Understanding Crypto Market Cycles


When it comes to conquering the market, you have to first understand the crypto market cycle. The crypto market cycle is simply the period between the peak and low of a market. Markey cycles are common all-over financial markets, and it is a natural progression of what appears and reappears as time goes on. Unlike the stock market, crypto cycles are shorter and happen more rapidly due to the ongoing changes in the market.

New traders may not see that markets are cyclical, and often fail to plan for the end of the current market cycle. Additionally, even if you are aware of the market cycles, it can be difficult to know where you are in a cycle. When you understand market cycles, you can outsmart it, expect them, and profit from them.

Here are the four key phases of the Crypto market.

Market Phases

Accumulation Phase

This is where the cycle signals an oncoming flattening of prices when the market has bottomed after the high. Here, market trailblazers and corporate insiders, and experienced traders, begin to buy again. Here is where traders stand a decent chance to make good on new trades.

The Mark-up Phase

This phase begins when the cryptocurrency has reached a stable point and is starting to climb steadily in value. People who notice this early see changes in the market and leverage their technical analysis skills. Here, the growth is slow as sellers are dampening prices.

Soon prices begin to level off, the undecided buy, and there is a selling frenzy where prices make one more leap, finding strong gains. The market seems overjoyed at this change.

Distribution Phase

The next phase of the mark is characterized by the dominance of sellers. The strong sentiment of the last phase mellows into a mixed sentiment. Prices often hover within the same trading range, which in some cases vases can last for months on end.

By the end of this phase, the market moves in the opposite direction.

The Markdown Phase

The Markdown phase is the fourth and final phase. It is the most painful for those who still hold positions. The investors we find in this phase are usually inexperienced and cling to the investment as it is proved lower than what they paid. When this happens, late-cycle traders lose hope and finally cut their losses.

When this happens, late-cycle traders lose hope and finally cut their losses.

At this point, the early investors, who previously made good profits, buy the depreciated assets. These new investors project that a market bottom is imminent, and they most likely proceed to enjoy the subsequent markup.

When all these phases are looked into further, they make a clear cycle as follows:

The Crypto and Bitcoin Market Cycles

  • Stage 1: Disbelief
    • This streak will fail like the others.
  • Stage 2: Hope
    • Recovery can happen.
  • Stage 3: Optimism
    • This rally is really happening.
  • Stage 4: Belief
    • Time to fully invest.
  • Stage 5: Thrill
    • I’ll take out a loan, buy more and tell everyone else to buy!
  • Stage 6: Euphoria
    • I’m a genius, I’m going to be rich.
  • Stage 7: Complacency
    • Just cool off and wait for another rise.
  • Stage 8: Anxiety
    • This dip is lasting longer than I expected.
  • Stage 9: Denial
    • My investments are with solid projects, it’ll come back up.
  • Stage 10: Panic
    • Everyone is selling, I need to get out.
  • Stage 11: Capitulation
    • I’m getting out of the market; I can’t afford to lose more.
  • Stage 12: Anger
    • How was this allowed to happen?
  • Stage 13: Depression
    • My money is gone, I’m so stupid.

One Final Thing

When you have a good understanding of the different stages of the crypto market cycle, you’ll be much better positioned to take advantage of these stages to turn a heavy profit. If you have found this overview useful, you can learn more about Crypto Market Cycles with Swyftx.