The Four Phases of Crypto Market Cycles
Phase 1: Accumulation
Characteristics:
- Prices are low after a market decline
- Trading volume is low
- Sentiment is bearish or indifferent
- Smart money begins accumulating
What to Do:
- Research and identify quality projects
- Begin systematic buying (dollar-cost averaging)
- Build positions gradually
Phase 2: Mark-Up (Bull Run)
Characteristics:
- Prices begin rising
- Volume increases significantly
- Media attention grows
- FOMO drives buying
What to Do:
- Hold core positions
- Take partial profits at predetermined targets
- Avoid chasing pumps
Phase 3: Distribution
Characteristics:
- Prices reach peaks
- Volatility increases
- Euphoria in the market
- Smart money begins selling
What to Do:
- Take significant profits
- Reduce risk exposure
- Move portion to stablecoins
Phase 4: Mark-Down (Bear Market)
Characteristics:
- Prices decline significantly
- Capitulation selling occurs
- Despair and fear dominate
What to Do:
- Preserve capital
- Identify accumulation opportunities
- Prepare for next cycle
Historical Context
Bitcoin has experienced multiple complete cycles, each with similar patterns but varying durations and magnitudes.
Conclusion
Understanding market cycles helps you position investments appropriately and avoid emotional decisions.
