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Bitcoin Bull-Bear Cycle Model

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Definition of Bull-Bear Cycles and Market State Model

We don't predict the market, we define market states. The identification of cycle structure is the starting point of strategy formulation.
Bitcoin's price cycle can be modeled from multiple dimensions. In this chapter, we clearly distinguish between two core cycle systems:

  • Halving Cycle: Dominated by the monetary issuance rules of the blockchain system, anchored by block height

  • Bull-Bear Cycle: Dominated by market behavior, forming structural cognition through price extremes (tops and bottoms)

These two cycles are highly correlated but fundamentally different: The halving cycle anchors supply structure, while the bull-bear cycle maps market behavior and investor sentiment, serving as the key cycle unit for strategy design and behavior planning.

I. Basic Definitions of Bull and Bear Markets
Bull Market: The complete upward interval from the previous cycle's lowest point to the next price peak Bear Market: The complete downward interval from the current peak to the next cycle's lowest point
Principles for Bull-Bear Cycle Judgment:

  • Not directly tied to halving dates

  • Not redefined by mid-cycle crashes/rebounds

  • Only constructed based on "historically clear highs and lows"

Example: The COVID-19 crash on March 12, 2020, despite being a historically significant drop, remained within the previous bull market, representing a black swan event correction within the bull market, and did not change the rhythm recognition of the bull market phase.

II. Six Market State Models: From Structural Cognition to Operational Strategy
To enhance investors' rhythm judgment and strategy behavior recognition within bull-bear cycles, Bitcoin Hedge Fund (BHF-Fund) and Foundation (BHF-Foundation) have constructed a six-stage market state model (6 Market States) for investment reference and strategy alignment:
 
Stage Name State Definition Identification Features Strategy Orientation
Bull Bottom Initial accumulation and construction zone of bull market Extremely low prices, sentiment bottom, concentrated on-chain holdings Strategic accumulation, phased bottom fishing
Bull Mid Trend establishment, institutional accumulation, main uptrend launch Steady price rise, growing on-chain activity, trending upward Hold coins, low-frequency accumulation
Bull Top Market sentiment greed, FOMO amplification Volume expansion, model indicators overheating, short-term holdings surge Phased profit-taking, transition to long-term holding
Bear Top Initial high-level decline, sentiment lag Market misinterprets correction as "buying opportunity", but model turns bearish Clear positions, increase liquidity
Bear Mid Decline continuation, panic dominant Intense selling pressure, declining activity, increased on-chain selling Wait and observe, avoid misjudging bottom fishing
Bear Bottom Bottom identified, market frozen Extremely low volume, HODL concentration, declining on-chain momentum Strategic accumulation again, prepare for bull market launch
III. Why Do We Emphasize "Market State/Phase" Rather Than "Trend Judgment"?
Trend judgment is often affected by emotional disturbances, while market state is a verifiable, quantifiable, and constructible structural recognition framework. The six-stage market state model has the following functional values:

  • Can be combined with on-chain data and behavioral signals

  • Can be used to build cycle strategy triggers

  • Can be incorporated into evangelism language, education, and model consensus systems

Bull and bear are not feelings, but structures; states are not guesses, but systematic cognition.

IV. Algorithm Construction and Recognition Logic of Six-State Structure
Stage English Abbreviation Model Code Judgment Attributes
Bull Bottom Bull Bottom BB Strategic accumulation zone
Bull Mid Bull Mid BM Steady growth holding zone
Bull Top Bull Top BT High-level realization zone
Bear Top Bear Top RT Escape top end zone
Bear Mid Bear Mid RM Emotional stampede zone
Bear Bottom Bear Bottom RB Bottom fishing preparation zone
Identification Boundary Illustration:

  • Bull Market Start: Bear bottom price ±20%

  • Bull Market End: Creating the current cycle's top price

  • Bear Market End: Entering the next cycle's lowest point zone


V. Recognition Parameters and Indicator References (Simplified Model)
State Judgment Method (Simplified) Auxiliary Indicator References
Bull Bottom BB Price near previous bear bottom, on-chain coin age increasing Pi Cycle Bottom, Puell Multiple, AHR999 low values
Bull Mid BM 200MA crossover, increasing on-chain activity Active addresses, on-chain transaction volume, net capital inflow
Bull Top BT New high + short-term holdings explosive growth, greedy sentiment MVRV>3.5, Pi Cycle Top, RSI overbought, Google Trends peak
Bear Top RT Initial high-level decline, market sentiment not collapsed MVRV declining but still high, Rainbow red to orange, volume contraction
Bear Mid RM Decline over 50%, on-chain activity sharply reduced, NUPL entering red On-chain capital momentum weakening, capital outflow
Bear Bottom RB Low volume, HODL concentration, on-chain capital silence Dormant Coin Age high, AHR999 extremely low, USDT negative premium
VI. Cycle Reproducibility and Black Swan Error Tolerance Verification
Even in the face of black swan events (such as the COVID-19 crash on March 12, 2020), this model can still stably identify market structure and rhythm. Events change volatility, not structure; emotions shake confidence, models anchor rhythm.
Historical cycles show:

  • Bull markets last approximately 30-36 months on average

  • Bear markets last approximately 12-14 months on average

  • Six states have high reproducibility in on-chain data


VII. Model Positioning Value and System Interface Function
Bitcoin Bull-Bear Model is the only "market state recognition engine" in the entire investment strategy system:

  • Strategy product signal trigger basis

  • Source of state names in evangelism language system

  • Integration with multi-model cross-validation system for cycle confirmation

  • Provides basic coordinate system for capital allocation, strategy execution, and education

Market volatility creates illusions, market states define cognition; the six-stage model is the behavioral operation criterion for navigating bull and bear markets.