Original author: Ignas | DeFi Research
Original translation: TechFlow
In June 2021, when ETH dropped from $4,300 to $2,150, halving its price, I sold all my assets.
At that time, I was exhausted by the high intensity of the bull market. The continuous research and work made me exhausted physically and mentally. I was eager for everything to stop. When my portfolio shrank by 50%, I thought it was a sign of a bear market, so I decisively liquidated and felt relieved.
However, the market quickly rebounded, with ETH soaring 125% to $4,800. I was left on the sidelines, earning some money by holding stablecoins, but missing out on the rally.
Now, I feel like we are in a similar phase again, but this time I am mentally stronger and I am choosing to hold on to my assets and wait for the market to recover.
But what if Im wrong? What if this is really the beginning of a bear market?
The current market sentiment is dominated by fear: the impact of Trumps tariff policy and the stock markets historical highs may trigger a plunge, which will drag down the cryptocurrency market. At the same time, you may notice that Warren Buffett is holding a lot of cash, which makes you wonder if he knows something we dont. Smart people on social media platform X have posted pessimistic predictions, claiming that the market is about to collapse.
This is called Goblin Town (a colloquial term for a market crash).
Despite this, I choose not to be overwhelmed by the fear, uncertainty and doubt (FUD) and hope to help everyone analyze the current situation calmly by sharing some market data and insights.
Is Bitcoin Still in a Bull Market?
Here are a few indicators from CryptoQuant to help determine if Bitcoin is overvalued (expensive) or undervalued (cheap).
MVRV Z-Score indicator
The MVRV Z-Score is used to measure whether the Bitcoin price deviates from its historical trend, showing whether it is overvalued (red area) or undervalued (green area).
Currently, the price of Bitcoin has not entered the overvalued area, but it is also far above the undervalued area.
The market still has room to run, but it is mid-cycle, not early.
NUPL (Unrealized Net Profit/Loss)
The NUPL indicator measures market sentiment through unrealized profits, whether it is fear, optimism or enthusiasm.
Currently in the Optimism/Deniability phase (~0.48), indicating that the vast majority of holders are still in profit.
From the historical data, when NUPL is above 0.6, the market usually enters the greed/frenzy stage, indicating the arrival of the top.
Long-term holder SOPR (Spent Output Profit Rate)
SOPR tracks the behavior of long-term holders, determining whether they sell assets at a profit or loss.
The current value is 1.5, indicating that long-term holders are taking profits, but the selling is not aggressive.
In a healthy market uptrend, it is normal for long-term holders to continue to take profits.
CryptoQuant PL Index
The index combines MVRV, NUPL and SOPR data to assess overall market valuation.
It is currently above its 365-day moving average, confirming that the bull run is still ongoing.
When the index exceeds 1.0, it may signal the formation of a market cycle top.
CryptoQuant Bitcoin Bull-Bear Cycle Indicator
If you only follow one Bitcoin indicator, I recommend this one. It is a momentum indicator based on the PL index that tracks Bitcoins bull and bear cycles.
Bitcoin is currently firmly in bullish territory (orange), indicating a strong upward market trend.
But it has not yet entered the overheated bull market zone (red), which historically has typically marked the top of the cycle.
Summary – What happens next?
Bitcoin is currently in the middle stage of its bull cycle.
Holders are gradually taking profits, but the market has not yet shown extreme enthusiasm.
There is still room for further gains before prices reach high valuations.
If history repeats itself, Bitcoin still has the potential to rise before hitting a major cycle top.
Interestingly, a chart shared by CZ on X (Twitter) reflects exactly how I feel about where the market is headed:
“I can’t read charts, but…” — CZ on X
Currently, Bitcoin has confirmed that it has entered a bull market, but it has not yet reached the frenzy level at the top of the previous cycle. On-chain data shows that the market still has room to rise, but some holders have begun to take profits.
The current state of Ethereum: worrying
ETH is down 70% against BTC over the past two years. Since December 2024 alone, it’s down 48%!
Additionally, outflows from ETH ETFs have not shown any positive signals. 
Is ETH the most attractive risk-reward opportunity right now?
I shared some thoughts on X, and I think the catalysts for ETH are gradually accumulating:
There have been leadership changes at the Ethereum Foundation (EF) (Aya has left, but the new executive director has not yet been announced).
We have started to expand L1. Although we are currently only adjusting the Gas limit, the idea of this change itself is of great significance.
Pectra has launched EIP-7702 (simplified approval mechanism) and EFs Open Intents Framework, which will significantly improve the user experience of L2.
The communitys interest in memecoins has gradually waned, and more people have begun to focus on the fundamentals of Ethereum.
The popularity of MegaETH shows that: 1) people are still keen on innovative L2, and 2) successful L2 further verifies the concept of modularity.
Base announced that it will reduce the block time from 2 seconds to 200 milliseconds and launch L3 (similar to the concept of MegaETH). Although I am not a fan of Base personally.
Ethereum is still the best public chain for asset tokenization, and even BlackRock is endorsing it.
The price of ETH has been severely oversold, it is really very low, haha.
The implementation of L1 extensions may take several years, and the improvement of user experience will require support from multiple partners (for example, Base has not yet joined the Open Intents Framework).
Ethereum Future Outlook: Bullish or Bearish?
My biggest concern is that ETH may miss out on this bull run entirely and won’t become a worthwhile buying opportunity until the next bear run.
But market sentiment could shift quickly if the Ethereum Foundation and the wider community can make substantial progress on:
1) Extension of L1,
2) Significant improvement in L2 modular user experience,
3) The community gets rid of the current loser mentality,
Then ETH may rebound strongly and dominate in the second half of this cycle.
However, at present, SOLs market value is only 1/3.8 of ETH, it provides a better user experience, and its Lindy effect is increasing over time (as long as the network remains stable).
These factors will challenge ETHs dominance in the smart contract field.
Altcoins: Metrics to watch
The Robust Speculation Index measures whether altcoins are outperforming Bitcoin across multiple time frames.
The current indicator is at low levels (around 0.0-0.2), which suggests that Bitcoin is outperforming most altcoins.
Historically, when speculation is at a low, it usually paves the way for altcoin rallies.
Aylo shared a similar Crypto Breadth chart on X (Twitter), pointing out that altcoins may have bottomed out. If Bitcoins strength can continue, we may be able to expect a wave of altcoins.
Question: Which altcoins should I buy?
When choosing altcoins, I base my choices on the following criteria:
There will be no large-scale token unlocking events in the short term.
The product market fit (PMF) is good, that is, the product can meet market demand and gain user recognition.
Revenue sharing mechanisms (such as token buybacks) are a big plus.
FLUID is a decentralized lending protocol that has only been launched for a few months, but it has been able to compete with Uniswap in terms of trading volume on decentralized exchanges (DEX). Recently, FLUID announced that it will launch a token buyback program, which makes me confident about its future development.
Other altcoins worth watching:
ENA: Successfully survived the Bybit hack and multiple rounds of liquidation. Recently completed a $100 million financing at a price of $0.4. In addition, more and more protocols and centralized exchanges (CEX) are adopting sUSDe, which makes me very optimistic about its potential. The problem is that ENAs large-scale token unlocking is coming, which may put pressure on the price.
$SKY (formerly MKR): Taiki’s analysis mentioned some highlights:
$30 million in token buybacks per month (~1.9% of supply).
The supply of USDS (formerly DAI) is near all-time highs.
SPK Farming increases token demand and revenue stream.
Stablecoin regulation could be a positive factor.
$KMNO: Dominates the lending market on the Solana chain, with a TVL (total value locked) of $1.8 billion and a market cap of only $85 million. This suggests that its valuation may be underestimated. The problem is that users on the Solana chain are more traders than yield farmers. But this situation may change at any time.
Sonic’s $S: Its DeFi ecosystem is expanding rapidly (including deployment of key protocols such as Aave), in addition to the 200 million $S airdrop plan, a high-quality user experience, and growing attention on X. More importantly, there are no large-scale token unlocking events, which provides it with a more stable price foundation.
HYPE: There is a lot of discussion on X about its excellent token economics and strong community, which is worth paying attention to.
PENDLE: When the market starts to focus on fundamentals and speculators look for yield, Pendle is a very promising option.
AAVE: is undergoing adjustments to its token economics, and the 3.3 version upgrade brings stronger revenue performance.
What else did I miss?
Additionally, I am very excited for the upcoming token airdrops for MegaETH, Monad, Farcaster, Eclipse, Initia, Linea, and Polymarket.
Macroeconomic environment
I fully believe in the value of Bitcoin as digital gold. Compared to gold, Bitcoin supports self-custody and has greater transferability, which makes it more attractive.
The current macroeconomic environment provides an excellent testing scenario for Bitcoin: tariff policies, wars, fiscal deficits, large-scale currency over-issuance...all of these provide potential benefits for Bitcoin.
In my 2025 blog post, The Truth and Lies of Cryptocurrency, I cited research from BlackRock: Bitcoin sometimes sells off at the beginning of major macro events. However, chaos and uncertainty, as well as potential money supply oversupply, ultimately provide strong support for Bitcoin.
Current Market Observation
I think the current market volatility is caused by Trumps sudden departure from the established global order. This uncertainty has led to short-term panic in the market. However, people will gradually adapt to these new global realities.
Essentially, nothing has changed in the world that really undermines the fundamentals of cryptocurrencies. On the contrary, we see more and more positive news every day: the U.S. Securities and Exchange Commission (SEC) has dropped some lawsuits against cryptocurrencies, new cryptocurrency bills have been introduced, and even the governments overall attitude towards cryptocurrencies is gradually turning positive.
However, it is worth noting a point made by Ansem: when good news fails to drive prices higher, it is actually a bearish sign. This suggests that the market may need some time to digest and adjust to the current situation.
Still, I hope the market will adjust faster than his optimistic forecast for 2026/27.
If Raoul Pals analysis and charts are correct, the price of Bitcoin should catch up with the growth trend of the global M2 supply by 2026. M2 supply is an important indicator of the global currency circulation. If Bitcoin can match it, it will further consolidate its status as digital gold.
Summarize
All in all, I remain confident in the cryptocurrency market and believe that patience will eventually pay off.
