Top 10 Indicators for Identifying Cryptocurrencies

Author: Pantera | Blockchain in Plain Language

Cryptocurrencies have once again become the focus of attention. As prices soar, investors need to know when to be cautious. Based on historical data and price trends since 2013, the cryptocurrency market may need some time to continue to expand, enter a bubble zone, and reach unsustainable highs.

The only suspense now is which event will trigger the next bear market (most likely to start in 2025).

In this article, we explore the clear signals that truly indicate the market's peak. These signals are actually quite obvious but are often overlooked 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 edge of the final sprint, and the parabolic trend is about to erupt. The opportunity has come, but while we expect the price to reach new highs, we must also be prepared to deal with the inevitable price plunge.

In short, our only goal is to identify the market's frenzy in a timely manner and make money before the bubble bursts, smoothly exiting the market. This journey may be exciting, but to win, you need to know when to take your gains and leave!

In December 2022, eight indicators showed entry signals, and by 2023, the remaining two indicators also appeared, leading to a significant rebound in the market. While most people were in panic, some took the opportunity to buy at the low point. When most people were in a panic, some boldly bought in when "blood was flowing like a river."

Different from the general sentiment in the market, when some of the following indicators start flashing red lights, we need to be cautious, although the market cannot be accurately predicted at the moment, it is necessary to be prepared.

Without further ado, here are the top 10 indicators to focus on when a new bubble is about to burst. When these indicators start to appear, it's time for you to jump off the "bandwagon."

01
Top 10 Signals of Market Peak

1) Cryptocurrency heavily promoted on TV

TV shows, financial news, and websites suddenly show strong interest in cryptocurrencies, and reports on cryptocurrency prices quickly increase and become overwhelming. However, apart from speculative hype, there are very few real applications, perhaps only a few projects are pursuing practical applications and goals.

When mainstream media coverage becomes intensive, it is a dangerous signal. Usually, this means that the market is already overheated and may collapse soon, especially after these reports attract a large number of new investors. Entertainment programs with little financial knowledge will also start discussing cryptocurrencies because it has become a hot topic that can attract viewers' attention.

After cryptocurrencies become mainstream again, the bubble can only last for two to three months at most. We have seen the same situation in 2013, 2017, and 2021. The end of 2024 to the beginning of 2025 will be no exception. We have not yet entered the frenzy stage, so there is no need to worry too much before seeing a significant increase in media attention.

2) Celebrities and internet celebrities collectively endorse cryptocurrencies

Endorsements by celebrities and social media influencers are often a contrarian indicator financially, especially those unreliable financial endorsements.

I published a research article on this topic in early 2021, analyzing the events of 2017 (although there have been more similar situations in the following years):

The impact of celebrities and internet celebrities on cryptocurrency prices is almost the same, and their promotional effects are similar. In addition to Twitter (X), TikTok, and Instagram, you will also see top Twitch streamers promoting some unreliable cryptocurrencies and platforms. These promotional activities usually occur at the market peak, and most top streamers do not even disclose how much they are paid for the promotion, but instead pretend to be very interested in cryptocurrencies.

Whether it's celebrities, internet celebrities, or streamers, the common point when they suddenly start promoting cryptocurrencies on a large scale is that they have no idea about the true use of cryptocurrencies.

3) Increase in scams

Based on past experience, when the market approaches its peak, scams will become rampant.

Scammers will redouble their efforts, and various scam methods will emerge, such as forged trading platform websites, large-scale phishing attacks, and fraudulent projects or Ponzi schemes that run away with the money.

Billions of dollars in cryptocurrencies will be cashed out into fiat currency, causing a significant outflow of funds from the market, impacting market liquidity.

4) Google Trends "buy cryptocurrency" indicator

In the past, it used to be "buy Bitcoin," but that is no longer the case for various reasons, which we will not discuss here.

The key point is that this chart lags behind by a few weeks. It does not reflect the current interest in cryptocurrencies but lags behind by about a week.

Here is the chart and its interpretation:

When we see a parabolic upward trend like in 2021, it is good news for those who have already invested, but it means high risk for newcomers. This is the nature of the market, and you need to decide which side you want to be on.

Now, the chart shows that early investors are starting to profit, while new investors face greater financial risks.

In the frenzy stage, it is time to consider selling, rather than making unwise investment decisions.

In this heightened emotional state, you must act quickly and decisively.

The selling strategy may vary, but a reminder that completely exiting the investment is not usually the most ideal choice.

5) Retail investor FOMO (fear of missing out)

Massive retail investor FOMO is a reliable indicator of the market peak. "Fear of missing out" is a common psychology that can lead to unwise investment decisions.

Although FOMO can be "shorted," be careful because the market may remain irrational for a period of time.

6) Price soaring to unrealistic levels (waiting for parabolic trend)

You all know that you should avoid buying in this situation:

However, at the market peak, trading volume will always reach its peak.

At this time, most potential investors (usually the target group of retail investors) will enter the market.

At the same time, smart money that entered early will quickly and quietly exit the market because the news and publications they control will still look very positive.

7) Cryptocurrency becomes a symbol of social status

Owning cryptocurrency has become a symbol of social status.

You will see people wearing hats, clothes, and accessories with cryptocurrency logos on social media. When cryptocurrencies suddenly become a fashion statement, it often means that the market is more driven by social sentiment than fundamentals, which usually indicates that the market is about to peak.

When cryptocurrencies suddenly become a symbol of social status, get ready to "sell."

8) Trading platform malfunctions

During periods of increased market activity, major CEX/DEX platforms often experience malfunctions due to a large number of users accessing them at the same time.

This surge in activity usually occurs before or after the market peak, when everyone is rushing to buy or sell.

Although this indicator indicates that the market may be overheated, it alone cannot determine the start of a bear market. It still needs to be combined with other indicators for a comprehensive judgment.

9) Position in the cycle

The halving event is the timer of the market cycle, and the bull market is unlikely to end so quickly. The positive impact of the halving usually takes 12 to 18 months to manifest.

The price may soar instantly, and the parabolic trend may start at any time within the remaining four months of 2024.

However, during this period, the price may also plummet at any time, but these plunges usually recover quickly, indicating that the parabolic trend is almost inevitable.

So far, every bull market has had such moments that made investors panic early on. Trading platforms have made billions of dollars through market fluctuations, so a flash crash is inevitable.

There is no bear market yet, and it is almost impossible in 2024, although the profitability of each cycle is low as the market cycle approaches its limit. The most likely scenario is that these indicators will start to sound the alarm in the first quarter of 2025.

10) Your hairdresser bought cryptocurrency

I have no opinion on any profession, and a hairdresser is also an important profession, but if you ignore all other indicators and fail to see that you are in a bubble, then your hairdresser may be the last and only indicator you need.

So, when the price continues to rise for a long time, remember to visit your hairdresser frequently, such as once a month. However, it must be your hairdresser who brings up the topic, otherwise the effectiveness of this indicator is uncertain.

11) Conclusion

This is another prediction I made in 2021:

After the market peaks, Bitcoin will experience a significant decline, followed by a two-year bear market.

The current parabolic trend seems to have ended, and if it continues to rise, it is very likely to peak next time, but I don't think it will happen again.

I believe the market has already peaked, and it may not reach its high point again until 2024.

— Pantera (March 3, 2022)

Looking at a single indicator alone is not enough to make you uneasy. Usually, we need a combination of multiple indicators to trigger an alert. However, the 10th indicator itself may become an important warning signal.

It is worth noting that none of these indicators currently indicate that the market has peaked. Although there may be a bubble, there is still a lot of room for growth before it bursts. None of the indicators currently show a red light, so our current score is 0/10, and the possibility of the bull market ending here and the parabolic trend not appearing is almost zero.

Once you see most or all of the indicators appear, it may be too late, so be careful with the influencers of cryptocurrencies you follow.

However, there is no need to worry too much at the moment, but make sure to research the actual indicators, which will help you make reasonable investment decisions.

Currently, we see all the declines being filled, interest is slowly rising, and there are no clear signals indicating the need to sell. However, overconfidence may be the 11th indicator that I have overlooked. So, although we may observe various analyses and signals, the situation can change at any time, and all we can do is effectively manage the risk.

Original Title: Top 10 Indicators To Identify The Crypto Peak
Original Link: https://medium.com/the-crypto-kiosk/top-10-indicators-to-identify-the-crypto-peak-8f9ad79a9278
Original Author: Pantera
Translation: Blockchain in Plain Language

Article Link: https://www.hellobtc.com/kp/du/08/5387.html

Source: https://mp.weixin.qq.com/s/eLJrGfRJlrPQSmxA39uo5g

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