What is Crypto Market Cycle Theory? Check out the Complete Guide!

Bittime - Ever wondered how to make a decision before investing in cryptocurrency. You need to understand what the Crypto Market Cycle Theory is to be able to invest smartly. Check out the complete guide here!

What is Theory Crypto Market Cycle

Imagine the weather. Just like there are seasons, the crypto market also experiences cycles. This cycle is characterized by periods of growth, decline, and consolidation. Understanding this cycle can improve your investment decisions significantly.

Think of it like this: Wearing a raincoat in the summer is as illogical as not carrying an umbrella during the rainy season. Likewise, investing in crypto without understanding its cyclical nature can lead to unexpected losses.

Basically the Crypto Market Cycle Theory is an estimate of recurring patterns in the prices of cryptocurrency assets over time. This pattern consists of several phases that often occur in the same order, reflecting changes in investor sentiment and activity.

Four Phase Crypto Market Cycle

1. Accumulation

• This phase usually occurs after a significant market decline.
• Characterized by low volatility, negative sentiment, and minimal trading activity.
• Smart investors take advantage of these low prices to accumulate large positions.

2. Mark-up

• The market is starting to recover from the previous decline.
• Positive news and increasing investor confidence push prices up.
• Smart investors begin distributing their accumulated coins, often triggering further price increases.

3. Distribution

• The market reaches a top, and prices begin to consolidate.
• Smart investors continue to sell their holdings, while new investors enter the market.
• This phase can be characterized by significant price volatility.

4. Mark-down

• Markets experience sharp declines, often triggered by negative news or a loss of investor confidence.
• Smart investors have exited their positions, leaving retail investors holding losses.

Psychology Crypto Market Cycle

• Fear and Greed: These two emotions drive the market. When fear is high, prices tend to fall, and when greed is high, prices tend to rise.
• Reverse Psychology: Successful investors often do the opposite of what most people do. For example, buying when everyone is selling.
• Smart Investors vs. Smart Investors Retail Investors: Smart investors usually have a long-term perspective and are less influenced by short-term price fluctuations. Retail investors, on the other hand, often make emotional decisions based on fear and greed.

Applying Crypto Market Cycle Theory 

Application of crypto market cycle theory This can be done when market conditions are less stable, for example if the market continues to fall. Here are the ways you can do this:

• Dollar-Cost Averaging (DCA): Investing a fixed amount of money regularly can help cushion market volatility.
• Long Term Perspective: Successful crypto investors often have a long-term horizon. They focus on overall trends rather than short-term price fluctuations.
• Risk management: Diversification, stop-loss orders, and taking profits are important risk management techniques.

Conclusion

Understanding Crypto Market Cycle is very important for every crypto investor. By recognizing the different phases of the cycle and the psychology that drives them, you can make more informed investment decisions and increase your chances of long-term success. Remember, investing in cryptocurrency carries risks, and past performance is not indicative of future results.

How to Buy Crypto in Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Monitor graphic movement Bitcoin (BTC) price, Ethereum (ETH) Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.