Cryptocurrency price surges typically occur in stages:

1. Accumulation Phase: After a market correction or bear phase, large investors (often referred to as “whales”) and smart traders begin to accumulate assets at lower prices. During this phase, prices stabilize, and trading volumes are typically low as public interest is minimal.

2. Early Bullish Phase: As buying pressure increases, prices begin to rise. This bullish phase may not be noticeable at first, but early indicators such as technical breakouts, spikes in volume, or strong support zones signal a potential uptrend. Experienced traders and analysts can recognize this and enter the market.

3. Public Participation Stage: As the price gains become noticeable, retail traders and mainstream media begin to report on the price increase. This creates a snowball effect of FOMO (fear of missing out) that attracts more people into the market. Prices rise rapidly as more buyers join in, resulting in a strong uptrend.

4. Euphoria Phase: At this point, prices reach new highs, and sentiment becomes extremely positive. Media hype, speculative investments, and retail FOMO reach their peak. Many new and inexperienced traders jump in, convinced that prices will continue to rise forever. This phase often features strong, parabolic returns.

5. Distribution Phase: Smart investors and whales may begin to sell their assets to lock in profits. As they distribute their holdings, the price begins to stabilize or decline. Divergences, weaker volume, and failed attempts to reach new highs may appear. However, retail traders often fail to notice these signals and continue to buy.

6. Downtrend and Correction: Eventually, the supply from selling pressure overcomes the demand, and the price begins to fall sharply. Panic selling occurs as fear replaces FOMO, leading to a sharp decline. This correction can erase a large portion of the gains and lead back to a bear market or consolidation phase, preparing for the cycle to start over.

Cryptocurrency rallies can be intense and rapid, driven by both market fundamentals and emotional swings among traders. Monitoring these phases, using technical indicators, and managing risk are essential to getting the most out of a rally.

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