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Bull to Bear! Characteristics and Trading Strategies in the Early Stage of a Bull Market

As Sunday’s remaining quota gradually decreases, Bitcoin closing above the middle band of the Bollinger Bands this week is basically a certainty, which is often considered a signal that the bear market has ended and the market is turning bullish. So, what are the characteristics of the early stage of a bull market? How should we operate? Let’s talk about it today.

1. Core Characteristics of the Early Stage of a Bull Market

1. Subtle Shift in Market Sentiment

Despair → Doubt → Testing: The “zeroing theory” on social media is gradually being replaced by discussions of “bottom fishing,” bullish voices are beginning to emerge, but most people are still under the shadow of the bear market.

Smart money quietly positioning: Institutions and seasoned investors are taking the lead, on-chain data shows whale addresses continuously increasing their holdings, while retail funds still show hesitation.

2. Price Trend Bottoming Signals

Gradually rising lows: Core assets like Bitcoin and Ethereum are no longer making new lows, forming a bullish structure of “highs breaking through, lows supporting” on the daily chart.

Resilience of sharp rebounds: Sudden negative news causing declines can be quickly recovered within 24-48 hours, indicating that buying power is accumulating.

3. Early Signs of Liquidity Recovery

Stablecoin pools expanding: USDT and USDC market cap growth rate exceeds 3% monthly, and exchange stablecoin balances hit a six-month high.

DeFi protocols “spring thaw”: Leading lending protocols (such as Aave, Compound) deposit interest rates bottoming out and rebounding, indicating funds are starting to seek yields.

4. Fundamental Catalysts Emerging

Halving cycle approaching: Bitcoin’s block reward halving countdown has started, historical data shows that a 3-6 month period before halving usually begins an upward trend.

Regulatory policy thawing: New licenses issued in Hong Kong, Singapore, etc., and US Bitcoin spot ETF funds turning positive on weekly inflows.

2. Trading Strategies in the Early Stage of a Bull Market

1. Asset Selection: Focus on Core and Potential Tracks

Anchor assets (60%): Bitcoin, Ethereum, and other assets with strong consensus and liquidity, historically showing stable leading gains in the early bull phase.

Innovative tracks (30%): New narratives like AI + blockchain, RWA (Real World Assets), DePIN (Decentralized Physical Infrastructure), such as $RNDR, $ONDO.

Strictly avoid traps: Projects with market cap < $100 million, anonymous teams, or token unlock risks are extremely high.

2. Position Management: Pyramid-style Incremental Building

Bottoming phase:

Dollar-cost averaging into core assets

Position ≤ 30%

Breakout confirmation:

Add positions upon breaking above the 200-day moving average

Position increased to 50%

Trend formation:

Allocate to high Beta sectors

Position ≤ 70%

Keep 30% cash for black swan events

3. Dynamic Take-Profit: Mechanical Profit Lock-in

Three-tier take-profit method:

First target (+50%): Sell 1/3 of the position to recover principal

Second target (+100%): Sell another 1/3 to lock in profits

Remaining position aims for excess gains; exit fully if price falls below the 30-day moving average

4. Mindset Control: Avoid Emotional Trading

Reduce monitoring frequency: Check market ≤ 3 times per day to avoid minute-level fluctuations.

Establish an operation checklist:

[ ] Do conditions meet the preset buy-in criteria?

[ ] Is the position exceeding risk thresholds?

[ ] Are take-profit/stop-loss points updated?

5. Information Filtering: Focus on Key Data Sources

On-chain monitoring: Whale holdings changes via Glassnode, exchange net outflows via Santiment.

Policy tracking: Federal Reserve rate decisions, SEC regulatory updates, CBDC developments in major countries.

Technical indicators: Weekly RSI (preferably between 30-50), Bitcoin dominance (breaking 45% indicates altcoin season approaching).