A big bull market requires a bigger bubble. What stage of this cycle are we in now?

Article source: Talk Li Talk Outside

Since entering July, BTC has continued to challenge historical highs, ETH has also risen significantly, and even older cryptocurrencies like XRP and ADA have risen by over 40% in the past month. As shown in the following image.

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1. What stage are we currently in for this cycle?

With the recent warming of market sentiment, voices calling for a bear market seem to have decreased compared to earlier, but some people are still reluctant to admit we are in a bull market, thus falling into a new dilemma.

The definition of bear and bull markets may vary among different people, depending on individual perspectives. As we mentioned in our March 13th article: Some believe a bear market begins when BTC breaks below MA200, while others think it's a bear market when BTC drops below $50,000. It's not about whether you lose money in a bear market or make money in a bull market. As long as the market and liquidity exist, opportunities are present. We must both go with the flow and act against the trend.

Although the new stage of growth this month (July) has been impressive, with BTC reaching new highs and TOTAL2 reaching around $1.56 trillion, as shown in the following image.

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However, the total market value of Altcoins has not broken the previous high. Compared to the previous two bull market cycles, the current retail investor sentiment seems relatively pessimistic and has not reached the all-out FOMO state of a major bull market, though this is just my personal feeling.

Looking at this cycle from 2023 to now, there have indeed been many cases of retail investors becoming suddenly wealthy, but these seem mainly concentrated in MemeCoin. Moreover, in terms of overall proportion, these cases are relatively low. In other words, the profits generated in this crypto cycle have not yet spread widely, and compared to the retail wealth creation scale of the previous two cycles, it feels somewhat weaker.

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Specifically for Altcoins, from the beginning of the year to now, ETH's inflow has reached $7.79 billion (exceeding last year's total inflow), SOL's capital inflow is $8.43 billion, XRP's capital inflow is $7.21 billion, and SUI's capital inflow is $1.26 billion. As shown in the following image.

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However, there is an interesting phenomenon here: while some Altcoins are attracting massive capital inflows, some others are experiencing capital outflows. From this, we can draw some conclusions (speculations): The current Altcoin rally seems to be less driven by sentiment and more influenced by potential ETF expectations. Regarding Altcoin ETFs, we have discussed this in recent articles, such as in the July 19th article where we mentioned: With the approval of Bitcoin and Ethereum spot ETFs, the path for other top Altcoin ETFs seems to be becoming clearer. Based on past trends, the fourth quarter of this year (around October) might become a historic turning point for crypto ETFs, potentially seeing more Altcoin ETFs approved, which would inevitably bring more external liquidity.

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The current rally seems to further highlight these potential ETF expectations, with funds possibly pre-positioning or accumulating in Altcoins like SOL and XRP that are most likely to get ETF approval first. In other words, the stage-wise rally since late June can be called a mini Altcoin season, or an Altcoin season driven by policy and ETF expectations (from the US), rather than a traditional comprehensive Altcoin season. If we extend our time perspective further, we can draw another conclusion (speculation): This is merely the early stage of more institutions joining the crypto speculation army, or the early stage of forming a big bubble in this cycle. Whether it's MicroStrategy, which has already established a scale in BTC, SharpLink Gaming currently raising $5 billion to buy more ETH, or other institutions currently and potentially speculating on Altcoin ETFs, they are creating a new massive cycle bubble through cryptocurrencies. As for how long this new bubble game (opportunity) can last, I can't say for sure. From a short to medium-term perspective, institutions' crazy behavior will inevitably continue to push up crypto prices, even to levels that seem crazy to retail investors. From a long-term view, as this bubble rapidly goes crazy, it will likely periodically burst like bubbles in historical cycles. If our above view (speculation) holds, we can make another guess: The second half of this year will continue to experience larger volatility, but all fluctuations are for better washing and speculation. In the fourth quarter, the market might again present opportunities that will shock retail investors, potentially triggering a new widespread FOMO sentiment. After all, institutions' crazy behavior ultimately needs retail investors to take over, and when the bubble eventually bursts, some institutions will also take over. In this market, only a few will be the ultimate winners. We are already in this game and have seen the potential big bubble. While I can't precisely predict when this game will end, we can closely monitor from the following angles: - Which companies will buy and accumulate large amounts of cryptocurrencies in the coming weeks or months, and specifically what will they buy? - The market value changes of these companies, and whether their stocks can continue to trade at a premium? The process from rapid bubble expansion to instant burst is often a bubble's most beautiful moment. Opportunities are always for those with enough patience and firm belief. Since we've already persisted through this cycle for over 4 years (2022-2025), let's look forward to and enjoy the brief beauty of the final stage of this cycle.