What Are Crypto Bubbles & Are We In One Now: Bitunix's Guide For Beginners

What Is a Crypto Bubble?

A crypto bubble is a period characterized by a rapid increase in cryptocurrency prices that exceeds all expectations and expert predictions. Generally, this rise is caused by speculation and excitement rather than by technological developments or the crypto’s fundamentals.

According to Dr. Jean-Paul Rodrigue, a market bubble usually develops across four stages:

Stealth Phase

In the first phase, a cryptocurrency’s price begins to increase slowly as knowledgeable investors recognize a lucrative opportunity. Generally, casual investors are unaware of this phase, which often appears to be a normal period of accumulation to the untrained eye.

Awareness Phase

At this stage, institutional investors and other traders with considerable know-how join the trend. Also, the crypto’s bullish trajectory gets more media coverage. As a result, the asset’s price increases rapidly.

Mania Phase

This stage sees widespread participation, including first-time investors and members of the general public with minimal market knowledge. A rapidly spreading phenomenon, FOMO, or "fear of missing out," is driving a buying frenzy that pushes crypto prices beyond sustainable levels.

Blow-off Phase

Similar to a balloon that’s been inflated more than its air capacity, the market bubble bursts. At this stage, buying drops and a sharp correction follows as the asset’s price plummets. Panic spreads among investors desperate to sell their holdings at minimal loss. Meanwhile, the market sees a massive liquidity outflow, and the cryptocurrency’s price regresses to its long-term mean.

The evolution of a market bubble, according to Dr. Jean-Paul Rodrigue. Source: TransportGeography

Signs of an Imminent Bubble in Crypto

A crypto bubble is a wild vortex that can easily trap even experienced investors. You can look for these signs to determine if we’re in a bubble now:

Rapid Price Increases

If a cryptocurrency’s value rises rapidly without justification, we may be at the start of a bubble.

Fear of Missing Out (FOMO)

FOMO is real and highly contagious. Inexperienced traders tend to embrace it in the first stages of a market bubble.

Media Hype and Social Media Buzz

Social media platforms tend to increase hype and create an echo chamber where FOMO thrives.

New Investors Flooding the Market

When new investors join the market, you may witness a sudden surge in market capitalization that fuels the bubble even more.

The Bitcoin bubble of 2017. Source: MoneyWeek

The Bitcoin crash of late 2017 followed this pattern. The BTC price surged from around $6,000 to nearly $20,000 in less than 40 days. More money flooded the market from inexperienced investors as social media overhyped Bitcoin’s potential. However, BTC’s value then dropped rapidly over the next five months, crashing to its mean price of around $3,500.

Are We in a Cryptocurrency Bubble Now?

This year has seen the crypto market go through multiple ups and downs, suggesting that the sector is in a bubble. Price surges, new ATHs across several cryptocurrencies, and increased media attention point to an inflated valuation across the broader crypto landscape.

However, while the signs are there, they don’t provide sufficient evidence to call it a bubble. Prices have increased dramatically in 2025, but most cryptocurrencies grew steadily over several months. For example, Bitcoin took 5 months to go from $94,000 to its most recent ATH of $126,198.

The Bitcoin price chart for 2025. Source: CoinMarketCap

Experts are divided on whether the crypto market is in a bubble. Many believe that fundamentals are in line with the price increases. And while the market is currently bearish, the downtrend is not necessarily a post-bubble burst period.

How to Invest Safely and Avoid Bubble Traps

Anyone can be caught in the euphoria of a rapidly growing bubble. You will need patience and discipline to navigate through this period and make smart investments. Here are a few tips on how to avoid bubble traps:

Do Your Own Research (DYOR)

This step is crucial to avoid jumping on the wrong bandwagon. Study the crypto market to understand why the prices are increasing. Determine whether the sudden surge is caused by project fundamentals or speculation.

Dollar-Cost Averaging (DCA)

DCA is an investing strategy that requires you to invest only a fixed amount into an asset at regular intervals, regardless of its price. This tactic helps you mitigate the risks of market volatility, such as buying high, and lowers your average cost per share in the long run.

Diversification

You should diversify your portfolio to include various types of cryptocurrencies, such as Bitcoin, established altcoins, stablecoins, and new tokens.

Long-Term Perspective

Establish a long-term investment horizon and avoid being swayed by short-term market fluctuations. Short-term buys with immediate returns are always risky and can unbalance your portfolio.

How to Trade on Bitunix

Bitunix provides a wide range of trading tools and options to diversify your portfolio and build long-term investment strategies. Follow these simple steps to get started:

Go to the Bitunix Sign up page and register using your email or mobile number.
Deposit crypto or link a fiat method (KYC required only for fiat operations).
Go to the Spot Market for instant Spot crypto trading.
For advanced traders who are margin trading crypto, open a perpetual futures position to trade with leverage and capitalize on market swings.
Alternatively, you can have a more passive approach to crypto with the platform’s digital asset management services available in the Earn section.

Why Trade with Leverage on Bitunix?

Bitunix is a crypto exchange that truly cares. The platform provides a single-chart interface that enables both beginner and advanced traders to navigate the market with precise analysis and real-time indicator updates. The exchange also has one of the best liquidity pools in the market and complies with global regulatory requirements.

Bitunix stays true to its user-centric approach, allowing new traders to join through a fast registration process and a user-friendly verification system with optional KYC. Lastly, the platform has a Protection Fund that safeguards users’ assets and provides insurance.

Conclusion: Navigating the Crypto Market with Confidence

The crypto market is still a young and innovative sector, highly susceptible to bubbles. However, that shouldn’t stop you from joining it as long as you invest safely and only the amount you are willing to lose.

Bitunix offers a rich set of analytical tools, trading options, and educational resources to help you navigate the crypto market. The exchange caters to both beginners and industry veterans, allowing you to make informed decisions and build your portfolio with sustainable growth.

Bitunix is available for both desktop and mobile users. You can download the application for iOS or Android on the app download page.

Empower your crypto journey with knowledge. Start trading on Bitunix today!

FAQ Section

What is the difference between a bubble and a normal market correction?

A market bubble is generally characterized by asset prices surging rapidly and far above their intrinsic value, driven by speculation and emotion. On the other hand, a market correction is a normal and temporary pullback driven by fundamental economic factors.

How can I tell if a specific cryptocurrency is in a bubble?

A cryptocurrency may be in a bubble if its price has increased substantially over a short period and is driven by emotional buying and social media hype.

Is it possible to make money during a market bubble?

Yes. However, it is extremely risky since the bubble can burst at any time, causing massive losses.

How can I protect my investments from a potential bubble burst?

You can avoid losing funds to a bubble burst by acquiring a good understanding of the crypto market. Portfolio diversification, emotional control, and long-term planning also help you avoid joining FOMO-driven trends.

Glossary

FOMO: Fear of Missing Out. In investment terms, FOMO is the rising anxiety that you may be missing out on a potentially lucrative deal that everyone else is onboarding.

Spot Trading: The immediate purchase and sale of financial assets at their current market price, also known as the "spot price."

Trading Pair: A combination of two different digital or fiat currencies that can be exchanged for one another on a cryptocurrency exchange.

Stable Pair: A pool of assets that track similar values, such as two stablecoins.

Altcoin: Any crypto asset that is not Bitcoin.

DeFi: Decentralized finance applications on public blockchains.

Volatility: Degree of price fluctuation for an asset over time.

TVL: Total value locked in a protocol, a rough usage proxy.

About Bitunix

Bitunix is a global cryptocurrency derivatives exchange trusted by over 3 million users across more than 100 countries. At Bitunix, we are committed to providing a transparent, compliant, and secure trading environment for every user. Our platform features a fast registration process and a user-friendly verification system supported by mandatory KYC to ensure safety and compliance. With global standards of protection through Proof of Reserves (POR) and the Bitunix Care Fund, we prioritize user trust and fund security. The K-Line Ultra chart system delivers a seamless trading experience for both beginners and advanced traders. At the same time, leverage of up to 125x and deep liquidity make Bitunix one of the most dynamic platforms in the market.

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