Introduction

The euphoria of April and May in the crypto market has officially hit the brakes. While traders were riding high just weeks ago, the mood has shifted — and the data confirms it. Token Metrics’ proprietary AI signals flipped bearish on May 30, and since then, the market has been slowly but steadily declining.

In this post, we break down what’s happened since the bearish signal, how major altcoins and sectors are reacting, and what Token Metrics’ indicators are telling us about what might come next.

The Big Picture: Cooling Off After a Hot Q1 and Q2 Start

The platform’s AI signal turned bearish on May 30 when the total crypto market cap hit $3.34 trillion. Since then, the momentum that defined early 2025 has reversed.

This wasn’t a sudden crash — it’s a slow bleed. The signal shift didn’t come from headline-driven panic, but from data-level exhaustion: volume softening, sentiment stalling, and trend strength fading across most tokens.

Token Metrics AI recognized the shift — and issued the warning.

What the Bearish Signal Means

The AI model analyzes over 80 metrics across price, volume, sentiment, and on-chain data. When key trends across these data sets weaken, the system flips from bullish (green) to bearish (red).

On May 30:

• Trader Grades across most tokens declined
  
• Signal sentiment flipped bearish
  
• Momentum and velocity cooled down
  

According to the model, these were signs of a broad de-risking cycle — not just isolated weakness.

Sectors Showing Declines

Even tokens that had been performing well throughout Q2 began to stall or roll over.

🚨 Launch Coin

Previously one of the top performers in April, Launch Coin saw its grades decrease and price action softened.It may even be rebranding — a typical signal that a project is pivoting after a hype cycle.

🏦 Real World Assets (RWAs)

RWAs were hot in March–May, but by early June, volume and signal quality had cooled off significantly.

🔐 ZK and L2s

Projects like Starknet and zkSync, once dominant in trader attention, have seen signal strength drop, with many now scoring below 70.

The cooling effect is broad, touching narratives, sectors, and high-performing individual tokens alike.

The Bull-Bear Indicator in Action

One of the key tools used by Token Metrics is the Bull vs. Bear Indicator, which aggregates bullish vs. bearish signals across all tokens tracked.

As of early June:

• The percentage of tokens with bullish signals dropped to its lowest since January.
  
• New projects launching with strong grades also saw a decline.
  
• Even community-favorite tokens began receiving “exit” alerts.
  

This isn’t fear — it’s fatigue.

How Traders Are Reacting

During the webinar, we noted that many users who rely on Token Metrics signals began rotating into stables once the May 30 signal flipped. Others reduced leverage, paused entries, or shifted into defensive plays like ETH and BTC.

This reflects an important philosophy:

"When the data changes, we change our approach."

Instead of trying to fight the tape or chase rebounds, disciplined traders are using the bearish signal to protect gains and preserve capital.

What About Ethereum and Bitcoin?

Even ETH and BTC, the two bellwether assets, aren’t immune.

• Ethereum: Lost momentum after a strong May push. Its Trader Grade is dropping, and the AI signals currently reflect neutral-to-bearish sentiment.
  
• Bitcoin: While still holding structure better than altcoins, it has also declined since peaking above $72k. Volume weakening and sentiment falling suggest caution.
  

In previous cycles, ETH and BTC acted as shelters during altcoin corrections. But now, even the majors show weakness — another reason why the bearish flip matters.

What Could Reverse This?

Abdullah Sarwar, head of research at Token Metrics, mentioned that for the signals to flip back bullish, we would need to see:

• Increased momentum across top tokens
  
• New narratives (e.g., real-world utility, cross-chain demand)
  
• Higher volume and liquidity inflows
  
• Positive macro or ETF news
  

Until then, the system will remain in defensive mode — prioritizing safety over chasing trades.

How to Act During a Bearish Signal

The team offered several tips for traders during this cooling-off period:

1. Reduce exposure
   Don’t hold full positions in assets with weak grades or bearish signals.
   ‍
   
2. Watch signal reversals
   Keep an eye on sudden bullish flips with high Trader Grades — they often mark trend reversals.
   ‍
   
3. Rebalance into safer assets
   BTC, ETH, or even stables allow you to sit on the sidelines while others take unnecessary risk.
   
   
4. Use Token Metrics filters
   Use the platform to filter for:
   
   
   • Top tokens with >80 grades
     
   • Signals that flipped bullish in the last 3 days
     
   • Low market-cap tokens with strong on-chain activity
     

These tools help find exceptions in a weak market.

Conclusion: Bearish Doesn’t Mean Broken

Markets cycle — and AI sees it before headlines do.

Token Metrics' bearish signal wasn’t a call to panic. It was a calibrated, data-backed alert that the trend had shifted — and that it was time to switch from offense to defense.

If you’re navigating this new phase, listen to the data. Use the tools. And most importantly, avoid trading emotionally.

The bull market might return. When it does, Token Metrics AI will flip bullish again — and you’ll be ready.