The crypto markets can be a scary place for beginner and seasoned traders alike. The market is well known for being highly volatile and hard to read. Understanding and being able to read these market cycles can offer you a huge advantage over other traders in this space.

The different cycles in the market help all investors figure out when the best times to buy and sell, the best time for maximising profits and the best times for minimising losses.

In todays blog we will explore what crypto market cycles are, how you can understand them, and the best way to make the most of each type of cycle.

What Are Crypto Market Cycles?

Market cycles in the world of cryptocurrency refer to repeated price movements. These can be influenced by a number of things including investor sentiment, economic situations and advances in technology. The market cycle typically comes in four, different phases:

Phase One – Accumulation Phase

Phase Two – Market Expansion (Bull Market)

Phase Three – Distribution Phase

Phase Four – Contraction (Bear Market)

Understanding these cycles, and the differences it can make in trading can help any investors figure out when to buy their crypto, when to hold their crypto and the best times to sell.

Accumulation Phase. Buy. Buy. Buy.

The accumulation phase happens after the market has been down for a long period of time (During a bear market) when prices have hit rock bottom, investor activity is low. Institutional investors and experienced traders will use this phase to begin purchasing assets at a lower than average price, boosting their portfolios at a fraction of the cost.

How to recognise the accumulation phase:

– Lower than average trading across all platforms.

– Minimal price changes within the crypto markets.

– Lack of general reporting on the crypto space.

During this time is the best opportunity to strengthen your portfolio with assets that have strong fundamentals.

Market Expansion (Bull Market). Positive, But Remain Safe.

During the market expansion phase of the market cycle, the overall demand for various cryptocurrencies is usually at its highest, leading to rapid price increases. Investor sentiment becomes “bullish” and as more and more people enter the market, the price of all cryptocurrencies become increasingly strong, often breaking all time high records.

How to recognise the market expansion:

– Mass increase in trading across all platforms.

– Growing media coverage and hype of crypto related topics.

– New all-time-highs being reached by various cryptocurrencies.

During an expansion market, it is advised to consider “taking profits” off certain assets in your portfolio to allow you to reposition to a stronger overall portfolio position. As with other opportunities, be aware of scams during this time as people will take advantage of the “hype” behind cryptos and attempt to push projects that have no real future in the space. Head over to Crypto Analyst‘s website and consider joining us to be kept up to date on all the newest trends.

Distribution Phase. Knowing When To Sell.

The distribution phase of the market cycles marks the peak of the expansion phase and the current “bull run”. Its during this phase that early investors begin taking some of the profits off the assets and the market sentiment overall is extremely optimistic.

While prices within the crypto markets may still rise, so does the volatility of the assets. This can signal the potential for a reversal of the markets and an upcoming decrease in the overall value.

How to recognise the distribution phase:

– Extreme “hype” and “bullish” attitudes from people within the crypto space.

– Higher than usual volatility and large price swings.

– Increased amounts of crypto sold by “larger” holders.

If, during this phase of the markets you have made substantial profits with a particular currency, now would be the time to consider selling a potion of the asset to protect your capital.

The main thing that you NEED to avoid during this time is FOMO (Fear Of Missing Out). This can lead to poor investment decisions. By now, I would hope that you have an investment strategy, and this is one of the key times you MUST stick to it.

Contraction (Bear Market). Time For Managing Risks.

Following the distribution phase is the contraction phase of the market cycle. This cycles results in significant price drops across the entire market. Investor sentiment turns “bearish” and panic selling is a common sight as people watch their once valuable assets drop in value, further driving down prices.

How to recognise the contraction phase.

– Large decline in trading across all platforms.

– Widespread negative views of cryptocurrency in the general news.

– Increased fear and uncertainty around cryptocurrencies.

The best advice I can give anyone during a bear market is to avoid panicking and making emotional decisions. Bear markets come and go, it is part of the crypto markets. You can reduce your risk by staying positive and avoiding risky trades to attempt to make back any losses.

Staying informed on the market trends at this time can be critical and give you an edge over other traders, and more importantly some much needed peace of mind.

Crypto Analyst‘s Final Thoughts.

Any investor will not succeed in the crypto space without understanding the market cycles. By knowing what to look out for and being able to identify the various market cycles you are giving yourself chance to react in time, whether buying or selling cryptocurrencies.

Always use market indicators where possible, stay informed and practise healthy risk management. These tips will help you navigate the ever changing world of cryptocurrency.