Over the years, the market has witnessed a rise in crypto assets and a crash in Bitcoin (BTC) after several bullish seasons. A fall in the price of cryptocurrencies is almost inevitable as their volatility causes large capital inflows and outflows.
Bullish seasons are characterized by increased capital inflows into the market, leading to an increase in asset prices, while bearish seasons typically occur after a price spike caused by an industry or industry. macroeconomic factors. Assets can reach record highs or fall to multi-month lows. These trends can be seen in Bitcoin's historical price data over many years.
A notable example is the 2021 bull market that saw BTC soar to an all-time high of over $64,000. The 2022 bear market saw Bitcoin crash below $19,000. Here are five signs to help you spot the end of a bullish cycle.
whale movement
activities bitcoin whale have a greater influence on the market than other actors. This is a direct result of holding cryptocurrencies typically above 1000 BTC. If on-chain activity shows bulls selling assets, it is a sign that a Bitcoin crash is dominating the market due to a change in sentiment. Similarly, when a large amount of BTC is transferred to an exchange, it indicates a whale is about to sell and suggests a Bitcoin crash.
relative strength index
Bitcoin's Relative Strength Index (RSI) and other indicators can inform investors about market direction. This indicator measures the buying and selling pressure of an asset. When an asset becomes overbought, it signals a potential fall that could lead to a crash in Bitcoin. RSI is measured on a scale of 0 to 100.
trading volume is low
A decline in trading volume is a sign of a sharp decline in market sentiment towards the crypto asset, which often leads to a crash in Bitcoin. An increase in market activity causes bullish behavior, while a decrease in market activity signals the opposite due to fear of a sharp drop in prices.
bottleneck regulation
Strict regulations by global authorities create uncertainty for investors. In most cases, strict regulations arise in the context of market implosion or collapse. One example is the fall of 2022 when the Terra stablecoin crashed. FTX It took billions of dollars out of the market. These events led to Bitcoin's collapse and increased regulation in most jurisdictions.
Market Hype and Meme Coin Frenzy
Although outside of the Bitcoin ecosystem, the general overhype in the broader crypto market is a sign of increased activity and an increase in the RSI. This is good at first, as it involves a phase of inflows and price appreciation, but is often followed by a market correction, causing a Bitcoin crash.
Also read: Fantom (FTM) launches first validator powered by Sonic Tech, price soars 8%
