Day 7 of Navratri: Understanding Crypto Market Cycles


Since the inception of Bitcoin, the Crypto market has seen several ups and downs, popularly known as market cycles. Each cycle of the crypto market has several stages which often coincide with the larger economic landscape. Today, in the 7th blog of our 9-part series, let us understand the different stages of a crypto market cycle.

A market cycle often starts with early adopters taking positions before the masses discover the price movements. This is because the fair majority of the retail market waits for price movement in a bullish direction before taking a buy position. Moreover, when the price starts to move in a bullish direction, investors often wonder if the price has peaked. Amid this confusion, opportunities are lost. Therefore, it is important to analyze markets in a longer time frame and buy fundamentally robust crypto assets which are truly solving a problem.  With that, let us explore the various stages of a market cycle.

The Stages of a Market Cycle

Accumulation Phase

This stage is marked by less volatility. Most retail investors sell their assets during this stage contemplating the fear of a price drop. However, seasoned investors take this opportunity to accumulate their holdings as the asset is cheaply available. Periodic accumulation of assets during this stage can prove to be beneficial from a long-term perspective provided that there are no black swan events in the industry and other macro-economic factors and regulatory factors support the market.

Read more: Understanding Fundamental Analysis In Crypto

Markup phase

The Markup phase usually marks the beginning of a bull run where the price takes strong support and starts moving upwards. The bulls begin to gain control in this phase and many short positions tend to break. News about the market is aggressively covered by the media and investors can smartly take positions. Increased news coverage also increases the possibility of new investors venturing into the crypto market which adds fuel to the bull run. 

Distribution Phase

This is a stage where the price usually peaks and can breach the previously set all-time high. FOMO traders, the ones who are taken over by greed end up buying in this phase with the hope that the price reaches even further. Lack of research often blinds investors from looking at the larger picture. This is also a stage where the seasoned investors who usually take buy positions in the accumulation phase end up selling their holdings and hence the bulls turn into bears. When the “Smart Money” starts leaving the market, a strong resistance is encountered and the market usually reverses marking the beginning of the Markdown phase.

Read more: Crypto Investing vs Crypto Trading

MarkDown phase

At this stage, the market takes a pessimistic outlook towards the industry and Fear, Uncertainty and Doubt set in. The investors who end up buying assets in the distribution phase often get their hands burnt and end up exiting the market at a loss. The price drops to a point where another strong support is encountered. At this stage, most FOMO investors exit the market and the seasoned investors see the sign of accumulation and again take buy positions and the whole cycle continues.

Bitcoin Cycles

Since its inception in 2009, Bitcoin has seen close to 4 cycles, and each cycle can be broken down into the above-mentioned phases. Here is a snapshot of Bitcoin’s price movement since its beginning. These cycles can be understood better when the price of Bitcoin is seen on a logarithmic scale rather than a linear scale. This is because the current price of Bitcoin is way higher than the price during its inception.

Read more: Bitcoin Price Prediction

Source: Trading View

Note: The above-mentioned price chart is indicative and captures the historical price movements. However, it is important to note that cycles may not repeat as well. This blog should not be taken as an investment recommendation, and investors should conduct their own thorough research before investing in the Crypto Markets.

To learn more about Crypto, Web 3 and Blockchain, visit ZebPay blogs. Click on the banner below to join the millions taking part in the Navratri festive celebrations. Stay tuned for our next blog which will detail “Importance of Due Diligence in Crypto Investing” in this 9-part series.

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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