the following areas:
1) The expansion of L1,
2) Significant improvement in the modularity of L2 user experience,
3) The community overcoming the current "loser mentality",
then ETH may rebound strongly and dominate the second half of this cycle.
However, currently, the market cap of SOL is only 1/3.8 of ETH, it provides a better user experience, and its "Lindy effect" is strengthening over time (as long as the network remains stable).
These factors will challenge ETH's dominance in the smart contract field.
Altcoins: Indicators to Watch
Robust Speculation Index can measure whether Altcoins outperform Bit over multiple time frames.
· The current indicator is at a relatively low level (around 0.0-0.2), indicating that Bit outperforms most Altcoins.
· Based on historical experience, when speculation activity is at a low point, it usually paves the way for an Altcoin rebound.
Aylo shared a similar Crypto Breadth chart on X (Twitter), pointing out that Altcoins may have bottomed out. If Bit's strength can be sustained, we may expect an Altcoin rally.
Question: Which Altcoins to buy?
When choosing Altcoins, I will base on the following criteria:
· No large-scale token unlocking events in the short term.
· Good Product Market Fit (PMF), i.e., the product can meet market demand and gain user recognition.
· Revenue sharing mechanism (such as token buyback) is an important bonus.
FLUID is a decentralized lending protocol that has just been launched for a few months, but its trading volume on decentralized exchanges (DEXs) has already been able to compete with Uniswap. Recently, FLUID announced an upcoming token buyback plan, which makes me very confident about its future development.
Other Altcoins Worth Watching:
ENA: Successfully weathered the Bybit hacker attack and multiple liquidation waves. Recently completed a $100 million financing, with a price of $0.4. In addition, more and more protocols and centralized exchanges (CEXs) are adopting sUSDe, which makes me very optimistic about its potential. The problem is that ENA's large-scale token unlocking is imminent, which may put pressure on the price.
$SKY (formerly MKR): Taiki's analysis mentioned some highlights:
· $30 million monthly token buyback (about 1.9% of the supply).
· The supply of USDS (formerly DAI) is close to a historical high.
· SPK Farming has increased token demand and revenue sources.
· Stablecoin regulation may become a positive factor.
$KMNO: Dominates the lending market on the Solana chain, with a TVL (Total Value Locked) of $1.8 billion, while the market cap is only $85 million. This suggests that its valuation may be underestimated. The problem is that Solana chain users are more traders than yield farmers. But this situation may change over time.
Sonic's $S: Its DeFi ecosystem is expanding rapidly (including the deployment of key protocols like Aave), and it also has a 20 million $S airdrop plan, high-quality user experience, and growing attention on X. More importantly, there are no large-scale token unlocking events, providing a more stable price basis.
HYPE: There are many discussions on X about its excellent token economics and strong community, worth watching.
PENDLE: When the market starts to focus on fundamentals and speculators are looking for yields, Pendle is a very promising choice.
AAVE: Undergoing adjustments to its token economics, with the 3.3 upgrade bringing stronger revenue performance.
What else have I missed?
In addition, I am very excited about the upcoming token airdrops of MegaETH, Monad, Farcaster, Eclipse, Initia, Linea, and Polymarket.
Macroeconomic Environment
I firmly believe in the value of Bit as digital gold. Compared to gold, Bit supports self-custody and has stronger transferability, making it more attractive.
The current macroeconomic environment provides an excellent testing ground for Bit: tariff policies, wars, fiscal deficits, large-scale monetary expansion... All of this provides potential tailwinds for Bit.
In my 2025 blog post "The Truth and Lies of Cryptocurrencies", I quoted BlackRock's research: Bit sometimes experiences sell-offs in the early stages of major macroeconomic events. However, chaos and uncertainty, as well as potential monetary expansion, will ultimately provide strong support for Bit.
Current Market Observation
I believe the current market volatility is due to Trump's sudden departure from the established global order. This uncertainty has led to short-term panic in the market. However, people will gradually adapt to these new global realities.
Fundamentally, the world has not undergone any real changes that weaken the fundamentals of cryptocurrencies. On the contrary, we see more and more positive news every day: The SEC has withdrawn some lawsuits against cryptocurrencies, introduced new cryptocurrency bills, and the government's overall attitude towards cryptocurrencies is gradually becoming more positive.
However, a point raised by Ansem is worth noting: When good news fails to drive price increases, it is actually a bearish signal. This suggests that the market may need some time to digest and adjust to the current situation.
Nevertheless, I still hope the market adjustment can be faster than his optimistic prediction for 2026/27.
If Raoul Pal's analysis and charts are correct, Bit's price should catch up with the growth trend of global M2 supply before 2026. M2 supply is an important indicator of global money circulation, and if Bit can match it, it will further consolidate its position as "digital gold".
Conclusion
In summary, I remain confident in the cryptocurrency market and believe that with patience, the ultimate reward will be obtained.
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