Identifying the return of capital flow can be challenging, but it is crucial in positioning ourselves for profit. Recognizing the following signs can help us receive the capital flow.
I. Signs in Terms of News
1. Early Stage
This is the stage where investors prepare to accumulate stocks, so the news tends to be negative. Only market makers and experienced investors know exactly what to expect. This stage is usually a psychological game, designed to put pressure on small investors.
There will be negative news to clear out stocks in the last phase in preparation for the new bull run season.
There are many cases of fear, uncertainty, and doubt (FUD) related to hacking, where tens or even hundreds of millions of dollars are lost. Sometimes, the truth is that the dev team themselves hack their own project, raising suspicion.
A series of large and small crypto trading platforms go bankrupt or even become insolvent.
This stage is challenging in terms of trust and psychology, as negative news is pumped out by experienced investors to create a sense of frustration and loss of trust for the crowd in the market.
Additionally, macroeconomic and economic situations tend to be unfavorable, such as the Fed raising interest rates. BTC has not gone through an economic crisis, so this time could be different.
Most inexperienced Key Opinion Leaders (KOLs) will predict a bearish market, or they may be hired by experienced investors to do so.
Some KOLs have a "reverse signal," indicating that BTC is extremely bad, and they sell all BTC to avoid deeper losses.
Experienced investors and bookmakers, when they have enough stocks, will start to pump positive news back.
2. Middle Stage
This stage is characterized by suspicion among investors who believe they have joined too late. They see that prices are extremely high, so they hesitate to invest. However, prices continue to rise.
The media is starting to talk about the return of BTC and crypto, but people are still skeptical due to the rising prices.
The economic situation is improving, with countries' economies and especially the financial situation in the US starting to recover, and stimulus packages being released.
Influential investors, known as sharks, begin to spread news through the media or price movements to attract smaller investors with new technology concepts such as Defi, NFT, and Web3, which sound futuristic.
There will be a clear separation between trends, with KOLs (Key Opinion Leaders) predicting increases on one side and predicting a bulltrap bounce on the other.
At this point, the price and news begin to move in opposite directions to mislead inexperienced small investors.
IDO, Launchad, and Launchpad bets will multiply dozens of times to attract new people.
Trends such as "move to earn" and "play to earn" will attract capital flow.
3. Final Stage
This is the final and most exciting stage where small investors continue to buy while big players continuously sell, and sharks close their bull traps to take profits.
Experts on social media platforms like Twitter and Facebook are promoting their analytical skills because in an uptrend, they can predict which coins will rise. They start offering expensive courses with the philosophy "buy expensive, sell expensive," and if you make a profit, it's good luck.
People who previously talked about crypto in a downtrend have disappeared until now when they return to the market.
BTC and crypto are being discussed on social media platforms, even by non-financial people and newcomers. Signal groups are getting more crowded.
Newcomers continuously show off their profits and achievements, even though they don't understand crypto.
Many projects, including MLM or non-MLM, keep popping up like mushrooms to lure newbies.
Famous KOLs will tweet continuously about the potential of the market and the future of the crypto finance industry.
The media constantly talks about BTC, and everyone is discussing it. The media praises crypto as the future of this technology or that technology, but this news could be pumped out by sharks to lure newbies when they are ready to exit.
Some "spiritual" factors like XRP, EOS, and LTC will skyrocket, and then the market will drop. You may not know that BTC crashed a few days after EOS reached its ATH in May last year.
Shi* coins and Memecoins usually soar at the end of the season, so be careful if you see this sign because low-cap shi* coins are often speculative money, so seasoned traders in the crypto market usually speculate at this stage because they have already sold all their coins.
II. Technical Indicators
1. Initial Stage
This is the phase where BTC price charts and onchain indicators signal a potential bottom, but this information may not be readily available to everyone. It's important to be wary of bulltraps and beartraps during this near-end of the downtrend.
Onchain teams, like us, can use stablecoins being pushed onto the market to catch the bottom as an indicator. Alternatively, you can visit websites such as Glassnode and Cryptoquant to view them, but self-analysis can be challenging. It's best to consult with our group if you're not confident.
Classic bottoming patterns and strong pinbar candlestick patterns will appear on the technical analysis chart.
Whales stop selling BTC and start accumulating slowly, with long-term holder indicators starting to rise.
The hashrate decreases sharply as the market goes down, with miners shutting down their machines because the cost of mining BTC is not enough to cover their losses.
Trading volume is mostly from traders and is much higher than in the uptrend, partly due to whales taking profits and partly due to stop-losses.
BTC.D and USDT.D increase due to a lot of money flowing into BTC, and these indicators show signs of peaking because some people in the market are selling for fiat or stablecoins to wait for a bottom.
Liquidity during this period is extremely low or even non-existent.
This period is the accumulation phase for large players, leading to a shock in the BTC supply on exchanges.
OTC trading is very active, but it can be difficult for retail investors to access this information unless they have an alpha leak.
2. Intermediate Stage
This stage focuses on psychological testing, where psychological games are the primary focus. It is important to note that this stage could be a bulltrap or a real uptrend, and only the sharks know. If it is a real uptrend, the following signs may appear:
The BTC price chart will continuously rise for months, surpassing resistance levels with new highs higher than previous highs and new lows higher than previous lows. If you learn the Elliott wave, you will understand this better.
Onchain data about BTC is quite positive as long-term holders begin to stop selling and accumulate BTC.
The BTC hashrate index is increasing day by day due to active miners in this stage.
Technical analysis indicators are increasingly positive because if a real uptrend season happens, technical analysis, news, and price movements will all agree with each other.
Money flow in this stage is investment money because this is an uptrend stage where smart investors have already realized it.
The amount of new stablecoins printed keeps increasing by billions of dollars each time.
In the early and intermediate stages, the holder has the advantage, but in the intermediate and final stage, the trader has the advantage. Be cautious in the last season of the uptrend.
Trading volume is increasing day by day, but it cannot be compared to the volume during a downtrend.
BTC.D indicators decrease, USDT.D starts to turn around, pouring capital into altcoins.
TVL of ecosystems starts to grow strongly again, which can be checked on defilama.
The market cap starts to gradually increase, breaking through resistance levels one by one.
3. Final Stage
This stage is quite chaotic, but technical indicators are more important than news. At this time, news is good, but technically it is very bad, so be careful.
Signs of BTC peak divergence appear in the weekly chart, and bearish candlestick patterns begin to form.
The amount of BTC on exchanges is very high, and liquidity is quite good for sharks to sell.
Trading volume begins to decrease compared to the beginning and intermediate stages because most of this volume is fomo volume or shark volume.
Money flow starts to stagnate with no new money flowing into the market.
Indicators such as USDT.D and BTC.D hit bottom and meet extremely strong support levels.
III. Preparation for Different Stages
1. First Stage
This stage is often unfamiliar to small investors. However, there are a few ways to approach it:
Build your assets and gradually choose and DCA coins to prepare for the upcoming season.
Try to participate in the market, but keep your money safe.
Pay attention to whether news and technical aspects are starting to agree with each other. If so, it may be a good time to start.
Check for new developments on Binance, as CZ often creates trends that pull back the market.
In summary, this stage may also be a bull trap, so it's better to hold onto your money than make potential investments.
2. Middle Stage
If the BTC price continues to rise sharply and is on the third wave according to Elliot's theory, and good news is continuously released, this is the time when newbies should be cautious, while experienced people should actively participate in the market.
Most altcoins are skyrocketing during this stage. Hold onto them and don't jump in and out, or you might lose money like playing futures.
Wait for corrections to increase the amount of coins/tokens held, which is called DCA price increase.
3. Final Stage
This is the stage where sharks sell off and small fish experience the most FOMO.
Check whether KOLs have sold their holdings. If you lack experience, listen to their advice, but still make the right decision suitable for your own capital.
Observe the market from the outside, because while making money and preserving capital in the crypto market is easy, conserving capital is extremely difficult.
Participate in shi* coin and memecoin bets, which tend to increase during this stage, but pay attention to the pump rhythm and don't miss the chance to sell at the right time.
IV. Conclusion
Through my participation in the market, I've seen not only knowledge but also psychological games being played by sharks. Sharks and exchange owners are afraid of investors who make a profit once and come back for more. However, human psychology is always greedy, so almost no one can make money once without coming back for the second or third time, and that's when the bookies empty their pockets. Although no uptrend repeats itself like the past, human psychology has not changed for thousands of years, so the market operates similarly but the methods are different. Through this article, I hope everyone can read and understand the signs and prepare well for the upcoming uptrend season.