The Four Market Phases, Which Phase Are We in Now?

Original Author: Jason Yanowitz, Blockworks
Translation Author: zhouzhou, BlockBeats

Editor's Note: The crypto market goes through four stages: Rebirth, Excitement, Euphoria, and Disruption. Stage 1 is bear market fatigue where the market recovers, but most people are unaware; Stage 2 sees a gradual warming of the market, but overall disbelief in the bull market; Stage 3 witnesses price surges, high market sentiment, but speculators have not yet rushed in; Stage 4 is marked by market frenzy, with speculators and big companies entering, and the bubble beginning to form. It is advised to focus on your own strategy, avoid blindly following the crowd, enjoy this brief period of prosperity, and prepare for future changes.

Below is the original content (reorganized for better comprehension):

We Are in the Third Stage of the Bull Market

Buckle up as we have just entered the most thrilling stage.

Stage 1: Rebirth

Looking back, Stage 1 is "Rebirth," which occurred from January 2023 to January 2024. During the "Rebirth" stage, the market was generally filled with bear market fatigue, and indifference dissolved all narratives. Your friends and the media were still focused on the bear market's collapse events, and the wave of layoffs continued.

However, prices quietly rose, with Bitcoin tripling. But you hardly noticed because the overall situation was still in a loss. Only veteran crypto users who had experienced more than two cycles realized that the bull market had begun, but most people still did not believe this was the bull market.

Stage 2: Excitement

This stage began in February 2024 and ended last week. Some coins approached their all-time highs, and the market narrative returned, albeit only a few times per quarter. Everyone in the crypto space understood that we had entered a bull market,

but strangely, your friends still didn't message you.

You were caught between excitement and anxiety. Most layoffs had ended, but hiring had not restarted. The entire sector seemed closed off: no one was leaving, and no new recruits were joining. Overall, life was good, your crypto friends were all profitable, and this was the calm before the storm.

Stage 3: Euphoria

We are currently in this stage, with euphoria officially beginning with the presidential election on November 5. Everyone is making money, but the speculators have not yet fully joined the frenzy. Enjoy this moment because it will be short-lived.

Your holdings are about to reach an all-time high (if they haven't already), where there used to be new market narratives every quarter, there are now new narratives every week. Eventually, these narratives will become daily updates. There is no longer narrative fatigue—only a constant stream of "good" ideas.

Everyone with a following has become a "genius," putting forth new market narratives. Someone will undoubtedly make money on the hot coin of the week and will surely hype it up, which can be frustrating. (But remember, everyone has coins to shill, and no one advertises their losses.)

New narratives bring new coins, with some coin pumping each day, but most of which you do not hold. Even if you made an 8% gain this week, you may still regret missing out on [Hot New Coin]. New coin + new narrative = FOMO (fear of missing out), and if you're not careful, FOMO can consume you.

Some advice: Know your investment style and its pros and cons.

If you're trading every day? Understand that your work and mental health will be affected.

If you're building a project? Note that you may miss out on some significant opportunities.

Each approach has its pros and cons—understand them.

Don't try to do it all.

Going back to Stage 3, the private market is about to heat up. It all started with the asset allocators. On November 6, they realized they were too conservative in their crypto investments and began reaching out to venture capital and hedge funds for more allocation. These firms will soon announce the launch of new funds much faster than anticipated.

Late-stage venture capital has been dormant for over two years, but now it is back with a vengeance. Large funds and a robust IPO market mean that Series B to D companies can once again raise funds, with large raises becoming the norm again. Series A deals will also be quick to close, attracting a new wave of world-class founders.

Recruitment competition is becoming exceptionally fierce, with protocols offering highly enticing token compensation packages for top talent.

If you're a founder, you have at most 3 to 6 months (possibly shorter) to attract top talent at a reasonable salary, and then you'll have to play catch-up continuously.

We are back in the mainstream spotlight, with Forbes, Bloomberg, CNBC... they are starting to embrace cryptocurrency. Your friend messages you about Cardano, your financial advisor suggests allocating 5% of funds to Bitcoin, traditional finance is rushing to "tokenize" various assets. Then, at some point in mid-2025, some strange things start happening.

Phase 4: Rupture

Fortune 500 companies announce large-scale Bitcoin purchases, athletes and artists also start getting involved - cryptocurrency permeates culture. VCs no longer conduct due diligence, speculators raise hundreds of millions and become the protagonists. Some random coins surge 10x in one week.

In Phase 4, everyone starts believing the market will always go up, delusion seeps into decision-making, this phase can also be called "madness," everything becomes irrational. What used to be a new market narrative every week has now turned into one giant narrative.

You have more money than you ever imagined, your high school classmate launches a token, and his net worth is now in the tens of millions. A veteran gamer buys a sports team, Bieber launches a decentralized social platform, LeBron James launches a MEME coin, companies spend billions on marketing.

So buckle up, the next 12 months are going to be wild. For those who are focused, 2025 might change their lives. But if you're not careful, the arrogance and laziness of Phase 4 will have serious consequences. Lastly, remember to occasionally pause and enjoy it all. Now, let's get building.

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