The crypto market, as like any other market, has had its ups and downs. The key for some to make money in the market is to follow the basic principle of buying low and selling high. In order to do this, it is important to know when the market is going down and when the market is going up.
Bitcoin Market Cycle
Although indicators are still deemed reliable, fundamental analysis and understanding of the crypto market cycle are still important to make the right calculated decisions. While Moving Average tells where the crypto asset might be leading towards, the market also relies heavily on what is known as the crypto market cycle. With Cardano making a lot of headlines with its new Alonzo update, SundaeSwap is expected to be the ADA version of PancakeSwap.
The Bitcoin market cycle divides the different stages of the crypto asset from the start, greed, peak, fear, and when it settles. An article by CryptocurrencyFacts divides this market cycle into nine different steps. As of the moment, with the bearish movement of the top 10 cryptocurrencies, it is important to see where the market is as of the moment.
Crypto Market Cycle Explained
STEP 1: Institutional investors, early adaptors, smart money, whales, and etc., accumulate massive amounts of Bitcoin at a low price which sometimes looks like anger and depression coming from the last peak.
STEP 2: The price of Bitcoin finally goes up. This is where experienced traders and investors HODL through disbelief, and hope and this is where most of them buy the dip at support. This is where GREED happens, and more and more people buy Bitcoin.
STEP 3: The general market gets excited as the price starts going up. This is where new money usually gives in to FOMO, buying up the asset as it rises. During this period, the recommendation is to either HODL and/or SELL throughout the thrill, belief, and finally the euphoria, which is the time to start closing the longs.
STEP 4: Bitcoin is then distributed at a high price. This particular phase consists of a lot of price action near the peak. While some would still believe that the price would go up, others would finally SELL their HODLings.
STEP 5: Once enough Bitcoin has been sold, the price starts to go down as a lot of traders and investors start to experience anxiety and denial. This is also where SHORT plays and BOUNCES happen.
STEP 6: This is where the FEAR happens, and people are starting to sell due to panic as the price consistently goes down.
STEP 7: The price starts to go down quicker, and due to panic, FEAR kicks in, and those that might have bought at the top start to cut their losses. This is where BOUNCES can be played, and this is where to start closing shorts.
STEP 8: The market starts to get messy, and there is a gradual bearish trend for the rest of the market. This is when the accumulating phase begins once again as whales and investors start to buy, and thus the price starts to go bullish.
STEP 9: This is where the market cycle repeats itself.
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Written by Urian B.