Recognising and Entering a Bull Market: Stages, Signals & Smart Positioning
A professional, cross-asset playbook for reading bull markets and scaling into risk with discipline.
Bull markets rarely start with headlines. They start quietly – in data, flows and behaviour – long before the crowd
notices. The investors who recognise the early and mid-stages of a bull cycle don’t guess; they read the structure
of the market and scale into risk with intent.
This guide outlines a disciplined framework for:
- Identifying the three stages of a bull market
- Confirming the trend using macro, cross-asset and crypto-native data
- Designing a percentage-based entry plan
- Managing your portfolio as the cycle matures
1. The Three Stages of a Bull Market
Bull markets in equities and digital assets share the same behavioural architecture. Knowing which stage you are in
is the starting point for all positioning decisions.
Stage 1 – Early Bull (Accumulation Phase)
The early stage emerges from the previous downturn. Price action stabilises, but sentiment is still cautious or
outright negative.
What it looks like
- Volatility compresses; extreme moves become rarer
- Markets stop making lower lows and begin to base
- Liquidity stabilises; forced selling abates
- Institutional and long-term investors quietly accumulate
Key cross-asset signals
- Bond yields soften or stabilise after an aggressive rise
- USD strength fades; the dollar trades sideways instead of trending
- Credit spreads tighten, especially high yield vs Treasuries
- VIX drifts lower from stressed levels
- Market breadth improves: more stocks rising than falling
Crypto-specific signals
- Funding is neutral or slightly negative (no extreme euphoria)
- Open interest is low but slowly climbing
- On-chain data shows long-term holders accumulating
- BTC dominance rises as capital rotates into quality
Interpretation: This is the phase where long-term, high-conviction positions are built, not traded
aggressively.
Stage 2 – Mid Bull (Expansion Phase)
The expansion phase is the “working engine” of a bull market. Price trends strengthen, participation broadens and
volatility becomes a feature of an otherwise healthy uptrend.
What it looks like
- Higher highs and higher lows across major indices
- Sector and narrative rotation (e.g. tech → growth → digital assets)
- Liquidity improves; volumes rise on rallies
- Crypto experiences periodic, leverage-driven shakeouts
Key signals
- VIX spikes briefly on sell-offs but does not stay elevated
- USD trades in a range rather than trending strongly higher
- Positive but controlled funding rates in BTC and majors
- Spot flows increase; open interest builds then resets via liquidations
Interpretation: This phase usually offers the best risk-adjusted opportunities. Corrections are
normal and often structural rather than fundamental.
Stage 3 – Late Bull (Euphoria Phase)
In the late stage, price accelerates, but so do risks. This is where euphoria, leverage and narrative excess
typically peak.
What it looks like
- Parabolic price moves across risk assets
- Retail FOMO and “everyone is a trader” sentiment
- Speculative tokens and memecoins outperform fundamentals
- Leverage and open interest reach extreme levels
Key signals
- RSI and momentum at persistent extremes
- VIX unusually low while prices are stretched
- Funding rates highly positive for extended periods
- On-chain metrics show heavy profit-taking by long-term holders
- USD strength and rising yields begin to reappear
Interpretation: This is where disciplined investors begin to
scale out of risk, not chase it.
2. Confirming a Bull Market: Data Checklist
Rather than relying on a single chart, professional investors cross-check multiple dimensions of the market:
Macro & Cross-Asset
- Equity breadth & leadership (S&P / NASDAQ internals)
- Credit spreads tightening vs previous stress points
- USD stable or gently weakening
- Yield curve normalising or stabilising
- Commodity complex recovering from oversold conditions
Crypto & Leverage
- Funding rates modestly positive, not extreme
- Open interest rising in line with trend (not detached)
- Liquidation clusters forming and being cleared
- Spot volumes supporting breakouts
- Healthy basis between spot and futures
On-Chain & Structure
- MVRV in a “healthy” band (roughly 1.0–2.5)
- Long-term holder supply growing
- Realised price trending higher
- SOPR > 1 with orderly profit-taking
- Key moving averages reclaimed (e.g. 200D, 20W)
3. How to Enter a Bull Market: Percentage-Based Framework
Scaling into a bull market should be deliberate. Instead of an “all in or all out” approach, use staged entries
aligned to the cycle.
Stage 1 – Accumulation Entry (20–30% of Intended Capital)
- Focus on high-conviction core positions: BTC, ETH, quality indices and leaders
- Use dollar-cost averaging rather than precise bottom picking
- Keep leverage at zero or minimal
- Accept that sentiment will still feel uncomfortable – that is the point
Stage 2 – Expansion Entry (Additional 40–50%)
- Increase exposure as higher highs and higher lows are confirmed
- Add selective altcoins, sector winners and growth names
- Use volatility and leverage-driven dips as entry points
- Trim positions that consistently underperform the trend
Stage 3 – Late-Stage Positioning (Final 10–20%)
- Deploy remaining capital only when risk/reward is justified
- Begin setting clear profit-taking zones and exit criteria
- Increase allocation to defensive or uncorrelated assets
- Shift mindset from accumulation to preservation
4. Portfolio Management Principles in a Bull Market
- Trim into strength, not weakness. Sell into rallies, not panic.
- Let winners compound, cut persistent laggards.
- Watch leverage data (funding, OI, liquidations) to avoid crowded exits.
- Keep a cash buffer to take advantage of inevitable shakeouts.
- Predefine exit rules before Stage 3 euphoria fully develops.