Lately I’ve been thinking a lot about the current market cycle. The big question: have we already reached the top in equities, and is this the end of the bull run?
Historically, most cycles end in a similar sequence – first a boom in blue chips, then growth stocks, and finally small caps. This rotation pattern has been remarkably consistent across market history.
This time, we’ve seen a huge run in the Magnificent 7, while the Russell 2000 is lagging. That means money hasn’t yet rotated into small caps – which in the past was a clear sign of the late stage of the cycle.
At the same time, something else is happening – capital is flowing abroad. Europe and Asia are showing strong returns, while the US is falling behind. That looks more like market fatigue in the US rather than global euphoria.
And here comes the key: the Fed. Interest rates and liquidity will decide which scenario plays out.
In short: If this were a classic end-of-cycle, we’d already see an explosion in small caps and global euphoria.
Two Scenarios
Scenario A (bullish): Another “mini blow-off top,” if the Fed loosens liquidity and money rotates into small caps.
Scenario B (bearish): No euphoria, just slow exhaustion and a gradual move lower.
The Crypto Connection
Crypto cycles haven’t really invented anything new – they just follow the same pattern as classic stock market cycles: first BTC, then the larger altcoins, and finally the small, speculative “shitcoins.”
We’re seeing this play out right now, but haven’t reached the final stage yet.
