Recently, the cryptocurrency market has been fluctuating wildly, and my newbie friends around me are panicking, asking me every day if the bull market is coming to an end.

1. Market fluctuations during a bull market are normal, and historical data can confirm this.

As a participant who has experienced the two rounds of bull and bear markets in 2017 and 2021, it is necessary to clarify: a bull market is not just a one-sided surge. In the previous two bull markets, mainstream cryptocurrencies (BTC/ETH) experienced multiple pullbacks of 20%-30%, with the longest adjustment period lasting 45 days, but ultimately continued the upward trend. The current market volatility is essentially a combination of fund reallocation and the emotional release of newcomers, rather than a trend reversal. The following five major signals are sufficient to support the continuation logic of the market.

2. Five Core Signals: From Macro to Micro, Anchoring the Bull Market Fundamentals

Signal One: The liquidity cycle is turning, and the end of QT opens up space for easing.

Core logic: The Federal Reserve's QT (quantitative tightening) began in June 2022, with a cumulative reduction of over $1.2 trillion, which is a key factor suppressing risk assets. According to the CME FedWatch Tool, the probability of halting the reduction in November is 89%, indicating that market liquidity will shift from contraction to marginal easing.

Transmission Path: Liquidity Easing → Risk Appetite Recovery for Risk Assets → Cryptocurrency as a High Elasticity Asset (Historical correlation data shows that the correlation between BTC and US tech stocks, represented by the Nasdaq, is 0.65), will benefit first from capital rotation. During the QE period in 2020, BTC achieved a 12-fold increase, confirming the driving effect of liquidity on the crypto market.

Signal Two: Regulatory uncertainty clears, and the industry enters a period of compliance dividends.

Key Point: After the 2023 CZ (Zhao Changpeng) incident, the U.S. SEC officially concluded its high-pressure regulatory phase on the crypto industry. The SEC's attitude towards the approval of spot BTC ETFs has turned positive (11 institutions have already submitted applications), the EU MiCA legislation and the UK crypto asset regulatory framework have been successively implemented, and global regulation has shifted from chaotic crackdowns to clear rules.

Capital Impact: Regulatory certainty is a prerequisite for institutional funds to enter the market. According to CoinShares data, net inflows into crypto funds reached $2.8 billion in Q3 2024, marking a new high since Q4 2021, indicating that new capital has begun to position itself rather than withdraw.

Signal Three: The FOMC rate cut window is approaching, and expectations for monetary easing are strengthening.

Policy basis: In October, the year-on-year increase in the US CPI fell to 3.2%, and the core PCE (the inflation indicator preferred by the Federal Reserve) decreased to 2.8%, close to the 2% target; at the same time, the growth rate of non-farm employment data has slowed, indicating a decrease in the priority of combating inflation and an increase in the demand for stable growth.

Market Impact: According to historical data, after the Federal Reserve's first rate cut, the average increase in BTC over the next six months is 48% (it rose 52% after the rate cut in 2019 and 91% after the rate cut in 2020). If the FOMC meeting on October 30 signals a rate cut, it will directly ignite market expectations for a loosening cycle, driving funds from low-yield fixed income assets into cryptocurrencies.

Signal Four: The tide of safe-haven assets recedes, and signs of risk appetite rising become apparent.

Asset linkage verification: Gold (traditional safe-haven asset) has retraced 7.2% from its September high, and the 10-year U.S. Treasury yield has fallen from 4.9% to 4.5%, indicating that market demand for safe-haven assets is waning; during the same period, the Russell 2000 small-cap index (high-risk equity asset) has risen by 5.3%, forming a rotational pattern of retreating safe-haven assets and advancing risk assets.

Cryptocurrency Mapping: This rotation usually first transmits to the stock market, and then extends to cryptocurrencies. From the perspective of capital flow, the net inflow of BTC/ETH in cryptocurrency spot exchanges has increased by 38% month-on-month in the past two weeks, confirming early signals of risk appetite transmitting to the cryptocurrency sector.

Signal Five: Institutional layout actions are clear, and the options market reveals the direction of entry.

Data evidence: The volume of bullish call options for CRCL (crypto industry ETF) and COIN (Coinbase stock) has surged by 210% and 156% respectively in the last 10 trading days, with strike prices concentrated in the current price +20% range, indicating that professional institutions are locking in profits ahead of an expected rise.

Logical Essence: Institutional funds have a prophetic nature. Before the bull market started in 2021, Grayscale's BTC Trust holdings increased for 8 consecutive weeks. The recent volatility in the options market essentially reflects institutions' optimistic pre-positioning for the medium-term market.

3. Practical advice for beginners: Avoid pitfalls and focus on the core.

1. Target Selection: Focus on core assets in the market, BTC (accounting for 52% of market capitalization) and ETH (accounting for 18%), which together occupy 70% of the liquidity in the cryptocurrency market. In the previous two bull markets, the maximum drawdown of these two was 30%-50% lower than that of lesser-known coins, and their rebound speed was 2-3 times faster, making them the optimal choice for beginners to withstand volatility.

2. Position Management: Reject the All-in mentality and suggest allocating only funds that can withstand losses (no more than 10% of the family's investable funds), and build positions in 3-4 batches to avoid being fully invested at a single point in time and facing the risks of short-term volatility.

3. Stop-loss settings: Maintain the risk bottom line. Taking BTC as an example, the stop-loss can be set 5% below the recent 30-day low (currently about $55,000), and for ETH, it can be set 5% below $1,800. This avoids being washed out by short-term fluctuations while controlling losses in case of a true trend reversal.

In the previous two bull markets, the investors who truly benefited from the main uptrend were not the short-term traders chasing prices, but the long-term holders who understood the cycle and endured the fluctuations. Although the current market has volatility, the five dimensions of liquidity, regulation, policy, capital, and institutions all point towards the continuation of the bull market. New investors need to discard the emotional interference of fear of heights and panic selling, and focus on core assets and position control. After all, the true test of a bull market has never been whether you can catch the price increase, but whether you can withstand the fluctuations.

Most people are trapped in a vicious cycle, not due to a lack of effort, but due to a lack of a guiding light. Those who understand will naturally understand.