Crypto market cycleprices are highly cyclical, influenced by investor sentiment and market conditions. The first phase of the cycle, known as a bull market phase, is marked by a substantial uptrend in prices and a positive change in investor perception. The bullish phase is often triggered by positive media attention, new technological advancements and increasing cryptocurrency adoption. This period can attract a wider audience of investors and may also be bolstered by institutional involvement. As the bull market phase continues, a significant increase in price momentum can push cryptocurrencies to new all-time highs. The higher lows and higher highs of the bull market can be easily identified using technical analysis, which allows skilled investors to capitalize on the upward trend.
Bull Runs and Bear Markets: Navigating the Crypto Market Cycle
During the markup phase, an increase in investment volume is observed as new groups of market participants enter the crypto space. Speculation and irrational exuberance is prevalent during this phase as investors experience FOMO and buy near the top. It can be difficult to spot a bottom during this phase, as investors often see smaller dips or pullbacks as buying opportunities rather than warning signs of declining price action.
Once the markup phase ends, a decline into a markdown phase is typically observed. A decline in price and negative investor sentiment will cause a decrease in trading activity as many people attempt to sell their assets at loss. This is when the smart money and early investors begin to accumulate again, buying at “discounted” prices. Returning investors are an indication that the accumulation phase has started again and the next cycle is underway.