In cryptocurrency (just like in traditional financial markets), a market cycle refers to the recurring pattern of market behavior driven by investor emotions, economic factors, and market psychology. These cycles typically go through four main phases:
đ 1. Accumulation Phase
What happens: After a bear market or crash, prices are low and stable. Smart investors and institutions start quietly buying.
Sentiment: Boredom, disbelief, caution.
Best time to buy (for long-term gains).
Price: Low and stagnant, low trading volume.
đ 2. Bull Market (Markup Phase)
What happens: Prices start rising. Media attention grows, retail investors jump in.
Sentiment: Optimism â Excitement â Euphoria.
Risk: FOMO (Fear of Missing Out) can lead to poor decisions.
Price: Rapid increase, strong uptrend.
đ 3. Distribution Phase
What happens: Prices peak and start to move sideways. Smart money begins selling to retail investors.
Sentiment: Greed, denial.
Risk: People believe prices will keep rising forever.
Price: High and volatile, warning signs of a reversal.
đ 4. Bear Market (Markdown Phase)
What happens: Prices drop sharply. Panic selling occurs.
Sentiment: Fear â Capitulation â Depression.
Risk: Selling at a loss due to panic.
Price: Long downtrend, low trading activity.
đ Then the cycle repeats...
These cycles donât follow a fixed time (e.g., months or years), and external events (regulation, tech, macroeconomics) can speed up or slow them down.
â Why is understanding the cycle important?
Helps avoid buying at the top or selling at the bottom.
Allows smarter investment strategies (e.g., DCA in accumulation phase).
Reduces emotional decisions driven by FOMO or panic.