Author: Pantera; Translator: Vernacular Blockchain
Cryptocurrencies are once again in the spotlight, and as prices soar, investors need to know when to start to be vigilant. Based on historical data and price trends since 2013, the crypto market may need some time to continue to expand, enter bubble territory, and reach unsustainable highs.
The only suspense now is which event will trigger the next bear market (which will most likely start in 2025).
In this article, we explore what are the true signs of a market top? These signs are actually obvious, but are often ignored or misunderstood. Technical analysis on YouTube and Twitter (X) is not necessarily reliable, because most so-called "experts" are just guessing.
However, the current market is on the verge of a final sprint, and a parabolic trend is imminent. The opportunity has come, but while we look forward to new highs in prices, we must also be prepared for the inevitable price crash.
In short, our only goal is to identify the market frenzy in time before the bubble bursts and make money and exit smoothly. The journey may be exciting, but if you want to win, you have to know when to quit!
In December 2022, eight indicators showed entry signals, and in 2023, the remaining two indicators also appeared one after another, and the market ushered in a sharp rebound. When most people were panicking, some people took the opportunity to buy at the bottom. When most people were panicking, some people boldly bought when "blood was flowing".
Different from the general sentiment in the market, when some of the following indicators start to flash red lights, we need to be alert. Although it is impossible to make accurate predictions about the market now, it is necessary to prepare for a rainy day.
Without further ado, here are the top 10 indicators to watch when a new bubble is about to burst. When these indicators start flashing, it’s time to jump off the “boom train”.
01Ten signs that the market has peaked
1) Cryptocurrency is heavily promoted on TV
Television shows, financial news and websites are suddenly very interested in cryptocurrencies, and reports on cryptocurrency prices will increase rapidly and become overwhelming. However, apart from the speculation, there are few real applications, and perhaps only a few projects are pursuing practical use cases and goals.
When mainstream media coverage is intense, it’s a red flag. Usually, it means the market is overheated and could crash soon, especially if the coverage attracts a large number of new investors. Entertainment shows with little financial knowledge will also start discussing cryptocurrencies because it’s a hot topic and attracts viewers’ attention.
The cryptocurrency bubble will only last two to three months at most after it becomes mainstream again. We have seen the same thing in 2013, 2017 and 2021. The end of 2024 to the beginning of 2025 will be no exception. We are not yet in the mania stage, so don't worry too much until you see a significant increase in media attention.
2) Celebrities and influencers collectively support cryptocurrency
Endorsements from celebrities and social media influencers are often a negative indicator financially, especially those with shady financial backing.
I published a research article on this topic in early 2021, analyzing events from 2017 (although there have been many more similar cases in the years since):
Celebrities and influencers have almost the same impact on cryptocurrency prices, and their promotions are almost as effective. In addition to Twitter (X), TikTok, and Instagram, you can also see top Twitch streamers promoting some unreliable cryptocurrencies and platforms. These promotions usually happen at the peak of the market, and most of the top streamers don’t even disclose how much they are paid when promoting, but instead pretend to be very interested in cryptocurrencies.
Whether it is celebrities, internet celebrities or anchors, the common point among them who suddenly started to promote cryptocurrencies on a large scale is that they have no idea about the real use of cryptocurrencies.
3) Increased fraud
As a rule of thumb, scams become more prevalent when markets approach their peaks.
Scammers will redouble their efforts, and various scams will emerge in an endless stream, such as fake exchange websites, large-scale phishing attacks, and fake projects or Ponzi schemes that run away with the funds.
Billions of dollars of cryptocurrencies will be cashed out into fiat currencies, which will lead to a large outflow of funds from the market and have an impact on market liquidity.
4) Google Trends “Buy Cryptocurrency” indicator
It used to be common to say “buy bitcoin” but that is no longer the case for a number of reasons we won’t get into here.
The key point is that this chart is a few weeks behind. It does not reflect current interest in cryptocurrencies, but is about a week behind.
Here is the chart and how to interpret it:
When we see a parabolic uptrend like we are seeing in 2021, it is great news for those who are already invested, but it means high risk for newcomers. That is the nature of the market, and you need to decide which side you want to be on.
Now, what this chart shows is that early investors are starting to profit, while new investors are facing greater financial risk.
During the frenzy phase, it is time to consider selling rather than making unwise investment decisions.
When emotions like these run high, you must act quickly and decisively.
Selling strategies can vary, but as a reminder, exiting an investment completely is generally not the most ideal option.
5) Retail investor panic
Massive retail panic (FOMO) is a reliable indicator of a market top. The fear of missing out is a common psychological condition that can lead to unwise investment decisions.
While FOMO can be “short,” be careful because markets can remain irrational for some time.
6) Prices surge to unrealistic levels (wait for parabolic move)
You all know that you should avoid buying in this situation:
However, trading volume always reaches its peak at market peaks.
At this time, most potential investors (usually the target group of retail investors) will enter the market to buy.
Meanwhile, the smart money that bought in early will quickly but quietly exit the market because the news and publications they control will still look positive.
7) Cryptocurrency becomes a status symbol
Owning cryptocurrency has become a symbol of social status.
You’ll see people wearing cryptocurrency logos on hats, clothing, and accessories on social media. When cryptocurrencies start to be seen as trendy, it often means the market is driven more by social sentiment than fundamentals, which often signals an impending market top.
When cryptocurrencies suddenly become a status symbol, be prepared to sell.
8) Exchange failure
During periods of increased market activity, major CEX/DEX often experience outages due to large numbers of users accessing them simultaneously.
This surge in activity usually occurs around the time of a market top, when everyone is rushing to buy or sell.
Although this indicator suggests that the market may be overheated, it alone cannot determine the beginning of a bear market and needs to be combined with other indicators to make a comprehensive judgment.
9) Cycle position
The halving event is a timer for the market cycle, and the bull run cannot end so quickly. The positive impact of the halving usually takes 12 to 18 months to appear.
Prices could surge sharply higher in an instant, and a parabolic move could begin any time within the remaining four months of 2024.
However, prices could also plummet at any time during this period, but these plunges usually recover quickly, indicating that a parabolic move is almost inevitable.
Every bull run so far has had moments like this, where investors panic early on. Exchanges make billions of dollars from market volatility, so flash crashes are inevitable.
There is no bear market yet, and it is almost impossible to appear in 2024, although the profitability of each cycle is lower when the market cycles approach their limits. Most likely, these indicators will start to sound the alarm in the first quarter of 2025.
10) Your barber bought crypto
I have no problem with any profession, and being a barber is an important profession, but if you ignore all other indicators and don't see that you are in a bubble, then your barber may be the last and only indicator you need.
So, when prices continue to rise for a long time, remember to visit your barber regularly, such as once a month. However, your barber must take the initiative to bring up this topic, otherwise the effect of this indicator may not be certain.
11) Conclusion
Here’s another prediction I made for 2021:
After the market peaks, Bitcoin will fall sharply and then enter a two-year bear market.
The current parabolic trend seems to have ended. If it continues to rise, it will most likely top out next time, but I don’t think it will happen again.
I think the market has peaked and it may take until 2024 before it reaches new highs.
— Pantera (March 3, 2022)
Looking at just one indicator isn’t enough to make you nervous. Often, it takes a combination of multiple indicators to raise an alarm. However, the 10th indicator alone can be a significant warning sign.
It is important to note that none of these indicators suggest that the market has topped at this point. While there may well be a bubble, there is still plenty of upside before it bursts. None of the indicators are showing red lights at this point, and we are currently at 0/10, so the chances of the bull market ending here and not going parabolic are virtually zero.
Once you see most or all of the indicators appear, it may be too late, so be careful about the crypto influencers you follow.
Don’t worry too much just yet, but make sure to research actual indicators that will help you make sound investment decisions.
Currently we are seeing all the dips being filled, interest is slowly rising, and no indicators are giving clear signals to sell. However, overconfidence is probably the eleventh indicator I ignore. So, while we may be observing various analysis and signals, the situation can change at any time, and all we can do is manage risk effectively.
