11 Nov Cryptocurrency Market Cycles: What is it and where are we currently?
What Is A Market Cycle?
Basically, a market cycle is the “time period” between a high and low of a market and all the phases in between this period. It is important to note that all markets exhibit cycles, however, the difference is the time it takes for the cycle to elapse. For example, it takes years for the stock market to complete a cycle because the market is generally stable. On the other hand, the crypto market is fueled by its volatile nature and the market cycle tends to be shorter than the conservative stock market.
In six years, we have witnessed at least two market cycles. Remember the 2013 market surge, which was closely followed by a downtrend that lasted till 2015? Then there was an unprecedented rally that eventually led to the peak price movement in 2017. Right after the frenzy in late 2017 and early 2018, the market corrected itself and dropped drastically and at the moment the market is yet to recover.
Crypto Market Cycle Stages
We will pick up our analysis from the recovery period of the crypto market. The stages that accompany this period include:
The first indicator that a market is recovering is hope as investors are beginning to dwell on the positives as well as the possibility that the market is about to experience an upward trend. However, they are still cautious because there is still a feeling of uncertainty about the future of the market.
When the market shows a sustained upward trend for months, investors are reassured by the price movement, and more money is pumped into the market. In this stage, market activities come to life and there is a sense of optimism as there is a favorable outlook of the market.
After optimism has been garnered and the market continues its uptrend, then belief sets in. In this phase, there is a surge in investments and crypto projects which is the first sign that there is a forthcoming bull run.
The resilient positive price performance of the market, which had led to an increase in crypto projects ushers in a period of thrill-driven investment decisions. At this phase, investors get comfortable or maybe too comfortable as they indiscriminatingly invest in various projects since every investment seems to be generating profit. It is important for investors to control the urge to randomly invest in every opportunity that pops up during this phase.
Euphoria is the peak of the rally as the never-ending price surge acts as a catalyst for the increase of new investors and traders to the crypto space and FOMO sets in. Hodlers start to distribute the crypto they have accumulated and this results in an unprecedented transfer of crypto from hodlers to new investors. This phase also breeds new sets of crypto millionaires and this further intensifies the FOMO movement.
At the very peak of the bull run, the market starts to show signs of reversal and investors’ price and ROI predictions start to falter. However, there is still a lingering feeling that the market trend is just a glitch and the bull run will continue from whence it stopped. As a result, investors become complacent and they fail to come up with effective strategies that will help them adjust to the forthcoming downtrend.
After the continuous decline of the market, investors start to realize that the bull run has come to an end. Anxiety kicks in, their investment decisions are clouded by emotions and they continue to incur more losses.
Investors continue to hope for a turnaround. They refuse to sell and savage their funds and they continue to lose money.
The continuous dip in prices solidify the emergence of a bear market and at this stage, there is a massive sell-off of assets which is fueled by panic.
At this stage, the market is hopeless as prices reach the lowest point of the cycle. Also, publications predicting the end of the market start to make the rounds. Eventually, the market attains a period of stability before it starts to recover. However, this phase is known to last for a very long time and the cycle starts again.
Where Are We In The Current Cycle?
The present market trend indicates that we are currently between the depression and recovery stages. This is because the prices of crypto, especially bitcoin are becoming more stable, therefore, the market has definitely hit the depression phase. However, this is an estimate as the crypto market is still very young and there are a few cycles we can use as comparative tools to the current cycle.
How to Approach Market Cycle Investing
Investors that are aware of market cycles are able to utilize strategies that put them at the very top of the food chain when the crypto market hit a bull run. The best way to capitalize on the crypto market cycle is to accumulate assets and invest when the market is at a low. It is at this point that quality crypto projects stand out. Accumulating these assets when their prices are low and distributing them when the bull run begins is the route to becoming a millionaire.
However, you need to access the right signals and information which will help you identify the best moment to accumulate, the right coins to accumulate, and the best time to distribute. By joining our telegram trading signal channel, you can access quality signals that will offer you all the insight you need to capitalize on the crypto market cycle.