Holders are gradually taking profits, but the market has not yet shown extreme euphoria.
Author: Ignas | DeFi Research
Translation: Deep Tide TechFlow
In June 2021, when ETH dropped from $4,300 to $2,150, halving in price, I chose to sell all my assets.
At that time, I was exhausted from the high intensity of the bull market; the continuous research and work had drained me physically and mentally, and I desperately wanted everything to stop. When my portfolio shrank by 50%, I thought it was a signal of a bear market, so I decisively liquidated everything and felt a wave of relief.
However, the market quickly rebounded, and ETH surged by 125%, reaching $4,800. I could only watch from the sidelines; although I earned some returns by holding stablecoins, I missed out on this rebound.
Now, I feel we are in a similar phase again, but this time my mental state is stronger. I choose to firmly hold my assets and wait for the market to recover.
But what if I'm wrong? What if this is indeed the beginning of a bear market?
Current market sentiment is dominated by fear: The impact of Trump's tariff policy, the stock market at historical highs could trigger a crash, dragging down the cryptocurrency market. Meanwhile, you might notice that Warren Buffett is holding a large amount of cash, which makes you wonder if he knows something we don't. "Smart people" on the social media platform X are posting pessimistic predictions, claiming the market is about to collapse.
This is what is referred to as Goblin Town (a colloquial term for market crashes).
Despite this, I choose not to be overwhelmed by this fear, uncertainty, and doubt (FUD), and I hope to help everyone calmly analyze the current situation by sharing some market data and insights.
Is Bitcoin still in a bull market?
Here are several indicators from CryptoQuant to help determine whether Bitcoin's price is overvalued (expensive) or undervalued (cheap).
MVRV Z-Score Indicator
The MVRV Z-Score measures whether Bitcoin's price deviates from historical trends, indicating whether it is overvalued (red area) or undervalued (green area).
Currently, Bitcoin's price has not entered the overvalued area, but it is also far above the undervalued area.
The market still has room for growth, but it is currently in the mid-cycle, not the early stage.
NUPL (Net Unrealized Profit/Loss)
The NUPL indicator measures market sentiment through unrealized profits, indicating whether it is fear, optimism, or euphoria.
Currently in the optimism/denial phase (~0.48), indicating that the vast majority of holders are still in profit.
Historically, when NUPL is above 0.6, the market typically enters a greed/euphoria phase, signaling the arrival of a top.
Long-Term Holder SOPR (Spent Output Profit Ratio)
SOPR tracks the behavior of long-term holders to determine whether they are selling assets at a profit or a loss.
The current value is 1.5, indicating that long-term holders are taking profits, but the selling is not aggressive.
In a healthy market uptrend, it is normal for long-term holders to continue taking profits.
CryptoQuant P&L Index
This index combines MVRV, NUPL, and SOPR data to assess overall market valuation.
Currently above its 365-day moving average, confirming that the bull market is still ongoing.
When the index exceeds 1.0, it may signal the formation of a market cycle top.
CryptoQuant Bitcoin Bull-Bear Cycle Indicator
If you focus on only one Bitcoin indicator, I recommend this one. It is a momentum indicator based on the P&L index, used to track Bitcoin's bull-bear cycles.
Bitcoin is currently firmly in the bull market zone (orange), indicating a strong upward market trend.
However, it has not yet entered the overheated bull market zone (red), which historically usually marks the top of the cycle.
Summary – What will happen next?
Bitcoin is currently in the mid-stage of the bull market cycle.
Holders are gradually taking profits, but the market has not yet shown extreme euphoria.
There is still room for further growth before prices reach overvalued levels.
If history repeats itself, Bitcoin still has upward potential before reaching the major cycle top.
Interestingly, a chart shared by CZ on X (Twitter) perfectly reflects my feelings about the market's future direction:
"I don't look at charts, but…" — CZ said on X.
Currently, Bitcoin has confirmed its entry into a bull market, but has not yet reached the euphoria levels seen at the tops of past cycles. On-chain data indicates that the market still has room for growth, but some holders have begun to take profits.
The current state of Ethereum: concerning
Over the past two years, ETH has dropped 70% against BTC. Since December 2024, it has already fallen by 48%!
Additionally, the outflow of funds from ETH ETFs has not shown any positive signals.
Is ETH currently the most attractive risk-reward opportunity?
I shared some thoughts on X, suggesting that catalysts for ETH are gradually accumulating:
Changes in leadership at the Ethereum Foundation (EF) (Aya stepped down, but a new executive director has not yet been announced).
Beginning to expand L1, although currently just adjusting gas limits, the idea behind this shift is significant.
Pectra launched EIP-7702 (simplified approval mechanism) and the EF's Open Intents Framework, which will significantly improve the user experience on L2.
Community interest in memecoins is gradually waning, with more people starting to focus on Ethereum's fundamentals.
The popularity of MegaETH indicates: 1) People are still keen on innovative L2s, 2) Successful L2s further validate the concept of modularity.
Base announced it will reduce block time from 2 seconds to 200 milliseconds and launched L3 (similar to the concept of MegaETH). Although I personally am not a fan of Base.
Ethereum remains the best public chain for asset tokenization, even BlackRock is backing it.
ETH's price has severely overshot, it is really very low, haha.
The realization of L1 expansion may take years, and improvements in user experience will require support from multiple partners (for example, Base has not yet joined the Open Intents Framework).
Future Outlook for Ethereum: Bullish or Bearish?
My biggest concern is that ETH may completely miss this bull market and only become a buying opportunity in the next bear market.
But market sentiment can change rapidly. If the Ethereum Foundation and the broader community can make substantial progress in the following areas:
1) L1 expansion,
2) Significant improvement in L2 modular user experience,
3) The community moving away from the current "loser mentality,"
So ETH may strongly rebound and dominate in the latter half of this cycle.
However, as it stands, SOL's market cap is only 3.8 times that of ETH, offering a better user experience, and over time, its "Lindy effect" is strengthening (as long as the network remains stable).
These factors will challenge ETH's dominance in the smart contract space.
Altcoins: Indicators to Watch
Robust Speculation Index can measure whether altcoins are outperforming Bitcoin across multiple time frames.
The current index is at a low level (around 0.0-0.2), indicating that Bitcoin is outperforming most altcoins.
Historically, when speculation activity is at a low point, it often paves the way for a rebound in altcoins.
Aylo shared a similar Crypto Breadth chart on X (Twitter), pointing out that altcoins may have bottomed out. If Bitcoin's strength can be sustained, we might expect a wave of altcoin activity.
Question: Which altcoins should I buy?
When selecting altcoins, I base my choices on the following criteria:
No large-scale token unlock events in the short term.
Good product-market fit (PMF), meaning the product meets market demand and gains user recognition.
Revenue-sharing mechanisms (such as token buybacks) are a significant plus.
FLUID is a decentralized lending protocol that launched just a few months ago, but it has already matched Uniswap in trading volume on decentralized exchanges (DEX). Recently, FLUID announced an upcoming token buyback plan, which gives me confidence in its future development.
Other Altcoins Worth Watching:
ENA: Successfully weathered the Bybit hack and multiple rounds of liquidations. Recently completed a $100 million funding round at a price of $0.4. Additionally, more protocols and centralized exchanges (CEX) are adopting sUSDe, which makes me very optimistic about its potential. The concern is that ENA's large-scale token unlock is approaching, which may put pressure on the price.
$SKY (formerly MKR): Taiki's analysis highlighted several points:
Monthly token buybacks of $30 million (about 1.9% of the supply).
The supply of USDS (formerly DAI) is nearing historical highs.
SPK Farming has increased token demand and revenue sources.
Stablecoin regulation could become a positive factor.
$KMNO: Dominates the lending market on the Solana chain, with a TVL (Total Value Locked) of $1.8 billion, while its market cap is only $85 million. This suggests its valuation may be undervalued. The concern is that users on the Solana chain are more traders than yield farmers. However, this situation could change at any time.
Sonic's $S: Its DeFi ecosystem is rapidly expanding (including deployments of key protocols like Aave), along with airdrop plans for 200 million $S, a high-quality user experience, and growing attention on X. More importantly, there are no large-scale token unlock events, providing a more stable price foundation.
HYPE: There is much discussion on X about its excellent tokenomics and strong community, which is worth noting.
PENDLE: When the market starts focusing on fundamentals and speculators seek yield, Pendle is a very promising choice.
AAVE: Undergoing adjustments in tokenomics, with version 3.3 upgrades bringing stronger revenue performance.
What have I missed?
Additionally, I am very much looking forward to the upcoming token airdrops for MegaETH, Monad, Farcaster, Eclipse, Initia, Linea, and Polymarket.
Macroeconomic Environment
I firmly believe in Bitcoin's value as digital gold. Compared to gold, Bitcoin supports self-custody and has stronger transferability, making it more attractive.
The current macroeconomic environment provides an excellent testing ground for Bitcoin: tariff policies, wars, fiscal deficits, massive monetary overproduction… all of this presents potential benefits for Bitcoin.
In my 2025 blog post "The Truth and Lies of Cryptocurrency," I cited research from BlackRock: Bitcoin sometimes experiences sell-offs at the onset of significant macro events. However, chaos and uncertainty, along with potential monetary overproduction, ultimately provide strong support for Bitcoin.
Current Market Observations
I believe the current market volatility is due to Trump's sudden deviation from the established global order. This uncertainty has led to short-term panic in the market. However, people will gradually adapt to these new global realities.
Essentially, there have been no real changes that undermine the fundamentals of cryptocurrency. On the contrary, we see more and more positive news every day: The U.S. Securities and Exchange Commission (SEC) has dropped some lawsuits against cryptocurrencies, introduced new cryptocurrency legislation, and even the government's overall attitude towards cryptocurrencies is gradually turning positive.
However, a point raised by Ansem is worth noting: When positive news fails to drive prices up, it is actually a bearish signal. This indicates that the market may need some time to digest and adjust to the current situation.
Nevertheless, I still hope that the market's adjustment speed can be faster than his optimistic forecast for 2026/27.
If Raoul Pal's analysis and charts are correct, Bitcoin's price should catch up with the growth trend of global M2 supply before 2026. The M2 supply is an important indicator of global monetary circulation, and if Bitcoin can match it, it will further solidify its position as "digital gold."
Summary
In summary, I remain confident in the cryptocurrency market and believe that as long as we maintain patience, we will ultimately be rewarded.
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