The Africans have a saying that goes; thus, “Do not test the depth of a river with both feet” In like manner, caution must not be thrown to the wind when it comes to engaging in fields like cryptocurrency. The intending crypto investor must understand that there are many cryptocurrency market cycles. These Cryptocurrency Market cycles include the bull runs, corrections, and the bear market. Many who threw caution to the wind without engaging proper research about this field are mostly the ones labelling the field as scam. I have experienced all cycles, and I am glad to share with you, my experiences.
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Table of Contents
Understanding Cryptocurrency Market Cycles
The Bull Run Cryptocurrency Market Cycle
This Cycle is the one every crypto investor and trader prays for. Even when their prayers seem to be answered, the joy never lasts forever. Just as the farmer prays for the rainy season, when the season comes, it doesn’t last forever. In like fashion, the bull cycle in crypto also has a span of time. The Bull run is characterized by skyrocketing prices of cryptocurrencies. This period is when many cryptocurrencies make new All Time Highs (ATH). By All Time High, I mean very high prices never seen before. For instance, at press time, we are in a bull run market cycle where Bitcoin has hit $70,000+USD and it is believed that before the cycle ends, it will be valued at higher prices.
Corrections in Cryptocurrency Market
A correction in cryptocurrency market simply refers to the process of price retracements. That is, when cryptocurrency prices skyrocket, they don’t do that forever, they must correct. For instance, when Bitcoin hit $70,000+ USD, it had to correct due to being overbought. There are indicators that reflect overbought regions, and they indicate when prices are about to correct. An example of this indicator is the Bitcoin Fear & Greed Index. This indicator tells the trader when the levels of Greed and Extreme Greed are reached. Prices correct during the Greed and Extreme Greed levels because majority love to buy at the top. Corrections happen both in Bear and Bull market cycles. It should be noted that price corrections in a bull market cycle does not mean that the market won’t go back up and price correction in the bear cycle does not signify the end of the bearish momentum. During the process of correction, leverages are flushed out, also weak hands nicknamed paper hands are flushed out of the market too. By weak hands, I mean those holders and traders who cannot hold on to a particular cryptocurrency through the correction cycle. Most of them sell due to fear that the market might never recover again. They are always wrong. A Pro Crypto trader and investor must learn to keep his or her emotions at bay.
The Cryptocurrency Bear Market Cycle
This is a prolonged period of price downturns in the cryptocurrency market. Price keeps tumbling during this period to scary levels. I remember my first bear market where Bitcoin’s value tumbled from $68,000+USD to $16,000+USD. It takes one with experience to keep faith during this period. Although, every cycle comes with its own blessings. While the Bull run cryptocurrency market cycle comes with the blessings of immense profits, the bear market cryptocurrency cycle comes with the opportunity to buy at very cheap prices.
Take Home Keys
- The bear market cycle will not last forever. It is an opportunity to buy cryptocurrencies at cheaper prices.
- Dollar cost average. It is smart to dollar cost average because you cannot tell the bottom. By dollar cost averaging, you keep buying while the price keeps tumbling in a bear market.
- Never buy high and sell low. There are people who bought Bitcoin at $68,000+ USD and sold at $16,000+USD because of fear.
- HODL. That is, Hold on to Dear Life. If you have bought in the bear market, be patient to enjoy immense gains during the bull run.
- The bull run always comes no matter how long it takes, be patient.
In conclusion, to be a successful cryptocurrency investor, one must have a proper understanding of cryptocurrency market cycles that is, the bull Runs, corrections,
and the Bear Market. It is also important to add that every 4 years since 2010, there is an event called bitcoin halving where the rewards bitcoin miners get for validating the bitcoin network is cut in half. Every Bitcoin halving year signifies a bull run like this year we are in, 2024, no wonder why prices are skyrocketing, and we are seeing new highs.
Been a while I read your content. Great read as always.