Cryptocurrency markets are cyclical. Understanding these cycles can help you position yourself for success—and avoid catastrophic losses.
The Four Phases of Market Cycles
Phase 1: Accumulation
Characteristics:
- Market is recovering from a bear market
- Prices are low, sentiment is poor
- Smart money quietly accumulates
- Volume is low, volatility is muted
- Media coverage is minimal or negative
What to do: Research, accumulate quality assets gradually, prepare for the next bull run.
Phase 2: Markup (Bull Market)
Characteristics:
- Prices start rising
- Positive news increases
- New buyers enter the market
- Volume increases
- Euphoria builds over time
What to do: Ride the trend, but don't forget to take profits along the way.
Phase 3: Distribution
Characteristics:
- Market tops are forming
- Extreme euphoria and FOMO
- Smart money sells to retail
- "This time is different" sentiment
- Everyone is a genius
What to do: Start taking profits, reduce exposure, don't chase parabolic moves.
Phase 4: Markdown (Bear Market)
Characteristics:
- Prices crash
- Fear and capitulation
- Many projects fail
- Volume drops
- Media turns negative
What to do: Protect capital, wait for value, accumulate only the strongest assets.
Historical Crypto Cycles
Crypto has shown remarkably consistent 4-year cycles, often tied to Bitcoin's halving schedule:
2013-2014 Cycle
- Peak: ~$1,200 (December 2013)
- Bottom: ~$200 (2015)
- Drawdown: ~85%
2017-2018 Cycle
- Peak: ~$20,000 (December 2017)
- Bottom: ~$3,200 (December 2018)
- Drawdown: ~84%
2020-2021 Cycle
- Peak: ~$69,000 (November 2021)
- Bottom: ~$15,500 (November 2022)
- Drawdown: ~78%
Current Cycle
The 2024 halving has set the stage for the next potential cycle. Historical patterns suggest—but don't guarantee—a potential peak sometime in 2025.
Signs of Market Tops
Watch for these warning signs:
- Retail investors rushing in (your taxi driver mentions crypto)
- Extreme greed readings on sentiment indicators
- Parabolic price increases
- "Number go up forever" mentality
- Excessive leverage in the system
- New inexperienced influencers appearing everywhere
Signs of Market Bottoms
Look for these accumulation signals:
- Extreme fear and despair
- Long-term holders accumulating
- Miners selling at break-even
- Volume capitulation spikes
- "Crypto is dead" media coverage
- Projects with real value trading at huge discounts
Strategies for Different Phases
Accumulation Phase
- Dollar-cost average into quality assets
- Focus on fundamentals
- Build your watchlist
- Save cash for opportunities
Bull Phase
- Ride winners, cut losers
- Take partial profits on the way up
- Don't use excessive leverage
- Have exit targets
Distribution Phase
- Reduce exposure significantly
- Take more profits to stablecoins or fiat
- Ignore FOMO
- Prepare for winter
Bear Phase
- Preserve capital
- Study and improve skills
- Only buy the strongest assets at deep discounts
- Be patient
The Most Important Rule
Don't fight the cycle. Swimming against the tide is exhausting and unprofitable.
In bear markets, even great assets go down. In bull markets, even mediocre assets can rise. Position yourself with the trend, not against it.
Practice Through Market Cycles
With ChartMini, you can study historical crypto data across multiple cycles. See how Bitcoin and altcoins behaved during 2017, 2021, and previous periods. Understanding history helps prepare you for the future.
Conclusion
Crypto cycles are brutal but predictable in their general pattern. The traders who succeed are those who recognize where we are in the cycle and position accordingly.
Be greedy when others are fearful. Be fearful when others are greedy. And always respect the cycle.