How to Identify Top Signals and Gradually Reduce Positions in a Late Bull Market
Few people can sell precisely at the top of a cryptocurrency bull market, but there are always signals left before and after the peak. The issue isn't finding the perfect selling point, but maintaining enough rationality to execute a position-reduction plan when market sentiment is at its most feverish.
This article organizes signals that have repeatedly appeared at bull market tops in history from three dimensions: on-chain data, market sentiment, and technical patterns, helping you build your own framework for judging when to reduce positions.
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1. Why Tops Are Hard to Judge
One characteristic of the late bull market is: every pullback prompts someone to say "this is the top," but prices then hit new highs. This repetition numbs most people, and they end up not reducing positions at the actual top.
An even bigger trap is that the real top often occurs when the news is best—major institutions announce adoption, countries begin laying groundwork, and friends around you are all discussing crypto. This very atmosphere makes it hard to sell.
2. Top Signals from On-Chain Data
There are mainly 4 signals:
1. NUPL (Net Unrealized Profit/Loss) enters extreme greed territory. When NUPL is above 0.75, the market enters a historical top risk zone, indicating that the vast majority of holders are in profit, creating immense pressure to take profits.
2. MVRV ratio exceeds 3.5. An MVRV (Market Value to Realized Value) ratio above 3.5 has historically corresponded to bull market top zones multiple times. The higher the number, the greater the average unrealized profit for current holders, and the greater the selling pressure.
3. Sustained inflow of BTC reserves into exchanges. A large amount of BTC moving from personal wallets to exchanges indicates long-term holders are preparing to sell. This is a typical capital flow pattern before a top.
4. Decrease in stablecoin reserves on exchanges. If stablecoins on exchanges decrease significantly, it means "ammunition" (funds waiting to buy) has been largely exhausted, and there is a lack of new buying momentum.
3. Top Signals from Market Sentiment
Signal 1: The Fear & Greed Index remains in extreme greed for a prolonged period. When the greed index stays above 80 for several consecutive weeks, the probability of an overheated market is high. Several historical tops were accompanied by extreme values in the greed index.
Signal 2: Abnormal surge in social media. Google Trends search volume for "Bitcoin" reaches historical highs; cryptocurrency discussion volume surges on Twitter and Weibo; news frequently appears on mainstream media front pages.
Signal 3: People around you who don't understand crypto start asking how to buy coins. This is one of the most classic and accurate grassroots indicators. When taxi drivers, parents, and friends from unrelated industries are all discussing "which coin can make money," the market is usually near its top.
Signal 4: Extremely fast issuance of new projects with very poor quality. The late bull market sees a flood of low-quality projects quickly raising funds and listing, with new "100x coins" appearing daily. This is a typical manifestation of excess market liquidity.
4. Top Signals from Technical Patterns
Signal 1: Bearish divergence between price and RSI. Price makes a new high, but the RSI does not simultaneously make a new high, or even declines, indicating weakening upward momentum.
Signal 2: Excessive deviation from the major moving average. Price is far above the 200-day moving average, with the deviation exceeding historical extremes, building pressure for a mean reversion.
Signal 3: Volume shrinks at highs. Price makes a new high, but trading volume does not increase correspondingly, or even decreases, indicating fewer participants and a lack of support for further upside.
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5. Practical Operation for Reducing Positions in Batches
Knowing the signals is one thing; actually executing position reduction is another. It is recommended to reduce positions in batches rather than selling everything at once:
- Plan 1: Target Price Reduction Method. Set several target price levels, for example, sell 20% of your total position for every 20% price increase. This allows you to hold through large rallies while locking in some profits.
- Plan 2: Signal-Triggered Reduction Method. Set trigger conditions, such as "sell 30% of position if NUPL exceeds 0.75," or "sell 20% if the Greed Index stays above 85 for two consecutive weeks." Execute when conditions are triggered, unaffected by emotions.
- Plan 3: Time-Based Reduction Method. Gradually reduce positions during the time window when historical tops are more likely (typically 12-18 months after the halving), without relying on precise timing.
Regardless of the plan, the key is to formulate and document it in advance, execute according to the plan when the market is frenzied, and do not change the plan on a whim.
6. Frequently Asked Questions
Q: What if I judge it's the top but the price continues to rise, and I sold too early? This is the biggest psychological challenge of reducing positions in batches. Set rules in advance, accept that prices may continue to rise after you sell, don't regret the sold portion, and continue to hold the remaining position.
Q: Is now (2026) the late stage of the bull market? No one can give you a definitive answer to this question. It is recommended to refer to current NUPL, MVRV data, and the Greed Index, combined with the signal framework in this article, to make your own judgment. Data can be viewed on platforms like Glassnode and CoinGlass.
Q: What should I convert to after reducing my position? USDT is the most common safe-haven option, with good liquidity for re-entry anytime. USDC is also an option, with higher compliance. See: How to Choose OKX Earn Products
