Original author: The DeFi Edge

Original compilation: Luffy, Foresight News

There are 4 phases of a cryptocurrency bull market and we are at the end of phase one. This article will show you how to take advantage of market cycles so you dont miss out on an opportunity for generational wealth.

How to seize the opportunity? You need to do three things:

• Navigating the Bull Market Stages

• profit maximization

• Avoid the most common pitfalls.

The first stage: accumulation stage

This is where we have been for the past year. After the Terra crash, the collapse of FTX, and the USDC decoupling scare, the market bottomed out.

Clearly, the worst is over (barring a major Binance/Tether mishap).

Current cryptocurrency prices are flat and boring. Even big news like Paypal launching a stablecoin has only a minimal impact on the price. Currently, there is no new liquidity entering the market and the market lacks volatility. Its like a PVP game between 500 degens, all trying to get to the next narrative before the other.

This is the preparation stage for a bull market, and the chess pieces have just been placed on the chessboard. And this is also the best time to sow.

Action Guide:

• Stock up on good items. Look for projects that you think will thrive in the coming bull market. Such projects need to meet certain conditions: have product/market fit, competitive advantage, team still under construction, solid roadmap and sound financial indicators.

• Save ammo. Its tempting to rush into some old projects. They look like a good buy since they are down 90% from their all-time highs. But the fact is this...most of the outstanding projects in the next cycle have not yet been born. People usually like to enter a brand new project as the earliest rusher rather than buying into old projects.

• Dont overtrade. Dont get caught up in games like Hamster Races and Bald, they can leave you with nothing. You must survive first to achieve final victory. Dont join a bad hand out of boredom, be patient and wait for the good ones.

• Fill the gaps in your knowledge. The bull market is not for learning. The bull market is for picking up money from the market. And now is the time to learn. If you dont want to hear about a new protocol built on top of GMX right now, you have to spend a week during the bull market learning the basics of GMX.

• Monitor liquidity. Pay attention to the capital inflow of CEX, pay attention to the stable currency being deployed, pay attention to the growth of DeFi TVL, and pay attention to the growth of the overall market value of cryptocurrencies. More liquidity means things are changing.

The second stage: early bull market

Cryptocurrency prices start to rise at this stage, and bears will find it hard to believe. They pop up every two months and talk about $12,000 in Bitcoin being imminent.

People get caught up in doubt and suffer from a condition called bear PTSD that blocks your gains. Ironically, as long as youre early in the cycle, you should be more at risk before the crowd arrives.

What triggers a bull market?

• Major events such as a Bitcoin or Ethereum ETF being approved, or a new country adopting Bitcoin as legal tender.

• The Bitcoin halving is coming in 2024. While the past is no guarantee of the future, if enough people believe it...

• New cryptographic primitives. The last cycle had DeFi and NFT. What will be popular this cycle? GambleFi? Telegram bot? Are NFTs making a comeback? Chain games? Or RWA? They may well be areas we havent even begun to imagine. Think of something like Axies Infinity or Stepn combined with better mechanics.

• Macroeconomic changes. The Fed stops raising interest rates, which will allow more liquidity to enter the crypto market.

• Regulatory changes. The United States and elsewhere can provide a more transparent, crypto-friendly framework.

• Friction is reduced. For regular folks in the crypto space, user experience is still a pain in the ass. Better wallets, account abstractions, and more beginner-friendly dapps will help.

• Development in Asia. Crypto Twitter (CT) has an extreme bias against the United States. This is why most CTs dont understand why Tron is so popular (its heavily used in Asia). Don’t underestimate the power of Korean degens, Hong Kong is becoming increasingly friendly to cryptocurrencies.

It only takes one major event to trigger a domino effect. Some degenerates make a lot of money, their lives take a quantum leap, and they tell everyone around them. Then, such stories slowly spread on the Internet.

Action Guide:

• Reduce losing positions and increase profitable ones. Dont get emotionally tied to your portfolio. Just because a project achieves a 5x gain doesnt mean it cant achieve a 10x gain. Brutally cut your losing positions based on data indicators, momentum and sentiment.

• Taking profits on the way up. No one can escape perfectly. Dont try to make every penny from trading, create a take-profit system and enforce it strictly.

• Be wary of excessive risk. People use leverage, leverage their real estate/retirement funds, or sell their Bitcoin and Ethereum to buy crapcoins. You can take risks, but be careful.

• Lower your IQ. Some of the best-performing projects have the worst fundamentals. Tokenomics would be a complete joke. But remember this: the price only goes up when other people buy. And people are too stupid to understand high IQ gameplay.

• Cult leader. The cult leaders began to flex their muscles. They know how to pull coins and influence sentiment. Inevitably, cult leaders seem to die eventually. You can join early and exit to take profits before the crash, or you can avoid them entirely.

• Dont ignore retail investors. It’s easy to get caught up in the crypto-Twitter DeFi echo chamber, where everyone is arguing with each other around “real yield curve vs flywheel effect”. Retail investors don’t understand this at all. So go where they hang out, like Reddit and YouTube comments.

• focus. It is impossible to find a few areas to specialize in and keep pace with the entire market. Missing some early opportunities and then getting in too late and becoming exit liquid doesnt affect the big picture. You may choose to form a small team to cover your knowledge blind spots.

Stage Three: Bull Market Peak

This is the stage when retail investors begin to pour in. They are entering stage 3 of 4 (but in their minds, they think they are entering stage 2 of 5).

Bull markets are self-reinforcing. As prices rise, FOMO intensifies, and a positive spiral keeps pushing prices higher and higher.

Everything is going up. $10,000 in junk coins can turn into life-changing gains. Whether youre getting a haircut or taking an Uber, people talking about cryptocurrency will be everywhere.

FOMO and euphoria kick in, the music never seems to stop, and all common sense goes out the window.

People started quitting their jobs and becoming full-time cryptocurrency traders. Others will sell their homes to invest in cryptocurrencies.

Everyone is in a really good mood.

Can you spot the most important signals?

• Mainstream media started covering cryptocurrencies. Youll hear over and over again the story of someone trying to find a hard drive with 8,000 Bitcoins on it or buying 2 pizzas for 10,000 Bitcoins.

• Financial Youtubers such as MeetKevin, Max Maher and Graham Stephen will start uploading more than 3 cryptocurrency videos per day.

• Mainstream brands like PepsiCo and McDonalds will start mentioning cryptocurrencies to gain influence. Mainstream celebrities try to make money by sponsoring or launching their NFT collections.

• Everyone is working hard. When theres a lot of big talk on your Twitter stream, your spider sense should disappear.

Everyone will try to convince you that this time is different and you have to fight your instincts.

The most important thing to do at this stage is to consider your exit plan. Keep a cool head and realize that there will be a moment when the music stops.

Take the chips off the table and your future self is praying that you were not an idiot. If you dont take profits, the market will take your profits back.

The fourth stage: the decline stage

What goes up will come down - the peak of the bull market has already appeared. Now everyone wants to know if this is the peak, or if the super cycle will continue.

Theyll try to tell you that this time is different - were finally mainstream! Keep an eye out for discussions of super cycles, Bitcoin extension theories, and more. This cycle will continue for several more years! ?

Remember, everyone has a financial incentive to keep the rave going. The audience must be made to invest money, and more liquidity must be continuously injected into the garbage coin.

Moments of light and hope will appear from time to time. Bitcoin peaked in November 2021, but OHM fork, FTM/Solidly and Luna are still on the rise.

Once the price plummets, bears who missed the bull cycle and generational wealth two years ago jump out and say, I told you so.

What makes me so convinced there will be another bull market?

I have bet my career and the next ten years of my life on DeFi, and I have a firm belief in this field.

Ill keep things simple.

For the average person, life sucks and gets worse.

• Credit card debt hits record high

• Everyones debt is at an all-time high

• Student loan repayment begins soon

• Credit card interest rates hit record highs

• Debt interest payments hit record high

• Average monthly payment for new car hits record high

• Dont get me started on housing prices

Society and culture have turned everyones life into an incredibly difficult pattern. Going to college and getting a job are not enough to survive and maintain a family. The cost of living continues to rise and the middle class is disappearing.

All of this happens at a time when society’s pressure to succeed is increasing.

No one in the new generation is interested in having a huge 401k (US pension insurance system) wealth at the age of 65. They want to get rich now. Everyone wants instant gratification. Everyone’s dopamine receptors are blown. Everyone wants to show off their wonderful life and show everyone that they are the hero, and thats where the pressure comes from.

Human beings are greedy and insatiable.

Cryptocurrency doesn’t just sell new financial infrastructure, it sells dreams. There is no faster way for people to realize their dreams than with cryptocurrencies.

Cryptocurrencies are our best chance of achieving this.