Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
By Emmanuel Sunday
In a market where tables can easily be turned, a person struggling financially can easily become affluent and an affluent person can be turned into a pauper in seconds, explaining the crypto-trading market cycles is paramount. These market cycles apply to all cryptocurrencies but, for clarity's sake, we'll be using Bitcoin as a benchmark. So you're expected to look at it from all perspectives and not from the Bitcoin perspective alone.
What you are about to learn is going to help you know when to buy and when to sell a cryptocurrency. The truth is many people don't know this but, you are about to have it at the tip of your fingers because it's of great importance to you as a crypto trader. If you know this, you won't let your emotions or greed or anything at all distract you from taking profit from a trade, because everybody is in the game to make money.
Crypto-trading market cycle
There are three phases in the crypto-trading market cycle. They are the Stealth phase, Awareness stage, and Obsession stage. And the knowledge of these you must keep handy at all times to avoid getting burnt.
The Stealth Stage
The stealth stage is when you need to buy. It's when the market is observing its quiet time, nobody is talking about the market or posting anything about it on social media as they would when it hits a new all-time high. That is when you are supposed to buy. Take, Bitcoin, for example. It is currently sitting below $30,000 (as of the time of writing this), and nobody is talking about it. Most people are not even thinking of buying it, but this is the best time to buy it.Â
It's the same with other coins too, when the coin is down, that is when you are supposed to buy. People make the mistake of buying when the buzz is up. They start asking if it's the right time to buy when people are posting on their social media platforms and all the drama that follows. What they don't know is that when everywhere is silent, that's when "smart players" start building their portfolios. By smart players, I mean crypto veterans who understand the game.
Awareness Stage
This is when the coin starts rising. During this period, it starts drawing the attention of the media, the buzz starts building, and the bear trap comes in. A bear trap in the crypto market is when a coin starts to rise and investors sell off their holdings as a response due to their fear of the dip.
Take, for example, someone who bought Bitcoin when the price was $68,789 and saw the price drop to $29,000, he had a little bit of patience before the price begins to rise, and then the price gets to a point he feels he can bear the loss and he sells off. That's a perfect example of someone afraid of the bear trap.
Now, why those who experienced the dip are selling off, retail investors will start coming in their numbers, the price is rising so they are enthusiastic. They'll sell their houses, sell their cars, to hit it big. As the price increases, they buy more.
Then like a rocket, there's going to be a new paradigm and Bitcoin will hit a new all-time high. Then the obsession stage begins.
Obsession Stage
When Bitcoin hits a new all-time high, more people are going to FOMO (fear of missing out ) and throw in money. On the other hand, Smart Players start taking profits because they know that a new buy-back position is coming. Those who bought for $29,000, for example, will sell at $80,000 because they have nothing to lose. More smart players start to sell off, and as they start selling, the volume begins to drop. And then the first denial happens, and the price starts dropping.
When it drops a little, something will happen. There's going to be a bull trap that's going to make people feel it's going back up. It then returns to normal and everybody is happy again. Some people will begin to put money again expecting it to reach a new all-time high.
Then it drops down a little and fear sets in. People start selling off, stop losses start getting triggered, and capitulation comes into the picture. The price is going to fall more, fear is going to rule the market, and people will begin to lose their money. People will continue selling to save a fraction of their money. Those who FOMO bought are going to be in despair. Some people will try to wait for the price to go back up, but fear won't let them keep to that promise.
It is this set of people that go about saying the crypto market is a scam simply because they don't understand how it moves.
Author Bio
My name is Emmanuel Sunday. I am an independent journalist and content strategist who takes full advantage of crux journalistic and marketing theories to tell unique stories. While I've covered stories across Finance, Marketing, Tech, and Gaming, I like to think I speak fluent Crypto. Here's my Twitter handle: @jamesabuchi2000
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.