Is the crypto market on the brink of COLLAPSE? Is it a bubble that will EXPLODE?

I am going to teach you how bubbles form and how to identify one before it bursts 📉

This post will help you a lot 🧵👇

Before we start, we appreciate any kind of interaction with the thread ❤️🔄

First of all

A bubble occurs when the price of an asset rises far beyond its intrinsic value: it inflates.

And when the market sentiment changes, the bubble bursts causing significant price drops in a short time.

In most cases, it does not recover its maximum values.

It is often said that cryptocurrencies or even Bitcoin are a bubble.

In our opinion, for the moment they are NOT. At least Bitcoin and the most important cryptos.

Although it is true that there are some cryptos or narratives that meet the bubble patterns and will burst downwards at any moment, especially during the next bear market.

During bear markets, some "bubbles" burst, as we saw with NFTs. Prices were highly inflated without real value and today they are down -90/99%.

We also believe that sooner or later we will see a bear market that will favor the bursting of some bubbles, both within crypto and in the financial sector in general.

When will the bear market start? No one knows. It could be in 3 months, 6 months, 1 year, 3 years...

The important thing is to take action and act strategically. We STILL believe that in the coming months we will see great returns in crypto, as there is still a bullish market ahead.

Returning to the topic of bubbles

Knowing how to identify one can help you a lot not to be overexposed

It can also help you know when to exit certain cryptocurrencies or narratives, even if some are not a bubble as such.

Before telling you how to identify a bubble, here are the 5 stages they have:

🔸 Stages of a bubble

1. Attention

Investors are starting to discover a new asset or sector that is beginning to attract attention.

Prices are gradually rising.

2. Boom

In this phase, prices begin to rise more aggressively as more people discover this asset or sector.

3. Euphoria

Prices are skyrocketing and the euphoria is through the roof.

More and more people are entering, despite the asset being through the roof.

4. Taking profits

Early investors and whales are starting to sell. Supply in the market is increasing.

5. Panic

Prices are starting to drop rapidly due to x trigger

Panic sets in as more investors want to sell

The bubble has burst and leaves the asset or sector very damaged.

Unlike a bear market, bubbles arise when prices go up simply because investors expect them to continue rising, not because the asset has that real value. In most cases, they do not return to their all-time highs.

In a bear market, prices fall regardless of whether there was a prior overvaluation, generally due to being in a crisis stage. Prices tend to recover in the medium term.

🔸 How to identify a bubble:

1. Prices out of reality

The value of the asset or sector is well above what it should be.

Compared to others, it looks very inflated and meaningless.

2. Maximum speculation

Don't keep buying the asset just because it is thought to keep rising, not for real fundamentals.

3. Everyone talks about the same thing.

Everyone talks about the same thing and is interested in getting in. It reaches the mainstream.

4. Increase in global liquidity and loans

If liquidity increases and more loans are being requested, it means there is more money to put in, which could further inflate the bubble.

5. Maximum euphoria

There is a lot of optimism that everything will continue to rise, despite being at prices that make no sense.

🔸 An example was the .com bubble

In the late 90s, internet-based companies were seen as the future, where many companies without viable business models reached billions of dollars in capitalization.

In the year 2000, the bubble burst, and $5 trillion of capital was wiped out from the market.

Will the crypto bubble burst? Will we see great returns for the rest of 2025? We want to know your opinion!

And follow us @Cryptoprofe_ if you want to learn daily!