Crypto KOL and former FTX community partner Benson Sun said he expects Bitcoin to post a slower, step-by-step bull run in this cycle rather than a sharp blow-off top like those seen in 2013 and 2017. In his view, the market may show several local topping signals before a true cycle peak arrives.
Sun argued that since 2021, the main source of BTC demand has been shifting away from retail investors toward institutions such as public companies, spot ETF buyers, and corporate treasuries. Because these players mainly buy spot, while some capital also runs delta-neutral arbitrage strategies, traditional cycle-top indicators such as funding rates and the MVRV Z-Score may not return to past extremes.
He said a more likely topping pattern in the current market would be fading institutional follow-through rather than fully overheated retail sentiment. To track that, he uses an Institutional Liquidity Index, or ILI, which references overall U.S. dollar liquidity, Strategy’s mNAV, and net Bitcoin ETF flows. A yellow divergence appears when BTC makes a rolling 30-day high without a corresponding rise in ILI. A red divergence appears when BTC breaks an all-time high while ILI diverges and stays below 50. Sun said he uses repeated yellow divergences to reduce altcoin exposure and leverage, then raise BTC allocation over time. If a red divergence appears, he said he would stop participating.
On Sept. 26, crypto KOL and former FTX community partner Benson Sun said he expects Bitcoin to follow a slower bull-market path in the current cycle, grinding to fresh highs over time instead of surging rapidly into a clear top as it did in 2013 and 2017.
He said the market could show several local topping signals before the actual cycle peak arrives.
Shift in buyers is central to the thesis
Sun said the main source of BTC buying has gradually moved away from retail participants since 2021 and toward institutions, including public companies, spot exchange-traded funds, and corporate treasuries. Because institutions mainly buy spot, and some capital also uses delta-neutral strategies for arbitrage, traditional indicators such as funding rates and the MVRV Z-Score may not climb back to extreme levels at the cycle top.
In his view, a near-term cycle top is more likely to show up as weakening institutional follow-through rather than broad retail euphoria.
ILI as a signal for institutional follow-through
He said the Institutional Liquidity Index, or ILI, mainly tracks overall U.S. dollar liquidity, Strategy’s mNAV, and net Bitcoin ETF flows. The gauge is meant to show whether institutional money is still following Bitcoin higher when BTC makes new highs.
A yellow divergence forms when BTC sets a rolling 30-day high but ILI does not rise at the same time. A red divergence forms when BTC breaks above its all-time high while ILI diverges and remains below 50.
How he would adjust positions
Sun said he would use the number of yellow divergences as a reference for judging where the cycle stands. Each time one appears, he would moderately cut altcoin exposure and leverage. As the market moves into a later stage, he would gradually raise the share of BTC in the portfolio and eventually hold only spot positions.
If a red divergence appears, he said he would stop participating.
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