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Bull and Bear Cycle Judgment: Four Key Indicators to Grasp the Market Pulse
Understand the language of the market, be greedy when others are fearful, and be fearful when others are greedy.
"This time is different" — this is the most expensive phrase in investment history. In the crypto world, people believe that the era they are in is unique during each cycle, yet history astonishingly repeats itself.
Investors who can navigate smoothly through bull and bear market transitions do not possess a crystal ball that predicts the future, but rather have mastered a systematic approach to assessing market cycles. Today, we will share four key indicators to help you understand the "heartbeat" of the market and make more informed investment decisions.
A. Why is cycle judgment so important?
The cyclical nature of the B crypto market
Since 2010, the crypto market has experienced three complete bull and bear cycles, each with similar patterns:
-2011-2015 cycle: Bitcoin went from $0.06 to $32, then fell back to $2.
-2015-2019 Cycle: Bitcoin rose from $200 to $20,000, then dropped back to $3,200.
-2019-2023 cycle: Bitcoin rose from 3500 dollars to 69000 dollars, then fell back to 15400 dollars.
Each cycle repeats a similar emotional trajectory: despair → hope → optimism → excitement → frenzy → anxiety → panic → despair.
Value of B cycle judgment
Accurately judging the market position can help you:
- Accumulate chips in the bottom area: Overcome fear and buy boldly.
-Stay rational in the top area: overcome greed, sell gradually
-Avoid chasing highs and selling lows: reduce emotional trading
- Optimize asset allocation: Adjust strategies according to different stages.
An investor who has gone through multiple cycles shares: "I don't aim to buy at the lowest point and sell at the highest point, but through cycle judgment, I can boldly buy when it's cheap and sell cautiously when it's expensive. This allows me to achieve stable asset growth in every cycle."
B. Four key indicators: Understanding the heartbeat of the market
Indicator 1: MVRV Ratio (Market Value to Realized Value Ratio)
What is MVRV?
MVRV is a unique on-chain metric in the crypto market, calculated as: Market Value / Realized Value. It reflects the degree of deviation of the current price from the historical cost.
How to interpret MVRV?
-MVRV < 1: Market value is below actual cost, in a severely undervalued area.
-MVRV = 1-2: Healthy Uptrend Range
-MVRV = 2-3: Valuation is high, need to be cautious.
-MVRV 3: severely overvalued, bubble obvious
Historical Data Verification:
- End of 2015: MVRV = 0.75
- 2018 Peak: MVRV = 3.5
- End of 2022: MVRV = 0.85
- January 2025: MVRV = 1.2 (healthy range)
Practical suggestions:
- When MVRV is below 1, start dollar-cost averaging or increase investment力度
- When MVRV exceeds 2.5, begin to take profits in batches.
- Significantly reduce positions when MVRV exceeds 3.
Indicator B: Fear and Greed Index
What is the Fear and Greed Index?
This is a comprehensive indicator that quantifies the market's sentiment state through multiple dimensions such as volatility, market trading volume, social media sentiment, surveys, and more.
How to interpret this index?
- 0-25: Extreme Fear - Market panic, often a buying opportunity
- 26-45: Fear - Market is pessimistic, suitable for accumulation
- 46-55: Neutral - Market Balanced
- 56-75: Greed - Market optimism, caution is needed
- 76-100: Extreme Greed - Market Frenzy, Huge Risks
Historical Performance:
- After the FTX collapse in November 2022: the index reached 8 (extreme fear), and then the market began to rebound.
- January 2025: The index is around 52 (neutral to cautious), and the market is in a healthy state.
Practical suggestions:
- When the index is below 25, overcome fear and actively buy.
- When the index is above 75, remain rational and gradually sell.
- In daily investments, refer to this index to adjust the investment pace.
Indicator 3: Stablecoin Supply Ratio (SSR)
What is SSR?
SSR measures the ratio of Bitcoin's market capitalization to the total market capitalization of stablecoins. It reflects the size of stablecoins' "purchasing power" relative to Bitcoin's market capitalization.
How to interpret SSR?
- Lower SSR: Stablecoins have strong purchasing power and a large amount of funds can enter the market.
- Higher SSR: Weak purchasing power of stablecoins, insufficient market capital in the future.
Market logic:
When SSR is low, it means there is a large amount of stablecoin "ammunition" waiting to enter the market, providing ample upward momentum. Conversely, when SSR is high, the market may lack new funds to drive it forward.
Current status:
In early 2025, SSR is at a historically relatively low level, indicating that there is sufficient stablecoin ready to enter the market, providing potential support for the market.
Practical advice:
- Monitor the total market capitalization changes of major stablecoins (USDT, USDC)
- Combine with other indicators to assess the funding situation
- Be cautious of the market peaking when SSR rises rapidly.
Indicator Four: Exchange Balance Changes
Indicator Meaning:
Tracking the changes in Bitcoin balances on major exchanges can provide insights into the movements of large funds.
Market Logic:
- Exchange balance decreases: withdrawing coins to private wallets, inclined towards long-term holding (bullish)
- Exchange balance increase: Deposit into the exchange, possibly preparing to sell (bearish)
Historical Mode:
- Bear market bottom: Exchange balances continue to flow out, with clear accumulation signs.
- Bull market top: rapid influx of balances into the exchange, increased selling pressure
Data for 2025:
The current exchange Bitcoin balance is at a multi-year low, indicating strong long-term holding belief.
Practical suggestions:
- Regularly pay attention to reports from on-chain data platforms like Glassnode.
- Combine net inflow/outflow data to determine short-term direction
- Be wary of sudden large increases in the exchange balance.
B 3. Application of Indicator Combination: Construct a Complete Cycle Judgment System
The synergistic effect of the four indicators B
A single indicator may lead to misjudgment, but using a combination of four indicators can greatly improve the accuracy of the assessment:
Bottom area characteristics:
- MVRV ratio < 1 (seriously undervalued)
- Fear and Greed Index < 25 (Extreme Fear)
- SSR is at a low level (sufficient funds)
- Exchange balance continues to flow out (accumulate)
Top area characteristics:
- MVRV ratio 3 (severely overvalued)
- Fear and Greed Index 75 (Extreme Greed)
- SSR is at a high level (funds exhausted)
- Quick inflow (distribution) of exchange balance
B Practical Case: Bottom Judgment of the 2022-2023 Cycle
Looking back at the market bottom at the end of 2022, four indicators sent clear signals:
1. MVRV Ratio: Dropped to 0.85, entering the historically undervalued range.
2. Fear and Greed Index: Falling below 20 multiple times, the market is in extreme fear.
3.SSR: The market capitalization of stablecoins is in a favorable position relative to Bitcoin's market capitalization.
4. Exchange balance: Continuous outflow, accumulation signs are obvious.
Those investors who were able to read these signals boldly bought in the range of $15,000 to $20,000 and reaped substantial returns during the subsequent rebound.
B Four, Investment Strategies for Different Time Periods
B bear market bottom phase (current reference position)
Market characteristics:
- The media rarely reports on cryptocurrency
- The discussion heat on social platforms is low
- Most people think "Bitcoin is dead"
- The price is fluctuating at a low level.
Investment Strategy:
-Large-scale regular investment: Invest more than 70% of available funds in batches
- Long-term thinking: Be prepared to hold for 2-3 years.
-Focus on mainstream: Key allocation of core assets such as BTC, ETH.
- Ignore fluctuations: Do not panic due to short-term declines.
B Bull Market Early Stage
Market Characteristics:
- The price has broken through the previous high, starting to attract attention.
- Discussion heat is gradually rising
- Early investors are starting to profit
Investment Strategy:
- Continue to invest: but appropriately slow down the pace.
- Hold as main: do not easily sell core positions
-Moderate diversification: allocate some quality altcoins
- Set goals: Start planning the selling strategy
B Bull Market Frenzy Stage
Market Characteristics:
- Media coverage is extensive, and the public is discussing it.
- Various "get rich overnight" stories are circulating.
- New projects are emerging one after another, with outrageous valuations.
- The fear and greed index remains high.
Investment Strategy:
- Stop buying: No more new funds will be added.
-Sell in batches: sell a portion of your position after a certain increase.
-Reduce risk: Decrease the proportion of altcoins and increase stablecoins.
- Stay alert: Don't chase high prices due to FOMO.
5. Avoid Common Pitfalls
Mistake 1: Over-reliance on a single indicator
Question: Focusing solely on one indicator while ignoring conflicting signals from other indicators.
Solution: Establish a multi-indicator confirmation system that requires multiple indicators to issue the same signal.
Mistake 2: Trying to time the market precisely
Question: Pursuing to buy at the lowest point and sell at the highest point.
Solution: Use regional thinking, buy in the bottom area, sell in the top area.
Mistake Three: Ignoring the Macroeconomic Environment
Question: Focus only on crypto indicators, ignoring macro factors such as interest rates and inflation.
Solution: Analyze the crypto indicators in conjunction with macroeconomic factors.
Mistake Four: Frequent Adjustment of Judgment
Question: Frequent changes in long-term judgment due to short-term fluctuations.
Solution: Establish a regular evaluation mechanism (such as once a month) to avoid daily disruptions.
B. Six, establish your periodic monitoring system.
B Daily Monitoring (5 minutes every day)
- Check the Fear and Greed Index
- Follow major news events
- Record changes in market sentiment
Weekly review (30 minutes each week)
- Update four key metric data
- Analyze the trend of indicator changes
- Adjust investment plan
B Monthly Assessment (2 hours per month)
- In-depth analysis of on-chain data
- Evaluate the alignment of position structure with market position
- Formulate the investment strategy for next month
B Recommended Tools List
B7. Long-term Thinking: Wisdom to Traverse Cycles
Understanding the inevitability of the B cycle
The alternation of bulls and bears is like the changing of the seasons; it is a natural law of the market. The important thing is to recognize that:
-Every bear market feels like the end of the world, but the market has always recovered each time.
-Every bull market feels different this time, but every bubble has burst.
- The cycle will repeat, but it will not simply repeat; each time there will be new characteristics.
B Maintain emotional stability
In extreme markets, emotional management is more important than technical analysis:
-Look for data support in times of fear, use rationality to overcome emotions.
-Reflect on historical lessons in times of greed, and maintain a sense of awe.
- Establish investment discipline, using systems to replace emotional decision-making.
Conclusion B: Become a friend of the market cycle
Mastering the judgment of bull and bear cycles is not to prove your predictive ability, but to do the right thing at the right time. When most people are swayed by emotions, you can remain clear-headed; when most people blindly follow the trend, you can think independently.
Remember: the market is always fluctuating, and cycles are always repeating. The important thing is not to predict the future, but to be prepared to respond to various possible futures.
Establish your own cycle monitoring system and listen carefully to the heartbeat of the market. Given time, you will be able to find your own stable profit path in this highly volatile market. #Gate广场圣诞送温暖