Grasping the Bull Market Rhythm: Why is the third bull the most dangerous opportunity?

The Fundamental Differences Throughout the Bull Market Cycle

The rise of the Crypto market in each cycle is not linear. Moving from a downturn to prosperity, this process goes through three distinct stages, each with different market performance, capital flows, and risk levels. Many investors lose money during a bull market because they fail to recognize which part of the cycle they are in and continue to participate with a bullish mindset during the third phase.

Bull 1: The Signal Stage of the Initial Rebound

When the market begins to show hope from extreme pessimism, Bull 1 starts. This stage is usually accompanied by a sluggish economy, but clear signs of rebound emerge, providing an entry window for savvy investors.

Currently, the market has entered the late stage of Bull 1. The most typical feature is Bitcoin leading the rally, while many altcoins underperform Bitcoin’s gains. Although buyers are increasingly optimistic about the future prospects of Crypto, the profit-taking effect in the market is unevenly distributed.

In this phase, small sectors take turns being hot — Bitcoin ecosystem first activates, followed by DeFi sectors, and Meme coins also start to gain traction. On the surface, it looks lively, with funds flowing across various tracks, but this enthusiasm is often short-lived and lacks sustainability, signaling that Bull 1 is about to end.

Bull 2: Long-term Uptrend Supported by Fundamentals

As the market enters the second stage, everything becomes more solid. The project’s fundamental data begins to improve — value capture increases, on-chain data continues to trend positively, and these fundamentals attract continuous new capital inflows.

Bull 2 lasts relatively longer and exhibits greater volatility. The key feature of this stage is that the upward momentum starts to diversify across different sectors, but leading projects still dominate the market. Unlike the scattered hype of Bull 1, during Bull 2, all sectors rise in an orderly manner, showing systemic prosperity.

Bull 3: The Most Dangerous Harvest Moment

When the market surges into the third phase of the bull, it appears the craziest on the surface but is actually the most dangerous. The upward trend is rapid and fierce, retail investors’ sentiment reaches widespread optimism, and some participate blindly for short-term profits.

The obvious signs of Bull 3 include: a surge in new coin listings, a flood of IEO projects, and stories of wealth myths and amplified profit effects filling the market. An counterintuitive phenomenon is that when investors are generally thinking about further short-term gains, it often signals the market top.

There is a deadly trap here: as the market reaches Bull 3, institutions and smart retail investors begin to exit gradually, but most latecomers still hold Bull 1 or Bull 2 mindsets, believing there is still significant upside, only to become the final bagholders. Bull 3 typically lasts only a few months, but during this period, risks are completely masked by emotions.

When Does Bull 3 Truly Arrive? Seizing the Key Moment

According to market cycle principles, a genuine Bull 3 requires multiple conditions to align. The start of the US rate-cutting cycle is one key factor, and the Bitcoin halving event is another driving force. When these two factors coincide, Bull 3 will truly emerge.

Based on current conditions, it is expected that the full development of Bull 3 will not occur until the second half of 2025. This also means that now is the time for long-term investors to gradually position themselves, but it is even more important to prepare psychologically for the high risks of Bull 3. When Bull 3 truly arrives, it will be the moment to exit.