The recurring pattern of BTC sentiment cycles

The Bitcoin market does not fluctuate entirely randomly but follows an endogenous emotional cycle pattern. By analyzing on-chain behavior of large entities and shifts in investor psychology, we can identify a recurring four-stage emotional pattern that drives the formation of the entire BTC price cycle.

Market Characteristics of the Four-Stage Emotional Cycle

Market participants experience a clear emotional evolution in each complete cycle:

Stage 1: Optimism Zone—Large entities show obvious accumulation behavior, on-chain holdings begin to concentrate in whale accounts, and prices steadily rise. This is a period of capital inflow and confidence release.

Stage 2: Profit-Taking Zone—As prices rapidly surge, early investors start to realize gains, and profit-taking chips are heavily reduced. There is noticeable profit-taking pressure in the market.

Stage 3: Hesitation Zone—Prices retreat from highs, and the market falls into uncertainty. Some long-term optimistic entities choose to add positions to average costs and attempt to bottom fish.

Stage 4: Disappointment Zone—Investors lose confidence in the future trend, chips in the market loosen, and panic selling increases. The market enters a low emotional state.

After experiencing these four stages, when prices fall to a certain level, the market begins to rebuild bottom consensus, and investor sentiment shifts back to the optimistic expectations of Stage 1. This cycle repeats itself, forming an endogenous emotional transition pattern within the market.

Dual Breakthroughs and Cycle Verification in 2025

In this cycle, under special macroeconomic conditions, there have been two repetitions of the optimistic and profit-taking zones. The first was triggered by the approval of spot BTC ETFs, and the second was driven by political events. Both triggers sparked new waves of accumulation in the market.

Especially when BTC prices retreated from highs in Q4 2025, signals of large entities accumulating appeared. This phenomenon perfectly matches the characteristics of the third stage (Hesitation Zone)—entities did not panic sell but instead increased their holdings at lows, demonstrating long-term confidence.

Current Indicator Signals and Overextension Signs

The latest on-chain indicators show a key change: the color representing daily market sentiment is shifting from “dark” (strong accumulation) to “light” (weaker accumulation momentum). This indicates clear signs of the market sentiment “overtransitioning from Stage 3 to Stage 4.”

According to recent market data, the current bullish and bearish sentiments each account for 50%, indicating that market participants are in a serious confidence split.

The Truth Revealed by Coin Holding Tiering

Separately observing whales of different sizes reveals more subtle emotional shifts:

During the accumulation wave of October-December 2025, the first movers were whales holding 100-1000 BTC. Subsequently, larger whales holding 1000-10000 BTC took over, continuing to accumulate. However, all this is now in the past—latter whales have ceased continuous accumulation, and former whales are even starting to distribute.

This color shift from “dark” to “light” essentially reflects that the accumulation momentum of the top entities is nearing its end. The influence of large funds far outweighs that of small addresses; when they stop buying or even start selling, the market sentiment support weakens significantly.

Confidence Restoration and Bottom Construction Path

The core issue BTC faces now is a lack of confidence. During optimistic periods, investors tend to “buy more as prices rise,” reinforcing the upward trend; during disappointment, they “sell at the first sign of a rise,” further depressing prices. This self-reinforcing emotional cycle gradually influences more participants.

To truly reverse this situation, one of the following conditions must be met:

• Prolonged recovery—sideways consolidation that rebuilds market confidence
• External stimuli—policy favorable news, macro events that trigger new accumulation demand
• Attractive bottom prices—lower price levels that attract new capital, establishing genuine bottom consensus

This process will not happen overnight; it requires time and external conditions to align. In the market’s cyclical pattern, each bottom construction involves a complete emotional cleansing.

Indicator Weighting and Calculation Logic

The on-chain indicator “BTC Accumulation Trend Score” measures two core dimensions:

Dimension 1: Entity Size Weight—Different-sized BTC holdings have vastly different influence. An institution holding 1 million BTC impacts the market far more than thousands of small retail accounts combined. The indicator assigns higher weight to large funds through a weighting mechanism.

Dimension 2: Net Change over the Past 30 Days—Measures whether the market is net buying or net selling. Continuous net buying indicates entities are accumulating chips; continuous net selling suggests distribution.

Combining these two dimensions: darker colors indicate active net buying by large entities, lighter colors indicate weakening buying momentum or net selling. By observing the evolution of this indicator’s color, investors can intuitively grasp the true behavior intentions of market participants and understand the current stage within the market’s endogenous cycle.