In the last cycle, when ETH dropped 50% (from $4300 to $2150, around June 2021), many retail investors sold all their positions.

At that time, many retail investors believed a bear market was imminent, and then ETH retraced and rose 125% to $4800.

I believe we are currently in a similar phase.

Fear dominates the sentiment: Trump imposes tariffs, historically high stocks may crash, and cryptocurrencies will follow suit, with many KO voices on X claiming a bear market is coming.

In light of this, I refuse to be overwhelmed by FUD and would like to share market charts and insights for your reference.

Is BTC still in a bull market?

The following charts are from CryptoQuant, used to determine whether Bitcoin's price is overvalued (expensive) or undervalued (cheap).

MVRV Z Score

It shows when Bitcoin is overvalued (red area) or undervalued (green area) based on historical trends.

• Bitcoin is currently not in the overvalued area but is far above the undervalued level.
• There is still upside potential, but we are in the mid-cycle, not the early stage.

NUPL (Net Unrealized Profit/Loss)

NUPL measures whether the market is in a state of fear, optimism, or excitement based on unrealized profits.

• Currently in the optimism/denial phase (~0.48), which means most holders are in profit.
• Historically, greed/excitement (above 0.6) indicates that the market has peaked.

Long-term Holder SOPR (Spent Output Profit Ratio)

SOPR tracks whether long-term holders are selling at a profit or a loss. A value greater than 1 indicates profit-taking.

• Currently at 1.5, indicating that long-term holders are taking profits, but not significantly.
• In a healthy uptrend, sustained selling above 1 is normal.

CryptoQuant Profit and Loss Index

This index combines MVRV, NUPL, and SOPR to assess the overall market valuation.

• Above its 365-day moving average, confirming the continuation of the bull market.
• Peaks above 1.0 indicate the risk of a cycle top forming.

CryptoQuant Bitcoin Bull and Bear Market Cycle Indicator

This momentum indicator uses the P&L index to track bull and bear market cycles.

• Bitcoin is firmly in the bull market zone (orange), confirming a strong uptrend.
• It has not yet entered the overheated bull market zone (red), which historically marks the cycle top.

TL;DR --- --- What’s the next step?

• Bitcoin is in the mid-cycle of a bull market.
• Holders are taking profits, but extreme excitement has not yet emerged.
• There is still potential for price appreciation before valuations become excessive.

If history repeats itself, Bitcoin still has room to run before reaching a major cycle top.

Interestingly, the chart shared by CZ on X reflects my feelings about our next steps:

Bitcoin has confirmed it is in a bull market, but has not yet reached the euphoria levels of past cycle tops. On-chain data shows there is still upside potential, but some profit-taking is occurring. Over the past two years, ETH has depreciated 70% against BTC. Since December 2024, ETH has depreciated by as much as 48%! The outflow of ETH ETF funds has also shown no bullish signs.

But is ETH currently the best R/R opportunity in cryptocurrency?

In fact, ETH catalysts are slowly emerging:

• Leadership changes at the Ethereum Foundation (Aya has left, new executive director pending)
• Decision to expand L1, starting with limiting Gas, but the change in mindset itself is also important.
• Pectra launches EIP-7702 (goodbye approvals) and the new Open Intents Framework from EF to improve L2 UX
• Tired of memecoins, the community wants to shift to fundamentals
• The hype around MegaETH indicates 1) people still like innovative L2s, 2) successful L2s validate the modularity theory
• Base announced it will reduce block time from 2 seconds to 200 milliseconds and L3 (similar to the argument for MegaETH). Although I am not a fan of Base.
• Ethereum is the best blockchain for asset tokenization. BlackRock is its spokesperson.
• ETH has dropped a lot. It really has dropped a lot, haha

The issue is that these changes take time: L1 expansion will take years, and UX improvements need to be adapted by multiple partners (Base is noticeably missing from the Open Intents Framework).

What I worry most is that ETH will completely miss this bull market and will only become a good buy in the next bear market. However, sentiment can change quickly. If the Ethereum Foundation and the broader community see 1) L1 expansion, 2) improved L2 modular user experience, 3) real signs of a mindset shift among Ethereum skeptics, then ETH could rebound and dominate the second half of this cycle.

Currently, SOL's market cap has decreased by 3.8 times, providing an excellent user experience and benefiting from the ever-strengthening Lindy effect (as long as it stays online). These factors will challenge ETH's dominance in the smart contract space.

Altcoins: What to Consider?

The Robust Speculation Index measures whether altcoins outperform Bitcoin over multiple time frames.

• Currently at low levels (~0.0--0.2), indicating BTC is outperforming most altcoins.
• Historically, altcoin rallies usually accompany periods of less speculation.

This is similar to the crypto breadth chart shared by Aylo on X, indicating that altcoins have bottomed and may see a rebound (if BTC prices remain stable).

The question is: which altcoins to buy? I have a few criteria:

• No significant unlocks in the short term
• Product-Market Fit (PMF)
• Revenue sharing (token buybacks) is a major advantage

Macroeconomic Environment

I strongly agree with the characterization of Bitcoin as digital gold. I prefer Bitcoin over gold because it has self-custody and transferability features. The current macro environment is the best testing ground for BTC. Tariffs, wars, fiscal deficits, money printing… everything is present.

Bitcoin sometimes gets sold off at the onset of major macro events. However, the potential for chaos, turmoil, and money printing is favorable for BTC.

I believe this is exactly what is happening now. Trump's sudden decision to diverge from the established world order has triggered market panic. However, people will quickly adapt to these new global realities.

Nothing in the world has changed enough to undermine cryptocurrency. In fact, the opposite is true. Day by day, we see positive moves from the SEC --- --- dismissing lawsuits, introducing new cryptocurrency legislation, and a positive attitude from the government towards cryptocurrency.

In fact, when bullish news fails to drive prices up, it is bearish news. The market needs some time to adjust.

However, I hope the market can self-correct faster than his bullish forecast for 2026/27. I remain optimistic and believe that patience will be rewarded.