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Bull and Bear cycle by month, what's next for the crypto market?

Ignas

2025-03-03 13:00

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Original Article Title: Bull or Bear: And What's next?

Original Article Author: Ignas, DeFi Research

Original Article Translation: Deep Tide TechFlow

In June 2021, when ETH plummeted from $4,300 to $2,150, halving in price, I chose to sell all my assets.

At that time, I was exhausted by the high intensity of the bull market. The continuous research and work had worn me out, and I was desperate for everything to stop. When my investment portfolio shrunk by 50%, I thought it was a signal of a bear market, so I decisively liquidated all my holdings and felt a wave of relief.

However, the market quickly rebounded afterwards, with ETH skyrocketing by 125% to reach $4,800. I could only watch from the sidelines, although I earned some gains by holding stablecoins, I missed out on this rebound.

Now, I feel like we are in a similar stage again, 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 am wrong? What if this time is really the beginning of a bear market?

The current market sentiment is dominated by fear: the impact of Trump's tariff policy, the stock market at an all-time high which may trigger a crash, subsequently dragging down the cryptocurrency market. At the same time, you may have noticed that Warren Buffett is holding a large amount of cash, which makes you wonder if he knows something we don't. The "smart people" on Social Media platform X are making pessimistic forecasts, claiming that the market is about to collapse.

This is what is known as Goblin Town (a colloquial term for a market crash).

Nevertheless, I choose not to be overwhelmed by this fear, uncertainty, and doubt (FUD), and I hope to help everyone calmly analyze the current situation by sharing some market data and insights.

Is Bitcoin Still in a Bull Market?

Here are some indicators from CryptoQuant to help determine whether the Bitcoin price is overvalued (expensive) or undervalued (cheap).

MVRV Z-Score Indicator

The MVRV Z-Score is used to measure whether the Bitcoin price is deviating from its historical trend, indicating whether it is overvalued (red zone) or undervalued (green zone).

Currently, the Bitcoin price has not entered the overvalued zone but is also significantly above the undervalued zone.

The market still has room for growth, but it is currently in a mid-term cycle rather than an early stage.

NUPL (Net Unrealized Profit/Loss) Ratio

The NUPL indicator measures market sentiment based on unrealized profits, indicating whether the market is fearful, optimistic, or euphoric.

Currently in the optimistic/denial phase (~0.48), indicating that the majority of holders are still in a profitable state.

Historically, when NUPL is above 0.6, the market usually enters a greedy/euphoric phase, signaling the arrival of a top.

HODLer SOPR (Spent Output Profit Ratio)

SOPR tracks the behavior of long-term holders to determine whether they are selling assets at a profit or loss.

· The current value is 1.5, indicating that long-term holders are realizing profits, but the selling pressure is not aggressive.

· In a healthy uptrend, long-term holders consistently taking profits is a normal occurrence.

CryptoQuant P&L Index

This index combines MVRV, NUPL, and SOPR data to assess the overall market valuation.

· Currently above its 365-day moving average, confirming the bull market is still ongoing.

· When the index exceeds 1.0, it may indicate the formation of a market cycle top.

CryptoQuant Bitcoin Bull/Bear Cycle Index

If you only pay attention to one Bitcoin indicator, I recommend this one. It is a momentum indicator based on the P&L index used to track Bitcoin's bull/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 signals the top of the cycle.

Summary – What Will Happen Next?

· Bitcoin is currently in the mid-term stage of the bull market cycle.

· Holders are gradually taking profits, but the market has not shown extreme euphoria yet.

· There is still room for further upside potential before the price reaches overvaluation.

If history repeats itself, Bitcoin still has the potential to rise before reaching the key cycle top.

Interestingly, a chart shared by CZ on Twitter perfectly reflects my sentiment about the market's future direction:

「I won't look at the chart, but...」—CZ said this on Twitter.

Currently, Bitcoin has confirmed its entry into a bull market, but it has not reached the euphoric levels seen at the top of past cycles. On-chain data indicates that the market still has room to rise, but some holders have started to take profits.

Ethereum's Current State: Cause for Concern

Over the past two years, ETH has seen a 70% price decline against BTC. Just since December 2024, it has already dropped by 48%!

Furthermore, there have been no positive signals from ETH ETF fund outflows.

Is ETH Currently the Most Attractive Risk-Reward Opportunity?

I shared some viewpoints on Twitter, suggesting that catalysts for ETH are gradually building up:

· There has been a leadership change at the Ethereum Foundation (Aya stepping down, but the new executive director has not been announced yet).

· Initiatives to scale L1 have begun. Although currently only adjusting the Gas limit, the shift in mindset itself is significant.

· Pectra has introduced EIP-7702 (Simplified Approval Mechanism) and the EF's Open Intents Framework, both of which will significantly improve the user experience of L2.

· The community's interest in memecoins is gradually waning, with more people starting to focus on Ethereum's fundamentals.

· The buzz around MegaETH indicates: 1) People are still enthusiastic about innovative L2 solutions, 2) The success of L2 further validates the modularization concept.

· Base has announced a reduction in block time from 2 seconds to 200 milliseconds and the introduction of L3 (similar to MegaETH's concept). Although I am personally not a fan of Base.

· Ethereum remains the best public blockchain for asset tokenization, with even BlackRock endorsing it.

· ETH's price has been severely oversold, really low, haha.

The implementation of L1 scaling may take several years, and improving user experience will require support from multiple partners (e.g., Base has not yet joined the Open Intents Framework).

Ethereum's Future Outlook: Bullish or Bearish?

My major concern is that ETH may completely miss out on this bull run and only become a compelling buy opportunity during the next bear market.

However, market sentiment can change rapidly. If the Ethereum Foundation and the broader community can make substantial progress in the following areas:

1) L1 scaling,

2) Significant improvement in L2 modularized user experience,

3) The community overcoming the current "loser mentality,"

then ETH may see a strong rebound in the latter part of this cycle and take the lead.

However, as of now, SOL's market cap is only 3.8% of ETH's, it offers a better user experience, and over time, its Lindy Effect is strengthening (as long as the network remains stable).

These factors will pose a challenge to ETH's dominance in the smart contract arena.

Memecoin: Metrics to Watch

Robust Speculation Index can measure a memecoin's outperformance against Bitcoin across multiple timeframes.

· The current metric is at a low level (around 0.0-0.2), indicating that Bitcoin is outperforming most altcoins.

· Historically, when speculative activity is at a low point, it usually sets the stage for an altcoin bounce.

Aylo shared a similar Crypto Breadth chart on Twitter, suggesting that altcoins may have bottomed out. If Bitcoin's strength can persist, we may expect a rally in altcoins.

Question: Which Altcoins Should I Buy?

When selecting altcoins, I rely on the following criteria:

· No significant token unlock events in the short term.

· Product-Market Fit is good, meaning the product can meet market demand and gain user acceptance.

· Revenue-Sharing Mechanism (e.g., token buyback) is a significant bonus.

FLUID is a decentralized lending protocol that was launched just a few months ago, but it has already shown competitive trading volume on decentralized exchanges (DEXes) compared to Uniswap. Recently, FLUID announced an upcoming token buyback plan, which makes me confident about its future development.

Other Altcoins Worth Watching:

ENA: Successfully survived the Bybit hack and multiple rounds of liquidation waves. Recently completed a $100 million funding round at a price of $0.4. Additionally, more protocols and centralized exchanges (CEXes) are adopting sUSDe, which makes me very bullish on its potential. The issue is that a significant token unlock for ENA is imminent, which could put pressure on the price.

$SKY (formerly MKR): Taiki's analysis highlighted some key points:

· $30 million in token buybacks monthly (approximately 1.9% of the supply).

· USDS (formerly DAI) supply is nearing an all-time high.

· SPK Farming has increased token demand and a source of revenue.

· Stablecoin regulation may become a positive factor.

$KMNO: Dominating the lending market on the Solana chain, with a TVL (Total Value Locked) of up to $1.8 billion while having a market cap of only $85 million. This indicates that its valuation may be underestimated. The issue is that Solana chain users are more traders than yield farmers. However, this situation could change at any time.

Sonic's $S: Its DeFi ecosystem is rapidly expanding (including deployments on key protocols like Aave), in addition to a 200 million $S airdrop plan, a high-quality user experience, and growing attention on X. More importantly, there are no large-scale token unlock events, providing it with a more stable price foundation.

HYPE: There are many discussions on X about its excellent tokenomics and strong community, worth paying attention to.

PENDLE: As the market begins to focus on fundamentals and speculators look for yield, Pendle is a very promising choice.

AAVE: Undergoing a tokenomics adjustment, the 3.3 version upgrade has brought stronger income performance.

What else am I missing?

Additionally, I am very excited about the upcoming token airdrops for MegaETH, Monad, Farcaster, Eclipse, Initia, Linea, and Polymarket.

Macroeconomic Environment

I fully believe in Bitcoin's value as digital gold. Compared to gold, Bitcoin supports self-custody and has greater portability, making it more attractive.

The current macroeconomic environment provides an excellent testing ground for Bitcoin: tariff policies, wars, fiscal deficits, large-scale money printing... All of this presents a potential tailwind for Bitcoin.

In my 2025 blog post "The Truth and Lies of Cryptocurrency," I cited BlackRock's research: Bitcoin sometimes experiences sell-offs at the onset of major macro events. However, chaos and uncertainty, along with potential money printing, will ultimately provide strong support for Bitcoin.

Current Market Observation

I believe that the recent market volatility is a result of the sudden deviation from the established global order by Trump. This uncertainty has led to short-term panic in the market. However, people will gradually adapt to this new global reality.

Fundamentally, there has been no real change that undermines the basic principles of cryptocurrency. On the contrary, we see more and more positive news every day: the U.S. Securities and Exchange Commission (SEC) has dismissed some cryptocurrency lawsuits, introduced new cryptocurrency bills, and even the government's overall attitude towards cryptocurrency is gradually becoming more positive.

However, one point raised by Ansem is worth noting: when positive news fails to drive price increases, it is actually a bearish signal. This indicates that the market may need some time to digest and adjust to the current situation.

Nevertheless, I still hope that the market's adjustment speed will be faster than his optimistic predictions for 2026/27.

If Raoul Pal's analysis and charts are correct, Bitcoin's price should catch up with the global M2 money supply growth trend before 2026. M2 money supply is a key indicator of global currency circulation, and if Bitcoin can match it, it will further solidify its position as "digital gold."