A big bull market requires a bigger bubble. Which stage are we currently in this cycle?

Source: Talking about Li and Talking about the Outside

Since entering July, Bitcoin has continued to challenge historical highs, and Ethereum has also seen significant gains. Even older coins like XRP and ADA have risen over 40% in the past month. As shown in the figure below. Zoom image will be displayed

1. What stage are we currently in this cycle?

With the recent warming of market sentiment, the voices calling for a bear market seem to have decreased compared to earlier, but some people still do not want to admit that we are still in a bull market, thus continuing to fall into new entanglements.

Regarding the definitions of bear and bull markets, different people may have different views, which depends on your own perspective. As we mentioned in the article on March 13: some believe that as long as Bitcoin falls below MA200, it is a bear market, while others think that Bitcoin must drop below 50,000 to be considered a bear market. It's not that a bear market means losing money, and a bull market guarantees profits. In fact, whether in a so-called bull or bear market, as long as the market exists and liquidity remains, opportunities are present. We must both follow the trend and go against it.

Although the new round of phase gains since this month (July) has been good, with Bitcoin reaching new highs and TOTAL2 peaking around 1.56 trillion USD, as shown in the figure below. Zoom image will be displayed

However, the overall market capitalization of altcoins has not broken previous highs, and compared to the previous two bull market cycles, my feeling is that retail investor sentiment still seems relatively pessimistic, not yet reaching that state of reckless FOMO typical of a major bull market. Of course, this is just my personal feeling.

Looking at this cycle from 2023 to now, there have indeed been many cases of retail investors becoming wealthy, but it seems to be mainly concentrated in the MemeCoin phenomenon. Moreover, in terms of the overall proportion of people, it is relatively low. In other words, the profits generated in this crypto cycle have not spread too far or too widely, and compared to the wealth creation scale of retail investors in the previous two cycles, it feels weaker.

According to a report by NewTrading, the global cryptocurrency user base is expected to reach 861 million by 2025. However, people may be more concerned about the number of users here. Just a few days ago, I saw a recent data report stating that according to CoinLaw's latest statistics released in July 2025, it is estimated that about 5.2% of adults in mainland China own or use cryptocurrencies (approximately 50 to 60 million people), as shown in the figure below. Zoom image will be displayed

Continuing with the most representative MemeCoin launch platform, PumpFun, as of the time of writing this article, the platform has over 22 million active addresses (i.e., wallet addresses), with the number of MemeCoins created exceeding 12 million. However, it has only created a few hundred millionaire wallet addresses, as shown in the figure below. Zoom image will be displayed

Moreover, among these few hundred millionaire addresses, how many truly belong to retail investors is still a question that needs further investigation.

So, what does a real bull market feel like? It's when everyone feels they are about to become wealthy, when making money feels as easy as breathing, and the market is rising every day, appearing to be paved with gold. During this period, no one pays attention to or studies fundamentals or candlestick charts; all that can be seen is people's frenzied FOMO desires.

Currently, I have not truly seen such a situation occur, which may indicate one of two scenarios:

1. The market has completely changed and no longer operates according to historical cyclical patterns, and retail investors are no longer an important part of the market.

2. The market has not yet entered the final euphoric phase, meaning we have not yet welcomed the true bubble phase of a major bull market (if we guess from the timeline, we may still be in the later part of this cycle).

Recently, many KOLs online have been inclined to say that the market will break the cyclical pattern and transition into a long bull market. For now, I will maintain a neutral stance on this. As we mentioned in the article on January 17: the most important logic for breaking the cyclical pattern and entering a long bull market is "transformation." Some of the transformations we have already seen include the continued popularity of crypto ETFs, increasing deep participation from large institutions (such as MicroStrategy), and Bitcoin being included in national (U.S.) strategic reserves, among others.

However, I believe that the current transformations are still not enough; we do not yet have the foundation to enter a long bull market. But in terms of Bitcoin's performance, it seems we are at a critical point of historical transformation. My guess is that this cycle will still follow certain existing patterns, but the timeline may be slightly extended. Perhaps starting from the next cycle, we will truly welcome or stand at the starting point of a new transformative era.

2. A major bull market still requires a larger bubble

We mentioned the term "bubble phase of a major bull market" above. The word "bubble" should not be viewed entirely negatively. As we mentioned in the article on July 19: the highest form of price play is actually to create bubbles, and what a major bull market needs most is more bubbles. MicroStrategy has ingeniously accumulated Bitcoin worth over 71 billion USD, and we have witnessed Bitcoin prices continuously breaking historical highs. If no new black swan events occur in the macro environment, ETH and some altcoins will likely continue to rise. In summary, making money is a process of embracing bubbles, enjoying bubbles, distancing from bubbles, and continuing to anticipate the formation of the next new bubble.

If we look at historical cycles, each bull market tends to give rise to a new crypto bubble. This birthing process brings incredible wealth creation opportunities but often ends with a rather tragic conclusion. For example, after the bull market of 2021, we experienced the bubble of Terra (LUNA), which was then dubbed the "Moutai of the crypto world." Similarly, after the 2017 bull market, we experienced the ICO bubble.

So far in this cycle, we have not yet seen signs of such bubbles, but as the strategies of companies like MicroStrategy are increasingly replicated, this situation seems to be changing. Especially as companies like SharpLink Gaming begin to shift their focus from Bitcoin to altcoins, I am starting to see some possible signs.

More and more companies are beginning to link their stocks to BTC/ETH and speculate on them. Their actions (purchases) have also had a huge positive impact on cryptocurrency prices and market sentiment. In addition to BTC and ETH, some companies are also starting or planning to chase and accelerate speculation on other altcoins, such as Bit Origin planning to raise 500 million USD to buy DOGE, Upexi planning to raise 200 million USD to buy SOL, and Nano Labs planning to raise 200 million USD to buy BNB, among others.

It is very evident that more and more companies are rushing to join the ranks of cryptocurrency speculation.

According to data from Coinshares, driven by institutional investors, inflows of funds since this month (July) have reached a record 11.2 billion USD, far exceeding the 7.6 billion USD after the U.S. elections in December 2024, as shown in the figure below. Zoom image will be displayed

Specifically regarding altcoins, from the beginning of the year to now, inflows for ETH have reached 7.79 billion USD (exceeding the total inflow for last year), inflows for SOL have been 8.43 billion USD, inflows for XRP have been 7.21 billion USD, and inflows for SUI have been 1.26 billion USD, as shown in the figure below. Zoom image will be displayed

However, there is an interesting phenomenon here: as some altcoins attract huge inflows recently, some altcoins are experiencing outflows of funds.

From this, we can draw some conclusions (guesses): the current altcoin rally seems to be unrelated to people's sentiment and is mainly driven by potential ETF expectations.

Regarding the issue of altcoin ETFs, we have discussed and mentioned it several times in recent articles. For example, in the article on July 19, we also stated: with the approval of Bitcoin and Ethereum spot ETFs, the paths for other leading altcoin ETFs seem to have become increasingly clear. Based on past situations, the fourth quarter of this year (around October) may become a historical turning point for crypto ETFs, at which point more altcoin ETFs may be approved, inevitably bringing more external liquidity. Zoom image will be displayed

The current rally seems to further highlight these potential ETF expectations, with funds possibly making early bets or accumulating on altcoins like SOL and XRP, which are most likely to be prioritized for ETF approval. In other words, the phase of rising since the end of June can be referred to as a mini altcoin season, driven by policies and ETF expectations (from the U.S.), rather than a traditional broad-based altcoin season.

If we extend the time dimension a bit further, we can also conclude (guess): this is merely the early stage of more institutions rushing to join the cryptocurrency speculation army, or the early stage of the formation of a major bubble in this cycle.

Whether it is MicroStrategy, which has already formed a scale in BTC, or SharpLink Gaming, which is currently raising 5 billion USD to continue purchasing more ETH, or other institutions that are currently or may continue to speculate on potential ETF altcoins, they are creating a new massive cyclical bubble for us through cryptocurrencies.

As for how long this new bubble game (opportunity) can last, I cannot say for sure. From a short to medium-term perspective, the crazy actions of institutions will inevitably continue to push up the prices of some cryptocurrencies, even driving some coin prices to levels that retail investors find insane. From a long-term perspective, as this bubble rapidly approaches madness, it will likely also phase out, similar to those bubbles in historical cycles.

If our above viewpoint (guess) holds, then we can continue to provide a new guess: in the second half of this year, we will continue to experience greater volatility, but all fluctuations are for better washing and speculation. In the fourth quarter of this year, the market may once again present opportunities that will astonish retail investors, potentially leading to new widespread FOMO sentiment.

After all, the crazy behavior of institutions ultimately needs to be picked up by retail investors, and of course, some institutions will also take over when the final bubble bursts. In this market, the ultimate big winner can only be a few.

We are already in this game, and we have already seen the potential big bubble. As for when this game will end, I cannot accurately judge, but we might as well keep a close eye on the following angles:

• Which companies will accumulate large amounts of cryptocurrencies in the coming weeks or even months, and what exactly will they buy?

• The changes in the market capitalization of these companies' stocks, and whether their corresponding stocks can continue to trade at a premium?

The process from rapid expansion to sudden collapse is often the most beautiful moment of a bubble. Opportunities are always reserved for those with enough patience and firm belief. Since we have already persisted through this cycle for more than four years (2022-2025), let’s look forward to and enjoy the last brief beauty of this cycle.