How to recognize the end of a crypto bull run: the signals that precede the cycle change

The bullish rallies of cryptocurrencies capture global media attention thanks to their extraordinary returns, but there remains an unchangeable truth: no crypto bull run can last indefinitely. The history of digital markets teaches us that every phase of exponential growth gives way to periods of correction or consolidation, and these transitions do not happen by chance. Specific indicators, on-chain dynamics, and macroeconomic factors converge to signal when a bull run is about to exhaust itself, offering market participants the opportunity to anticipate changes and protect their profits.

This analysis examines recurring patterns that characterize the end of a bullish run, integrating historical lessons, technical signals, blockchain metrics, and macroeconomic context to build a comprehensive picture of how to recognize when positive momentum is coming to an end.

Lessons from the past: crypto market boom and bust cycles

Blockchain has a rich history of episodes clearly illustrating how bull runs follow a predictable pattern: spectacular growth followed by a peak and then a significant downturn. Analyzing the three main bullish cycles of Bitcoin reveals common elements that, when observed carefully, allow identification of critical moments.

The 2013 cycle: the first lesson on volatility

In 2013, Bitcoin’s price made a swift jump from around $145 to over $1,200, attracting speculators and curious investors worldwide. The market seemed unstoppable until regulatory shocks and exchange failures occurred. This sudden crash demonstrated that the strength of a bull run depends not only on trader enthusiasm but also on ecosystem stability and regulatory favorability.

The 2017 rally: unlimited speculation

The 2017 surge is a classic case of hyperspeculation. Bitcoin rose from about $1,000 to nearly $20,000, fueled by new financial instruments like futures that amplified leverage, retail investor entry, and the ICO craze. At the peak, sentiment was extremely optimistic, with extravagant forecasts and a continuous influx of new participants. However, regulatory restrictions and profit-taking strategies by large investors triggered a sharp correction that wiped out much of the gains.

The 2020-2021 boom: sustained growth then collapse

The most recent cycle was characterized by a longer growth phase. With increasing institutional adoption and abundant liquidity provided by expansive monetary policies, Bitcoin went from about $8,000 to nearly $70,000. Although the growth was more gradual compared to 2017, the market still reached final euphoria. As central banks’ monetary policies tightened gradually, bullish momentum waned, setting the stage for the subsequent correction phase.

Three technical indicators that anticipate the end of a bull run

Beyond history, technical tools provide real-time warning signals. Recognizing these indicators means being able to anticipate major market movements.

When prices rise too quickly: parabolic movements

A sustainable rally is characterized by steady growth with small intermediate corrections. Conversely, when prices rise in an almost vertical and exponential manner—forming a parabolic curve—the market is signaling unsustainability. These parabolic movements historically precede strong trend reversals, as the market cannot sustain indefinite acceleration. Explosive peaks are often the prelude to equally dramatic corrections.

Volume contradicting price: the hidden danger

A healthy rally is accompanied by a gradual increase in trading volume, indicating that new buyers are continuously entering the market. However, when prices continue to rise while volume decreases, it means buying pressure is waning and existing traders are simply moving liquidity without creating new demand. This volume-price divergence is a powerful warning that internal momentum is weakening.

Excessive overbought conditions: when indicators reach extremes

The RSI (Relative Strength Index) is one of the most reliable thermometers for measuring overbought conditions. When RSI reaches extreme levels, typically above 90, the market is operating in overextended conditions. These levels are unsustainable and historically precede significant pullbacks. Similarly, reversal patterns like the “death cross”—when the short-term moving average crosses below the long-term one—or bearish momentum divergences are classic technical signals that the bullish phase is about to reverse.

On-chain data signals when the rally is winding down

The blockchain itself tells a detailed story through on-chain data. Unlike traditional price charts, these indicators reflect actual holder behavior, offering an internal view of sentiment shifts before they are reflected in market prices.

When unrealized profit reaches extremes: the NUPL signal

The Net Unrealized Profit/Loss (NUPL) metric measures the overall profit or loss that Bitcoin holders have on paper. When most holders are in a state of significant unrealized gains—with NUPL above 75%—it suggests they may start realizing those profits en masse. Massive profit realization is one of the most common catalysts for initiating a corrective phase. When holders perceive extraordinary gains, the temptation to “lock in profits” becomes irresistible, triggering a wave of sell-offs.

Valuation versus historical cost: the message of the MVRV Z-Score

The MVRV Z-Score (Market Value to Realized Value) compares the current market price with the average historical acquisition cost of all circulating Bitcoin. A high Z-Score, typically above 5-7, indicates significant overvaluation: assets are being traded at prices much higher than what current holders paid. This metric is particularly useful for identifying when the bull run has reached an unsustainable level of overvaluation.

Seller behavior: the SOPR signal

The Spent Output Profit Ratio (SOPR) tracks whether holders moving their coins are realizing profits or losses. A decline in SOPR from high-profit levels toward breakeven (SOPR = 1.0) indicates holders are starting to realize gains as prices rise. A decreasing SOPR sequence accompanied by rising NUPL is a warning sign that the bullish phase is losing steam.

When experts start selling: holder dynamics

Blockchain allows distinguishing between long-term holders and short-term traders. When long-term holders—those who maintained positions during downturns—suddenly start selling, it’s a strong signal that even the most experienced investors consider the market overextended. Simultaneously, an increase in short-term trading activity suggests the market is attracting inexperienced speculators, a traditional sign of an imminent peak.

When money flows out: exchange flows

Monitoring crypto flows to and from exchange wallets provides an indication of when investors are preparing to sell. A significant increase in coins moving from private wallets to exchanges is often a prelude to heavy selling, as traders transfer assets onto trading platforms in preparation for liquidation.

When interest wanes: network utilization metrics

If network utilization metrics—such as active addresses and on-chain transaction volume—stabilize or decline while prices continue to soar, this signals that interest from new buyers is evaporating. An authentic bull run is supported by growing network adoption; when this grows more slowly than the price, it reveals that price increases are driven by speculation rather than fundamental utility.

When macro factors slow down the bullish momentum of cryptocurrencies

Crypto markets, although decentralized, do not operate in a macroeconomic vacuum. Understanding how external forces interact with bull runs is essential to anticipate cycle transitions.

Monetary policy battles: liquidity and interest rates

Crypto rallies typically flourish when monetary conditions are expansionary—low interest rates, active quantitative easing, and abundant capital for speculative investments. When central banks begin tightening monetary policy, raising rates or reducing asset purchases, available liquidity contracts. This change has historically coincided with the end of bullish runs, as speculative capital diminishes and investors seek less risky assets.

When rules change: regulatory impact

A sudden change in the regulatory landscape can reverse market sentiment almost instantly. Announcements of restrictions, new bans, or investigations into intermediaries have historically caused significant corrections in crypto markets. Regulation is an external factor beyond traders’ control that can undermine a seemingly resilient bull run.

Global economic shocks: contagion of risk

When global financial markets face difficulties—such as a major stock correction or geopolitical tensions—investors tend to shift from “risk-on” to “risk-off” behavior. In these phases, cryptocurrencies, considered high-risk assets, are among the first to suffer sell-offs when market sentiment deteriorates. A global stock market crash or geopolitical escalation can wipe out months of gains in a few days.

Leverage effects: when amplification becomes dangerous

Leverage amplifies gains during a bull run, attracting speculators betting with borrowed capital. However, when the market reverses, this same leverage becomes a danger. Overextended positions collapse rapidly, triggering automatic liquidations that further accelerate declines. Leverage and liquidation dynamics can turn a normal correction into a catastrophic crash.

Behavior of large investors: profit-taking by institutions

Major holders—hedge funds, family offices, companies with significant positions—often begin reducing their exposure at market peaks. Their cautious approach, honed by decades of experience in traditional markets, serves as an early indicator that the bull run may have reached its sustainability. When “smart money” starts to exit, it’s often the first sign that conditions are changing.

Shift in sentiment: from euphoria to caution

Market sentiment indicators—from trader tweets to media coverage—often signal the turning point before prices reverse. Extreme optimism and widespread euphoria are well-known precursors to market tops. When sentiment shifts from uncontrolled enthusiasm to growing caution, the market is often beginning to process the end of the bull run even before prices collapse.

How to integrate signals for a comprehensive analysis

A single sparse metric or indicator is never definitive; true interpretive skill emerges from the convergence of multiple signals. A reliable analysis combines at least two or three indicators from different categories:

• Technical level: parabolic movements + extreme RSI + reversal patterns
• On-chain level: high NUPL + increasing flows to exchanges + decreasing SOPR
• Macro level: monetary tightening + negative regulatory news + deteriorating global sentiment

When at least two of these signals converge, the likelihood of a cycle reversal increases significantly. For example, if RSI is above 90, NUPL exceeds 75%, and central banks are aggressively raising rates, the confluence of signals suggests heightened market vulnerability.

Conclusion: protecting profits by anticipating cycle changes

A typical crypto bull run ends when internal exhaustion and external pressures reach a critical point. Historical cycles from 2013, 2017, and 2020-2021 all followed the same archetype: initial growth, acceleration phase, euphoria peak, then reversal. In each case, warning signals were present for those who knew where to look.

By integrating historical lessons with current technical indicators, on-chain metrics revealing holder behavior, and awareness of macroeconomic factors, market participants can develop a sensitivity to the cycle. While it’s impossible to pinpoint the exact moment of reversal with absolute certainty, constantly monitoring recurring warning signals allows navigating transitions from bull runs to corrective phases with greater awareness, protecting accumulated profits and preparing for the next cycle of opportunities.

Disclaimer: The opinions and analyses contained in this article are for informational and educational purposes only. This article does not constitute endorsement, recommendation, or investment, financial, or trading advice regarding the products, services, or instruments discussed. Before making any financial or investment decisions, consult qualified and independent professionals.