The cryptocurrency market full-cycle explained.

A cryptocurrency can be called a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double spend. The cryptocurrency markets are decentralized, which means that they are not issued or backed by a central authority like a government. Instead, they run across a network of computers. Unlike regular currencies, cryptocurrencies exist only as a shared digital record of ownership, stored on a blockchain.

The Cryptocurrency market has seen massive development over the years. Since cryptocurrency was born in 2009 and until now, we have noticed cycles that last for about 4 years each time. These cycles can be attributed to either an increase in the market trend (bull market) or a fall in the market (bear market). Each of these cycles comes with various speculation about the direction the market is heading in. 

But, in this article, we are going to look into the cryptocurrency market cycle fully to help you to grasp an understanding of how these market cycles work. Let’s get started. 

BTC Bull Market

The word “BULL” is used to explain a long period of price growth. That is price growth in the stock value or price growth in the cryptocurrency market. However, the first and most popular cryptocurrency, Bitcoin, made the name more popular, which is while we call it the Bitcoin bull market. This is enabled by a narrative that brings in a wave of newcomers. For example, during the 2017 bull market, we had the narrative of Bitcoin being gold 2.0 and the possibility to fund projects (ICOs). These narratives came as a result of the surging value of Bitcoin, which led to various positive speculation about the future value of the digital currency. 

In the same vein, in 2020, we had a narrative of hedge against inflation with public companies investing in BTC and also the Defi Ecosystem. During the last quarter of 2020, we could notice the Bitcoin bull market coming again, with many public companies joining the cryptocurrency ecosystem. For instance, Michael Saylor, CEO of Microstrategy, announced that they had purchased BTC worth millions of Dollars. Also,  PayPal, a top leading online payment merchant, announced its plan to start accepting cryptocurrency as a form of payment. These investments boosted the chances of the market going up again. So, in essence, A bull market is characterized by optimism, which results in prices increasing. 

Signs of a Bull Market

Many signs can show that we are heading towards a Bitcoin bull market. One of those signs is the BTC price rising and breaking resistance.  Resistance can be attributed to a level in which the price of an asset fails to break through due to intense selling pressure. In most cases, the occurrence of resistance levels may be related to big sell walls that prevent the price from rising further. So, when Bitcoin value surges above that resistance level, we could say that the buyers have taken charge of the market, which could signal a bull run. 

Also, another thing that could signal a bull run is the prices of altcoins stabilizing and the bitcoin dominance growing. Bitcoin dominance is a measure of how much of the total market cap of crypto is comprised of Bitcoin. It can help users to understand the price trend of BTC and altcoins. If the Bitcoin market cap is rising, it could also signal a bullish run springing up. 

Alt season  

If you are a crypto trader or you have been reading about cryptocurrency, you must have had the word “altcoin season.” It is the duration in which the prices of various altcoins are on the bullish run. This could be characterized by the BTC bull market, which makes a whole wave of altcoin newcomers to be having a lot of gains. Then they start to get interested in the entire ecosystem and want to diversify. That is where the altcoin season starts. In essence, the altcoin season majorly starts when the BTC is on the bullish run. For instance, most traders believe that Bitcoin is the King of cryptocurrencies and that when it moves, all other cryptocurrencies follow it, and when it falls, the rest also falls. 

The fast-rising of altcoins might signal an increase in the value of cryptocurrency, which might be attributed to a market cycle. 

Signs of altcoin season

Like we said earlier, BTC is the King of the market, and every other coin follows its price movement. So, a sign of an altcoin season coming up could be when we witness the Bitcoin price stabilizing. That is, in a situation where the price of BTC is within a particular support level. Furthermore, the gap between the buyers and sellers is almost the same. So, the BTC price is not fluctuating up and down. And, we could witness the Bitcoin dominance level dropping. What this means is that Altcoins are about to break out from their dependence on bitcoin and carve a path for themselves. In such a situation, we could see the prices of various altcoins surging even when the bitcoin value is not rising. 

Bear market 

A bear market is just the opposite of a bull market. While the bull market signals a reversal, which could lead to a Bitcoin price increase, A bear market, on the other hand, signals a market correction. For example, at a time, you could see the market going high and trying to break a certain resistance level, like in the case of May 2021, when the BTC price rose to an all-time high of $64,000 before correcting itself back to $40,000 price level. At that resistance level, the buyers and sellers are fighting on who will take control of the market. When the sellers win, the market corrects itself, and we enter into a bear market. This could be when there is no new money coming, and the market has topping signs. At that juncture, lots of people start to take profits from crypto into fiats and stable coins. Thus, the market begins to drop. This phase might take a while (like a week or more). At that time, we could see less rising of the price and higher falling of the price. For instance, assume the current BTC price is at $60,000 while the all-time high we have witnessed so far is $64,000. We could see the price rising to $62,000 and falling to $55,000. The price is not breaking the all-time high resistance level again.

Signs of a bear market

Just like in the case of the bull market, there are various signs of a bear market. But the most popular among them is Bitcoin and altcoins price dropping together.  One example of brea market would be 2014-2015 during which Bitcoin didn’t make any major jump and kept its nose towards downward prices. 

Also, there are speculations that feuds could lead to a bearish market. Like in the case of a series of tweets by popular USA billionaire Elon Musk and China announcing crackdown on non-green energy Bitcoin mining, which people believed was one of the reasons that led to the May 2021 cryptocurrency market crash. However, putting the speculative and volatile nature of the market into place, we cannot completely rule out the chances of such a tweet causing a market crash. 

Price stabilization  

Price stabilization could signal a new market cycle coming up. When there is no more seller (only holder), the market stops making new trading low prices. The price starts to stabilize. The smart traders then begin to slowly invest in the coins while waiting for a new narrative to start a new BTC bull market. That’s the end of the full market cycle. Cryptocurrency price stabilization is essential as it is one of the things investors look out for before investing in the cryptocurrency market.

Signs of the stabilization phase

One of the significant signs that show price stabilization is a minimal price movement of BTC and altcoins. You will notice that the market volatility is at an all-time low, which means that there is a slight balance between buyers and sellers. Also, there is a low global volume. 

Conclusion

If we talk about the origin of these terms bull and bear, some say that it came from animal attacks. While bulls thrust their horns upward, bears swipe downwards with their claws. 

In cryptocurrency, profit and loss is a common thing. However, whether the market is on the bullish run or bearish run, you can always make passive income if you invest responsibly. The cryptocurrency market has evolved with lots of innovations. These innovations come with

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Written by:  Narender Charan

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