When it comes to picking the highs and lows in a market like crypto, it’s pretty tricky to get it just right. Markets can be unpredictable and studying price action is not really an exact science. However, when it comes to the fundamental benefits of blockchain technology, most people here on HIVE can understand that in the long run we are going UP so in the long run I want to be a buyer and while I can’t reliably pick the LOW to buy at there is some basic logic to how I decide when the time is right to BUY.
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I’m talking about how the market cycles and maybe more specifically, the psychology of the crypto market. Every few years people get really excited about the technology and newbies flood the space with massive buying and we see big price action like we did in 2017 and 2021. People remember those “Good Times” as the euphoria is thick and intoxicating, but they don’t like to talk about what inevitably comes AFTER the massive price moves. That’s where many newbies quit in disgust having lost their savings and the shameless shills go quiet….for a while anyways.
Most crypto enthusiasts that are still in the game know about the 4-year cycle and a lot of long term crypto diehards like to link this cycle to the “Bitcoin Halving” event that coincides with it. It is true that Bitcoin often leads the market UP and then DOWN again so there is probably some merit in this theory, but I think that it is feeding into a (now) self-reinforcing psychology of the markets generally and the signs are pretty obvious if you know where to look. Today I want to have a look at the previous two completed 4-year cycles and show just how similar they are – not so much from a price action perspective but from a timing perspective.
Above is a chart from the peak in December 2013 to just before the insane run of late 2017. I’ve truncated that last part of this 4 year cycle to emphasise the chart features of the first 3 years of the cycle. You can see that after the peak there is some devastating Bear Market action that culminates in a Capitulation Low in January 2015 which is just over 1 year after the peak. Then there is about a year worth of Consolidation where the mainstream pretty much forgets about crypto and it’s a very boring time to be trading. The 3rd year is where there is a resumption of uptrend although it is pretty gradual. I call this the Recovery Phase because what typically happens here is that the price recovers to reach the Previous High. Then of course in the 4th year things get crazy and if you’re here reading my blog you already know all about year 4 of the cycle...
Now have a look at the 2nd cycle, from the peak in December 2017 – nearly exactly 4 years from the previous peak. Again we have a savage Bear Market for almost exactly a year, reaching a Capitulation Low in December 2018. From there we have Consolidation for about a year and then the Recovery Phase kicks off and runs for another year with the Previous High being cracked almost exactly 3 years after the previous peak. This is where I get the title for this post. History didn’t exactly repeat in this cycle, but it certainly rhymed.
Source
So, what’s the point of all this? Well the big question is – Where are we NOW in the current cycle? Well, lets have a look at the chart since the last peak in November 2021 and see if there are any similarities. If you have a look below you can see that we’ve had the savage Bear Market and hit a Capitulation Low about a year after the peak in November 2022. From there it’s bounced around a bit for the last 6 months….
That means I am putting us about half way through the Consolidation Phase of this 2021 cycle, which means that month to month price movements could be up or down (or neither) but if you are a long term accumulator and looking to buy into crypto for a longer term HODL then the Consolidation Phase is THE time to do it. I reckon we’ve got maybe about 6 months more of this phase to play out and I am personally hoping that I can rebuild my crypto portfolio over this time. For those who have been around the block a few times and have waited out the Bear Market this is a really exciting time to be involved in the crypto space. Cherry picking those crypto projects which are going to go for a wild ride in the next bull run can literally set you up for life. The last cycle was great for me and I’m looking for this cycle to be even better!
I've been in this gig for a while, and have been watching the cycles you describe, as well. As time goes by the thing that comes to my mind is the question of whether or not these (allegedly) BTC inspired/driven cycles will continue to hold true as BTC dominance gradually decreases. When we started tracking the halving trends, BTC had 95% dominance; today it is in the 40-something percent range.
=^..^=
Absolutely. That's why I'm saying that even if it is a BTC inspired cycle, the psychology now that comes with it self-reinforces it to a degree. So maybe the cycle will smooth out a bit over time, but I still think it is very much in play for THIS cycle.
Yo Buggs, great angle, and I agree!
Have a similar look at LTC… halving happens THIS August (around the 10th). In previous 2 cycles there has been a surge right before, then a dump about 2 weeks prior, then a consolidation for 6 (ish) months b4 bull starts again…
This time the surge has sputtered… but. Will we see a ramp up in next couple weeks? I’m thinking yes, but of course do not know for sure. Anyway, have a look at charts — could be a sweet little gainer in next 6-8 weeks.
⚡️🤘🤑🤘⚡️
Thanks for the tip man! Seems pretty legit and will keep an eye open on LTC.
I had actually considered LTC for my next bag of buys anyways.
I’m trying to build it up, but it’s not easy with everything costing more now a days. But I personally think the next bull market will not look like the previous ones. Meaning you can’t just throw money at any coin and make money. The market is getting more savvy. But who am I….
Totally agree man. My focus is already shifting to identifying the trends of this current cycle and getting the right coins. Very difficult to get it. Last cycle it was NFTs and DeFi. I pretty much completely missed the early DeFi run after getting jaded by SALT on the PREVIOUS cycle.
When it comes to opportunity... now is the time. Everyone likes to say that. However, historically speaking... it is. When people were getting optimistic in 2022, I simply wasn't biting. You don't DCA into a falling market... and yet everyone seems to promote it. Logic will tell you... buy (DCA) into a sideways or appreciating market. This is my 8th year in this game, so perhaps my emotions are better controlled and I have seen how these cycles play out. History definitely rhymes.
Absolutely. The veterans are well placed to ride these cycles now. I remember back in 2017 and 2018 I was checking the market multiple times a day, but I have a much better hold over the emotional rollercoaster today after being on a couple of rides.
I can't do much, I got a debt to pay off first as fast as I can!
I hear you. I'm already trying to figure out how I can free up some capital. Got a new house to pay off and the living expenses are squeezing, but I'll kick myself if I don't find a way.
I've been observing crypto since 2017, and enjoyed 1 bull cycle :P experienced 3 crypto cycles, experiencing the fourth one, But what if history doesn't repeat itself this time? Everyone in crypto space have developed so much expectation from the coming Bull cycle ( only if history repeat itself ), The more we are expanding, the more money will be needed to start the bull run. Things are getting hard @buggedout
I'm an optimist. The adoption of crypto has exploded on each of the cycles so far and there's plenty of people still to come on board so I'm not too worried about that aspect.
As for the expectation and psychology....I think this actually reinforces the psychology. If people think it'll go up, they'll buy and it'll go up. This is how cycles can be self-reinforcing and I think we've hit that point with crypto.
Indeed, studying price actions is not a science that's exact because of the unpredictable nature of the market.
The psychology of the crypto market has always been the excitement of new entrants into the space, with market pumps, speculations, and finally dumps that sent some of the Thomases packing.
These Bitcoin-inspired cycles were really something to look into. And it's cool how history rhymes as we look deeper.
So, this Consolidation Phase is the time for us to fill our bags up, while waiting for the next bull season.
Thank you for sharing, I learned a few things.
Definitely it’s now accumulating phase. And I agree that we might have some more months, maybe even until next year before we see the old highs, especially within Altcoins.
I am waiting for some money to free up for me first. Once it does, I have a couple projects eyeballed right now. I need to start looking for some more...besides Hive of course.
I really like your post. Clear and schematic. Good boy! 😊
:) i like the sound of that.. very poetic.
There is so much to learn from this and thanks for sharing.
I totally agree with you when we buy it thinking it's going to go down it never goes down it just goes up if that's the right thing to do today. Will become very rich. I myself invested a lot of money in it two years ago, then I didn't know much about its cycle, but now I have gain a lot of knowledge. At this point we have no other option but to fold our things and if anyone has the money then DCA is at the moment is best option. Holding in crypto is the only way a person can earn some money if he invests in a good project.
I still wonder how the steem price went to 6$ at one time and I was so foolish I didn't book profit patially. Atleast we should always book some profit in those without being much greedy. Now the bull cycle is not that much sustainable like before.
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