Some thoughts about crypto market cycles Ιmagine that we a | Trader X - Official Channel

Some thoughts about crypto market cycles

Ιmagine that we are at the end of 2021, Bitcoin has just hit its all-time high and is showing no signs of slowing down. Many altcoins have skyrocket to 10x and the destination is, the moon.

Is clearly in sight and now that you are so close to it, you start to realize that you never took the time to seriously think about the most important question in crypto investing. When should I sell?
Perhaps you fly past the moon and you find yourself watch in shock as all your gains get burned up

Mature markets such real estate, stocks, forex etc follow some kind of visible cycle. It can be a one-year cycle, a four-year cycle, or even a 12-year cycle. In some cases, these longer cycles contain even smaller cycles that last a few months or even a few weeks. Usually it is observed a cycle becoming longer as a given market matures.

Meanwhile, cryptocurrency market is very young and that makes it very volatile. This is simply because nobody knows for sure what the actual value of the market is.

Not only that, but cryptocurrency markets are not restricted to suit and tie traders. All you need to participate is an internet and that means a lot of inexperienced investors. This makes the cryptocurrency market even more volatile and irrational.

Despite all the daily chaos in the crypto market, when you step back you can see a somewhat clear market cycle. This cycle seems to last around four years and consists of a two-to-three-year bull market, followed by a one-to-two-year bear market depending on how you draw your indicators.

Nevertheless, all these cryptocurrency market cycles seems to be caused by the Bitcoin halving. The Bitcoin block rewards for miners are cut in half every four years. Assuming demand stays the same, the sudden decrease in supply eventually leads to a spike in Bitcoin's price. Since most altcoins are highly correlated to Bitcoin, they also see a massive swing to the upside. This explosion in value, makes it to the media which brings even more money from both experienced and inexperienced investors into cryptocurrency markets.

In contrast to the two previous cycles, in the current one, there is more smart money from financial institutions and experienced retail investors in the crypto space than ever before.

So, what is the answer to the hot question? Most people speculate that the current bull run will last till November, other assume a longer duration, till 2022, while others believe, and for good reason, that some kind of crash may take place during Summer. Think about it. Covid's overall economic situation, which includes lockdowns, restrictions to business activity, and unprecedented amounts of central bank financial stimulus to help firms and keep people working (printing fiat at its finest). As a consequence of the impact on currencies, savers and investors will be searching for safe havens as inflationary hedges.