Navigating the Phases of a Crypto Bull Run: From Bitcoin Dominance to Altcoin Mania

Introduction

One of the most exciting times of the cryptocurrency space is the bull run where prices of crypto keep rising in unimaginable and mind-bending levels like 1000% and sometimes 10000% within a very short period of time.

The amount of money that can be made in a Bull run is so huge that if invested in the right crypto projects in the right time can make you a millionaire and retire you in no time. But in a cryptocurrency bull run, the flow of money does not happen evenly among all the cryptocurrencies.

Instead, capital flows like a predictable pattern, transitioning from Bitcoin to altcoins. Understanding this flow will help you as investors to time your entries and exist as well as diversify your cryptocurrency portfolio to reap maximum gains.

Phases of a Cryptocurrency Bull Run

Phase 1: Bitcoin Takes the Lead

A bull run often begins with a strong movement in Bitcoin (BTC). Bitcoin is the cryptocurrency with the biggest market capitalization, so in a bull run, usually Bitcoin moves first. 

During this phase, Bitcoin Dominance (BTC.D), which means the percentage of total cryptocurrency market capitalization that is held by Bitcoin usually rises. 

For example, if total crypto market capitalization is 2 trillion, and if Bitcoin market cap is 800 billion, then we can say bitcoin holds 40% dominance in the total crypto market value. Therefore, a rising BTC dominance indicates bitcoin price is rising faster than other cryptocurrencies.

In a bull run, capital from various sources flows into Bitcoin, such as institutional investments, retail money due to FOMO, whales holding Bitcoin and buying more.

Further, technical aspects like Bitcoin halving effect also reduce supply pressure triggering a more bullish environment for Bitcoin.

Other macroeconomic factors such as low interest rates and quantitative easing also play a crucial role pushing the market price of Bitcoin higher.

Phase 2: Ethereum and Large-Cap Altcoins Follow

Once early Bitcoin investors secure significant profits, they often reallocate some of those gains into established large-cap altcoins like Ethereum (ETH), Solana (SOL), Cardano (ADA), and XRP, hoping for even greater returns.

During this phase, Bitcoin’s price may still rise, but at a slower pace. Meanwhile, altcoins gain momentum, causing Bitcoin’s dominance to plateau and eventually decline. As a result, the market capitalization of altcoins relative to Bitcoin begins to rise. Investors in this phase start showing a stronger preference for altcoins over Bitcoin.

Phase 3: The Alt Season Begins

As Ethereum and large-cap altcoins gain traction, traders and investors become more willing to take on risk, marking the start of altcoin season (Alt season). 

During this phase, capital shifts from large-cap assets to mid-cap and small-cap altcoins. Key indicators of an Alt season include:

• BTC dominance dropping significantly (falling below 50% is a strong signal of altcoin dominance).
• Parabolic gains in mid- and small-cap altcoins.
• Social media hype and extreme greed in the market.
• Meme coins and speculative tokens gaining popularity.

💡This is the phase where some altcoins see astronomical gains—sometimes 100x or even 1000x—as speculation reaches its peak.

Phase 4: Late-Stage Altcoin Mania 

Toward the end of the bull run, low-cap and high-risk altcoins experience explosive growth, attracting newer investors with high expectations. However, this phase is marked by extreme greed and euphoria, and smart investors begin taking profits by moving their capital into stablecoins.

Signs of Euphoria:

• Unrealistic price predictions.
• New investors ignoring fundamentals.
• Meme tokens hitting all-time highs.
• Market Peaking:
• Whales and institutions start cashing out, leading to increased volatility.

Altcoin Crashes:

As liquidity exits the market, many altcoins crash by 80-90%, signaling the end of the cycle.

Emotional/Psychological States

In any financial market cycle, the emotional state of the people changes, so when it comes to cryptocurrencies, this is no different. But understanding these emotional states is crucial so that it can help you to decide when to be cautious and carefully plan our exit.

The below diagram shows an entire phycological state of a full market cycle, from a bull run to a bear market.

To keep things simple, we will only focus from the Optimism to Euphoria emotional state and compare to which emotional states the phases of a cryptocurrency Bull run falls into.

In which Phase are we now?

Usually, the beginning of the bull market starts from the emotional state called Optimism; this is the emotional state where investors realize that something big is about to happen. There can be several macroeconomic factors supporting this. 

For example - when the US is going to cut interest rates nearly to zero levels, when other big economies like China and Russia are also looking forward to cutting interest rates at the same time indicating a rise in global M2 money supply, etc.

As of now, President Trump is crashing the market to persuade the Federal reserve to cut interest rates, further USA also has crypto supporting president and pro-crypto political figures. 

China’s economy is heading toward deflation, prompting the Chinese government to consider rate cuts to stimulate growth. 

Therefore, globally, economic conditions are aligning in a way that could favor cryptocurrencies and financial markets.

If you want to be an informed investor, you should study these things, so when something big is about to happen, savvy investors and institutions know this, and they start to accumulate.

Bitcoin dominance is slowly reaching its peak in the optimism phase and eventually reaches its peak and starts to decline in the belief phase. This does not mean that bitcoin price will drop, while small corrections happen, the prices of altcoins will run faster than Bitcoin.

Thrill and Euphoria Emotional State

In the Thrill state, we are deep into the altcoin season (phase 2 in the crypto Bull run). Bitcoin has already made massive gains, but now altcoins are outperforming BTC at an incredible pace. 

Bitcoin dominance is in a clear downtrend, signaling that more capital is flowing into Ethereum, large caps, and eventually, mid-cap and small-cap altcoins.

At this stage, retail investors believe they’ve mastered the market. Social media is filled with posts of traders making 10x or 100x gains, and people start quitting their jobs to trade full-time. 

Everyone is convinced that the market will keep going up forever. Leverage trading surges as investors chase higher returns. Bitcoin’s price doesn’t necessarily drop, but its dominance continues to decline as altcoins absorb more liquidity. So, everyone is thrilled and excited!

By the time we reach Euphoria, the market is completely overheated. Even low-quality projects, meme coins, and speculative tokens experience insane pumps. New investors enter the market in droves, convinced that they are still early. Mainstream media covers crypto non-stop, and predictions of Bitcoin reaching $500K or even $1M flood the news.

At this point, Bitcoin dominance is at its lowest, and altcoins are at their peak. However, smart money and whales start exiting, securing profits while retail investors continue to buy the top. This marks the final stage before the market cycle reverses.

When the cycle reverses, then the start of the bear market will start, people's emotional state will shift from Euphoria to complacency and eventually panic, depression and anger.

 

Final Thoughts

It is crucial to understand how money flows into different cryptocurrencies during a bull market to manage your investments wisely. Equally important is recognizing the psychological states investors experience throughout the cycle.

By understanding these patterns, you can strategically plan your exit. As the famous investor Warren Buffett once said, "Be greedy when others are fearful and fearful when others are greedy." 

This highlights the importance of identifying the Euphoria state - when extreme greed dominates the market. Recognizing this stage allows you to carefully cash out your crypto at high price levels and exit before the inevitable downturn.

Disclaimer: The contents of this article are for informational purposes only and are not financial advice. The views here are just the author’s opinions. The crypto market is volatile, so be sure to do your own research before investing.