- An important aspect when investing is knowing which phase of the cycle we are in
- There are three phases: Halving – Bull Market – Bear Market
- In the cryptocurrency market, […]
An important aspect when investing is knowing which phase of the cycle we are in. There are three phases: Halving – Bull Market – Bear Market.
In the cryptocurrency market, all transactions are recorded in a public ledger, and miners validate and record those transactions. For performing this function, miners receive a reward, which comes in two forms:
- Transaction fees paid with each transaction.
- Block reward for generating a new block.
The block reward is reduced every time 210,000 blocks are mined (approximately every 4 years). This has the effect of reducing Bitcoin’s supply. The most recent halving took place in April 2024.
After the Halving, which usually lasts about a year and is considered an accumulation period, comes the bull run, which typically lasts around a year and a half, followed by the bear market, which lasts for a similar duration as the bull run.
This Halving has been different from all the previous ones, since in January 2024 Bitcoin ETFs were launched, driving Bitcoin’s price higher during a period that normally does not see such strong appreciation. In just three months (January to March), Bitcoin went from $40,000 to nearly $70,000.
The entry of institutional investors (through ETFs) has disrupted the cycle, placing us in a scenario where the bull run could last longer than in previous cycles. In my opinion, we are in a supercycle, meaning that in this cycle we could surpass the typical 4-year pattern, potentially reaching significant revaluations in major cryptocurrencies, also due to Bitcoin’s scarcity.
If Bitcoin were to experience a similar increase to the previous cycle (+1,623%), it would imply a price target of around $269K.
Of course, every bull run includes pullbacks, which are healthy and necessary to strengthen the trend. That’s why, when you see Bitcoin dropping, zoom out and look at the bigger picture in the long term.
When it comes to investing, I recommend that if we are in a bear market, you invest in stablecoins (which are coins that represent a fiat currency, usually the USD, designed to maintain a value close to 1, staying stable with minimal fluctuation. Examples: USD Coin (USDC), Tether (USDT), Binance USD (BUSD), DAI, etc.). If we are in the Halving phase, invest in Bitcoin, and when the bull run arrives, start investing in altcoins.
Within the bull market, the following phases usually occur:
As we can see, the first phase is led by Bitcoin, but once Bitcoin’s dominance starts to fall while its price continues to rise, capital typically shifts toward Ethereum, the second-largest cryptocurrency on the market. In this phase, Ethereum outperforms Bitcoin—in other words, investors in each phase seek assets that, although riskier, offer higher returns. Therefore, after Ethereum comes the phase of top altcoins, followed by mid- and low-cap coins.
To see whether capital is moving from Bitcoin to Ethereum, it is important to follow the ETH/BTC pair. In the following chart, we can observe that since the bottom of the bear market, the ETH/BTC ratio has fallen, meaning that Bitcoin has been rising more than Ethereum. The same also happens during the Halving. However, once the Bull Run begins, this relationship changes, and Ethereum starts to rise more than Bitcoin.
Source: Tradingview
In today’s article, we are going to look at the metric: Funding Rates. This metric indicates how much a trader has to pay or receive for being long or short on a perpetual contract. The amount to be paid or received is the difference between the perpetual contract and the spot price.
When funding rates are positive (green bars on the chart), traders who are long pay those who are short. When funding rates are negative (red bars), traders who are short pay those who are long.
When this metric reaches extreme levels, it signals buying or selling opportunities. If it is excessively negative, it is a good time to buy, and if it is excessively positive, it is a good time to sell, as shown in the following chart.
Source: Bitcoin Magazine Pro
All of this and much more can be found in my book Investing in Crypto with Confidence: How to Analyze, Select, and Manage Digital Assets (Palgrave Macmillan), which will be released in early 2026.
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
