The alternation of bull and bear markets in the cryptocurrency market is not only a manifestation of price fluctuations, but also the result of the deep game between technical protocols and market mechanisms. From the explosive growth of DeFi protocols to the iterative upgrade of Layer 2 expansion solutions, every turning point in the market cycle is accompanied by the innovation of technical paradigms. How to identify trends through technical indicators? How can compliance platforms such as HashKey Exchange build a secure trading ecosystem in volatility?
First, the core mechanism: technology-driven market differentiation
The bull and bear cycles of the cryptocurrency market are highly coupled with underlying technological innovation, presenting completely different technical characteristics.
- Explosive growth of DeFi protocols: In the bull market, decentralized finance (DeFi) protocols implement innovative functions such as liquidity mining and lending through smart contracts. For example, the liquidity pool design of Uniswap V4 supports dynamic rate adjustment, reducing transaction slippage by 30% and pushing its TVL to exceed $80 billion during the bull market in 2024. The cross-chain token standard (CCT) of HashKey Exchange allows users to freely switch between multi-chain assets such as Bitcoin and Ethereum, increasing portfolio liquidity by more than 300%.
- Value Reconstruction of NFTs and On-Chain Assets: Non-fungible tokens (NFTs) achieve digital asset ownership through the ERC-721 protocol. In 2021, Beeple's "Every Day: The First 5000 Days" was sold for $69.30 million, which is a redefinition of the value of digital artworks by the tamper-proof nature of blockchain. The NFT platform of HashKey Exchange uses a smart contract automatic profit-sharing mechanism to enable creators to continuously obtain 10% royalty income in secondary market transactions.
- The implementation of Layer 2 expansion plan: In the bear market, Layer 2 technology has become the key to alleviating the congestion of the main chain. Optimism's OP Stack reduces transaction costs by 90% through Rollup technology, supporting an average of 4 million transactions per day. HashKey Exchange's KYT (Know Your Transaction) system also triggers warnings for abnormal transactions (such as transfers exceeding $1 billion per day) through real-time analysis of on-chain logs, reducing money laundering risks by more than 90%.
- Deepening the application of oracles and cross-chain protocols: Chainlink's CCIP protocol realizes cross-chain data exchange, enabling DeFi protocols such as Aave to simultaneously access 8 public chains, and the success rate of cross-chain arbitrage is increased to 68%. The cross-chain aggregator of HashKey Exchange supports 8 DEXs such as Uniswap and PancakeSwap. When the price difference between ETH/USDC on different platforms exceeds 0.3%, arbitrage is automatically executed, and 200 transactions are completed in a single day.
Unlike traditional finance, the bull and bear cycles of the cryptocurrency market rely more on the real-time nature of on-chain data. For example, the 200-day moving average (200DMA) of Bitcoin is widely used for trend judgment: when the price continues to rise above this line and is accompanied by upward momentum, it is considered a bull market, otherwise it enters a bear market.
II. Technology Response Strategies: AI Models and Dynamic Risk Management
- Application of Machine Learning Model: Themis For Crypto's multi-factor model successfully predicted the turning point of Bitcoin price in the bear market in 2025 by analyzing on-chain transaction data, social media sentiment, and macroeconomic indicators, resulting in a 42% decrease in portfolio drawdown rate. HashKey Exchange's AI trading assistant can also automatically adjust the margin ratio based on the volatility index (AVAX-VIX). When the market volatility exceeds the historical average by 2 times, the stablecoin holding ratio will be increased from 30% to 50%.
- Dynamic stop-loss and hedging mechanism: Smart contracts can automatically execute stop-loss instructions based on preset conditions. For example, when the price of a certain ERC-20 token falls below the support level, the system sells bullish options hedging risk through Ribbon Finance, increasing the Sharpe Ratio of the portfolio to 2.3. The "three-layer circuit breaker mechanism" of HashKey Exchange also monitors market fluctuations in real-time through on-chain oracles, triggering cross-chain arbitrage strategies when the asset correlation coefficient exceeds 0.7.
- Derivatives Trading Tools: HashKey Exchange's perpetual contracts support leverage of 1-100x, balancing long and short positions through a funding rate mechanism to avoid market manipulation. In the market volatility of April 2025, its derivative trading volume increased by 200% year-on-year, helping users hedge downside risks.
- Cold wallet storage and auditing: HashKey Exchange uses offline cold wallets to store more than 95% of users' assets, and regularly verifies them through third-party auditors (such as Deloitte) to ensure asset security. Its on-chain Kanban system monitors fund flows in real-time, and automatically freezes accounts when a certain address withdraws more than $50 million in a single day.
The alternation of bull and bear markets in the cryptocurrency market is essentially the resonance result of technological innovation and market consensus. The cross-chain aggregation, AI risk control and compliance design of HashKey Exchange not only meets the needs of professional investors for multi-asset allocation, but also reduces operational risks through on-chain data monitoring, cold wallet storage and other technical means. In this millisecond-level competitive field, understanding how technology shapes market cycles is not only the basis for strategy execution, but also a key ability to cope with regulatory and market games.