Understanding the Four-Stage Rotation in Crypto Market Cycles

The cryptocurrency market operates in predictable waves, with capital continuously rotating between different asset classes. Currently positioned in the Ethereum stage, understanding this rotation stage framework helps traders anticipate the next moves and identify emerging opportunities.

The Four-Stage Cycle Framework

Stage 1: Bitcoin Dominance Period

The cycle typically begins with Bitcoin commanding the majority of new capital inflows. During this phase, BTC’s price momentum accelerates while its market dominance percentage climbs sharply. Most altcoins struggle to keep pace, as institutional and enterprise money prioritizes Bitcoin as the primary entry point. This stage usually lasts the longest, establishing the foundation for subsequent rotations.

Stage 2: Ethereum Emergence Phase

Once Bitcoin reaches certain profit-taking levels, market attention gradually shifts toward Ethereum. ETH experiences accelerated gains that surpass BTC’s performance, drawing retail enthusiasm and competitive positioning among major Layer 1 platforms. Bitcoin’s market share begins contracting as capital reallocates. This rotation stage marks the beginning of broader market participation beyond just the flagship asset.

Stage 3: Mainstream Altcoin Catch-Up

As large-cap Ethereum holders take profits, liquidity spills over into established mainstream coins by market capitalization. These fundamentally-sound altcoins experience catch-up rallies, as traders rotate from concentrated positions into more diversified holdings. The focus remains on quality projects with real utility.

Stage 4: Speculative Altseason

The final stage unleashes heightened sentiment, driving capital into smaller-cap and emerging projects. These positions deliver dramatic short-term gains, though with correspondingly higher volatility and risk. Altseason typically burns hot for 15 to 20 days before cooling, marking the cycle’s terminus and the last buying opportunity before institutional capital withdraws.

Market Implications for Today

The current environment reflects characteristics of the Ethereum stage, despite increased institutional participation compared to previous cycles. This suggests mainstream coins may soon enter their appreciation window. Understanding where we stand in this rotation stage sequence allows participants to position accordingly while maintaining realistic expectations about eventual capital withdrawal.

The institutional involvement may alter cycle velocities but is unlikely to fundamentally break the historical rotation pattern.