Over the years, the market has witnessed the rise of crypto assets as well as the Bitcoin (BTC) crash after several bull seasons. The fall of crypto prices is almost inevitable because of its volatility occasioning massive inflows and outflows.
Bull seasons are marked by heightened inflows into the market leading to a higher asset price while bear seasons usually come after heightened prices sparked off by industry and macroeconomic factors. Assets can hit all-time highs and also fall to lows not recorded in months. These trends can be seen in Bitcoin’s historical price data over the years.
A notable example is the 2021 bull run that saw BTC soar to an all-time high above $64,000. The 2022 bear market saw a Bitcoin crash below $19,000. Here are five signs to spot the end of a bull cycle.
Whale Movements
The activities of Bitcoin whales influence the market more than other actors. This is a direct result of their cryptocurrency holdings typically above 1000 BTC. If on-chain activities show bulls selling assets, it’s a sign of a Bitcoin crash dominating the scene due to a change in sentiments. Similarly, when huge amounts of BTC are sent to exchanges, it shows whales are about to sell, signaling a Bitcoin crash.
Relative Strength Index
The Relative Strength Index (RSI) of Bitcoin and other indicators can signal investors to the direction of the market. This metric measures the buying and selling pressures of an asset. When the asset becomes overbought, this becomes a signal for a potential pullback leading to a Bitcoin crash. RSI is measured on a scale of 0-100.
Low Trading Volumes
Low trading volumes are a sign of plummeting market sentiments around crypto assets which often leads to a Bitcoin crash. Heightened market activity causes a bullish action while reduced activity signals the opposite due to fear of plunging prices.
Bottleneck Regulations
Strict regulations by global authorities create uncertainty on the part of investors. Most times harsh rules come on the back of market implosions and collapses. An example was the 2022 fall of Terra’s stablecoin and the FTX which took billions from the market. These events led to a Bitcoin crash and increased tougher regulations in most jurisdictions.
Market Hype and Memecoin Frenzy
Although outside the Bitcoin ecosystem, a general excess hype in the wider cryptocurrency market is a sign of heightened activity and increased RSI. This is initially good as it comes with a phase of inflows and increased prices but it is often followed by market corrections causing a Bitcoin crash.
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