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 that you don't miss out on an opportunity for generational wealth.

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

• Navigate the stages of the bull market
• profit maximization
• Avoid the most common pitfalls.

Phase 1: Accumulation phase

That's where we've 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 dull. Even big news like Paypal launching a stablecoin has little impact on prices. Currently, there is no new liquidity entering the market and the market lacks volatility. It's like a PVP game between 500 degens, each trying to get to the next narrative before the other.

This is the run-up to a bull market and the pieces have just been placed on the chessboard. And this happens to be the best time to sow seeds.

Action guide:

• Stock up on good items. Look for projects that you think will thrive in the upcoming 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. It's tempting to dive into some old projects. They look like a good buy as they are down 90% from their all-time highs. But here’s the thing… most of the next cycle’s brightest projects haven’t been born yet. People usually like to enter a brand new project as the "earliest catcher" instead of buying an old project.
• Don't over trade. Don't get caught up in games like Hamster Match and Bald, they might leave you with nothing. You must survive first to win the final victory. Don't join a bad hand just because you're bored, wait patiently for a good hand.
• Fill in your knowledge gaps. Bull markets are not for learning. The bull market is used to pick up money from the market. And now is the time to learn. If you don't want to hear about a new protocol built on top of GMX right now, you have to spend a week during a 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.

Phase 2: Early Bull Market

The price of cryptocurrencies will start to rise at this stage, and the bears will find it hard to believe. They pop up every two months and talk about $12,000 in Bitcoin is coming.

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

What will spark a bull market?

• A major event such as the approval of a Bitcoin or Ethereum ETF, or a new country adopting Bitcoin as legal tender. *Bitcoin halving will come in 2024. While the past is no guarantee of the future, if enough people believe it...
• New cryptographic primitives. In the last cycle, there were DeFi and NFT. What will be hot this cycle? GambleFi? Telegram bot? NFT comeback? Chain game? Or RWA? They are likely to be areas that we have not yet 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 US and beyond could provide a more transparent and crypto-friendly framework.
• Reduced friction. User experience is still a pain in the ass for the average person in the crypto space. Better wallets, account abstractions, and more beginner-friendly dapps will help.
• Development in Asia. Crypto Twitter (CT) is extremely biased against the US. This is why most CTs don't "understand" Tron is so popular (it's heavily used in Asia). Don't underestimate the power of Korean degens, Hong Kong is becoming more and more friendly to cryptocurrency.

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

Action guide:

• Reduce losing positions and increase profitable ones. Don't get emotionally tied to your portfolio. Just because a project achieves a 5x gain doesn't mean it can't achieve a 10x gain. Brutally cut your losing positions based on data indicators, momentum and sentiment.
• Take profits on the way up. No one can escape the summit perfectly. Don't try to make every penny out of your trades, create a take profit system and stick to it.
• Be wary of excessive risks. People are using leverage, using their real estate/retirement funds, or selling their Bitcoin and Ethereum to buy shitcoins. You can take risks, but do so with discretion.
• Lower your IQ. Some of the best performing projects have the worst fundamentals. Token economics will 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 play.
• Cult leaders. Cult leaders are starting to flex their muscles. They know how to pull tokens and influence sentiment. Inevitably, the cult leaders all seem to die eventually. You can get in early and take profits before they crash, or avoid them entirely.
• Don't ignore retail investors. It's easy to fall into the echo chamber of crypto Twitter DeFi, everyone is arguing with each other around the "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 of specialization and keep up with the pace of the entire market. Missing some early opportunities and then getting in too late and becoming exit liquidity doesn't affect the big picture. You may choose to form a small team to fill in your knowledge blind spots.

The third stage: the peak of the bull market

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

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

Everything is going up. $10,000 in junkcoins can be turned into life-changing gains. Whether you're going for a haircut or taking an Uber, people talking about cryptocurrencies will be everywhere.

FOMO and euphoria kick in, the music never seems to stop, and all common sense is thrown to the winds.

People started quitting their jobs to become full-time cryptocurrency traders. Others will sell their houses to invest in cryptocurrencies.

Everyone is in a very good mood.

Can you spot the most important signals?

• Mainstream media starts reporting on cryptocurrencies. You'll hear stories over and over about someone trying to find a hard drive with 8,000 bitcoins or buying 2 pizzas with 10,000 bitcoins. *Finance Youtubers like MeetKevin, Max Maher and Graham Stephen will start uploading 3+ crypto videos per day.
• Mainstream brands such as PepsiCo and McDonald's 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 there's 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 your head level and realize that there will be a moment when the music stops.

Take the chips off the table, your future self is praying you weren't an idiot. If you don't take profits, the market will take your profits back.

The fourth stage: the decline stage

Where there is a rise, there will be a fall - the peak of the bull market has been seen. Now everyone is wondering if this is the top, or if it will continue the "super cycle".

They'll try to tell you that this time is different - we're 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 party going. Audiences have to be invested, and crapcoins have to keep pumping more liquidity.

Moments of gleam and hope come 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.

I will keep things simple.

For the average person, life sucks and gets worse.

• Credit card debt hits record high
• Debt hits record high for everyone *Student loan repayment is about to begin
• Credit card rates hit record highs
• Debt interest payments hit record high
• Average new car monthly payment hits record high
• Don't get me started on house prices

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

All of this is happening at a time when the pressure to succeed in society is increasing.

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

Humans are greedy and insatiable.

Cryptocurrencies don't just sell new financial infrastructure, they sell dreams. For people, there is no faster way to realize their dreams than cryptocurrencies.

Cryptocurrency is our best chance to make this happen.