Cryptocurrency Market Evolution and Skynet Analysis Highlight Stages of Bitcoin and Ethereum
In the dynamic world of cryptocurrency, understanding the market cycles can be crucial for investors seeking to make informed decisions. These cycles, which closely align with behavioral finance concepts, reflect shifts in investor sentiment from pessimism to optimism, euphoric greed, and then fear.
Accumulation Phase
The accumulation phase is the quiet beginning of a new cycle. Prices are low and stable after a downturn, trading volumes are subdued, and most retail investors remain skeptical. However, this phase is when "smart money" or institutional investors quietly buy at low prices, anticipating future growth. This phase corresponds to cautious optimism and value investing behavior where fear dominates the market sentiment.
Uptrend / Growth / Bull Market
As positive news, new projects, and technological developments fuel the market, prices rise quickly. Investor sentiment shifts from fear to optimism and eventually euphoria, attracting more retail investors. Confidence builds as prices break previous resistance levels, often driven by momentum and herd behavior with rising trading volumes.
Distribution / Bubble Phase
Price reaches new all-time highs and may increase exponentially. This phase sees extreme bullish sentiment and overconfidence, with a mix of late comers buying in hope the bull market continues and some investors beginning to take profits. Behavioral finance calls this phase a "greed" stage where FOMO (fear of missing out) drives prices above intrinsic values and volatility spikes.
Downtrend / Crash / Bear Market
After the bubble bursts, the market experiences a sharp correction, with prices falling significantly (often 70–80%) and pessimism dominating. Investor sentiment shifts to fear and capitulation; many retail investors sell in panic while long-term holders may begin reassessing positions.
Current Market Scenario
Currently, Bitcoin is approaching its all-time highs, indicating we might be in the latter stages of a bull market. Euphoria is characterized by a soaring expansion in prices and a fear of missing out, with trends on social media such as #ToTheMoon and #BitcoinATH. However, this euphoria is tempered by good liquidity on Bitunix, allowing for smooth buying and selling with minimal slippage during volatility such as panic or euphoria.
In the face of this market surge, Bitunix, a trading platform with the slogan "Better Liquidity, Better Trading", aims to capitalize on the opportunity, appealing to both retail traders and institutions. The tightening of inflows into ETFs is pushing up momentum in the market.
Looking Ahead
As the market enters the anxiety and denial stage, creating uncertainty but investors remaining invested, thinking that the market will reverse, shrewd investors may start re-entering the market discreetly, marking the beginning of a new cycle. Recognizing these phases can help investors adjust strategies to behavioral dynamics rather than just price movements.
According to TradingView statistics, Ethereum rose 56% in July 2025, indicating a potential new cycle may be on the horizon. As always, it's important to remember that past performance is not indicative of future results, and investors should always conduct their own research and consider their risk tolerance before making investment decisions.
[1] Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292.
[2] Shiller, R. J. (2000). Irrational exuberance. Princeton University Press.
[3] Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. Yale University Press.
- During the accumulation phase in cryptocurrency, institutional investors, often referred to as "smart money," buy at low prices, anticipating future growth, reflecting behavioral finance concepts such as value investing and cautious optimism.
- In the uptrend or growth phase, the market is driven by positive news, new projects, and technological advancements, leading to a shift in sentiment from fear to optimism, and eventually euphoria, causing retail investors to participate.
- The distribution or bubble phase is characterized by extreme bullish sentiment and overconfidence, with FOMO (fear of missing out) driving prices above intrinsic values and volatility spiking, such as seen on social media with trends like #ToTheMoon and #BitcoinATH.
- After a market crash or downtrend, pessimism dominates, with prices falling significantly and investor sentiment shifting to fear and capitulation, creating an opportunity for shrewd investors to re-enter the market discreetly and mark the beginning of a new cycle.
