Understanding Crypto Market Cycles

Getting into the crypto world can be a little difficult for beginners, there’s no doubt about that. 

With such high volatility and a wealth of investment options out there to choose between – as well as trading strategies to get your head around – it can feel a little like jumping into a pool of alligators. If you want to survive, you’re going to have to know what each of them is thinking and work out the best way to deal with them.

Knowing what the crypto market is thinking can be a challenge at the best of times. But it’s not impossible. If you’re new to crypto investing, all you have to do r is understand the crypto market cycles and what exactly might affect them. 

Crypto Market Cycles: Explained

To put it simply, crypto market cycles refer to a set of observable long-term price patterns and trading behaviours, with traders using historical data to identify cycle correlations, map out future movements in the market, and forecast where exactly it might be going.

Now, we know what you’re thinking: how exactly do you forecast what’s going to happen if the crypto market is so volatile? And you’re right to think that. But while the crypto market is indeed volatile, that doesn’t mean it cannot be pinned down to exact, identifiable trends. 

The Cycles in Question

For most investors, the cryptocurrency market can be pinned down to four distinct cycles: the accumulation phase, the distribution phase, the bull market phase, and the bear market phase. 

In 2022, for instance, we were in the bear market phase. This meant that the selling pressure outweighed demand, which led to prices falling significantly.

In 2023, we then moved into the accumulation phase, when prices began to stabilise at lower levels. During this phase, long-term investors were accumulating their assets and being cautious about what they buy or sell, keeping their assets close to their chest in anticipation of future growth. 

At the beginning of 2024, various factors – including Bitcoin ETFs and the later Bitcoin halving – pushed cryptocurrency into a bull market, which meant prices were high across the board, and numerous new investors were entering the market to take advantage. 

At the time of writing, we’re in the distribution phase, which means we’ve seen the peak of the bull market and investors have started to take profits – selling their holdings to lock in gains.

Recognising These Cycles

There’s no doubt that recognising these cycles is difficult – cryptocurrency is still very young, having only been around for fifteen years – but as we mentioned previously, it’s not impossible. 

The key period that investors are basing these cycles on took place between 2018 and 2022 – otherwise known as the first crypto winter. During this period, cryptocurrency took a plunge, prices accumulated, and then it surged into a bull market. 

This has now happened once again during the second crypto winter, so it’s not wishful thinking to assume there’s a distinct pattern here which can be followed.

As always, though, it’s important to do your research if you’re entering the market and understand that the world of crypto plays by its own rules – so make sure you invest wisely and safely.