Usually, cryptocurrency bull runs happen in stages:
1. Accumulation Phase: Large investors (commonly referred to as "whales") and astute traders begin to amass assets at reduced prices following a market correction or bear phase. Prices level down during this stage, and there is typically little trading activity because there is little public interest.
2. Early Rally Phase: Prices begin to rise as purchasing pressure intensifies. Although early indicators such as technical breakouts, volume surges, or strong support zones suggest a possible increase, this climb may first go mostly unnoticed. Expert analysts and traders might notice this and take positions.
3. Phase of Public Participation: When price increases become apparent, the increase is covered by mainstream media and individual traders. More people enter the market as a result of the FOMO (fear of missing out) snowball effect. As more buyers enter the market, prices soon rise, creating a dramatic upward trend.
4. Euphoria Phase: During this stage, sentiment turns overwhelmingly positive and prices hit all-time highs. Retail FOMO, speculative investments, and media excitement are all at an all-time high. Convinced that prices will continue to rise indefinitely, many novice and inexperienced traders get in. Typically, this phase produces parabolic, fast gains.
5. Distribution Phase: To lock on profits, whales and astute investors may begin selling their holdings. Prices start to level out or decline as they divide their holdings. There could be indications of divergence, decreased volume, and unsuccessful attempts to hit new highs. Retail traders, however, frequently ignore these indicators and continue to purchase.
6. Downtrend and Correction: Prices eventually start to drop precipitously as the supply from selling pressure surpasses the demand. Fear takes the place of FOMO, causing panic selling and a precipitous drop. The cycle may restart as a result of this correction, which has the potential to wipe out a significant amount of profits and send the market back into a bear market or consolidation phase.
Both market fundamentals and trader emotions can fuel quick and furious cryptocurrency bull runs. Making the most of a bull run requires keeping an eye on these stages, utilizing technical indications, and controlling risk.
1. Accumulation Phase: Large investors (commonly referred to as "whales") and astute traders begin to amass assets at reduced prices following a market correction or bear phase. Prices level down during this stage, and there is typically little trading activity because there is little public interest.
2. Early Rally Phase: Prices begin to rise as purchasing pressure intensifies. Although early indicators such as technical breakouts, volume surges, or strong support zones suggest a possible increase, this climb may first go mostly unnoticed. Expert analysts and traders might notice this and take positions.
3. Phase of Public Participation: When price increases become apparent, the increase is covered by mainstream media and individual traders. More people enter the market as a result of the FOMO (fear of missing out) snowball effect. As more buyers enter the market, prices soon rise, creating a dramatic upward trend.
4. Euphoria Phase: During this stage, sentiment turns overwhelmingly positive and prices hit all-time highs. Retail FOMO, speculative investments, and media excitement are all at an all-time high. Convinced that prices will continue to rise indefinitely, many novice and inexperienced traders get in. Typically, this phase produces parabolic, fast gains.
5. Distribution Phase: To lock on profits, whales and astute investors may begin selling their holdings. Prices start to level out or decline as they divide their holdings. There could be indications of divergence, decreased volume, and unsuccessful attempts to hit new highs. Retail traders, however, frequently ignore these indicators and continue to purchase.
6. Downtrend and Correction: Prices eventually start to drop precipitously as the supply from selling pressure surpasses the demand. Fear takes the place of FOMO, causing panic selling and a precipitous drop. The cycle may restart as a result of this correction, which has the potential to wipe out a significant amount of profits and send the market back into a bear market or consolidation phase.
Both market fundamentals and trader emotions can fuel quick and furious cryptocurrency bull runs. Making the most of a bull run requires keeping an eye on these stages, utilizing technical indications, and controlling risk.