Timing Crypto Markets – History Doesn’t Repeat but it Rhymes
When it comes to picking the highs and lows in a market like crypto, it’s pretty tricky to get it just right. Markets can be unpredictable and studying price action is not really an exact science. However, when it comes to the fundamental benefits of blockchain technology, most people here on HIVE can understand that in the long run we are going UP so in the long run I want to be a buyer and while I can’t reliably pick the LOW to buy at there is some basic logic to how I decide when the time is right to BUY.
I’m talking about how the market cycles and maybe more specifically, the psychology of the crypto market. Every few years people get really excited about the technology and newbies flood the space with massive buying and we see big price action like we did in 2017 and 2021. People remember those “Good Times” as the euphoria is thick and intoxicating, but they don’t like to talk about what inevitably comes AFTER the massive price moves. That’s where many newbies quit in disgust having lost their savings and the shameless shills go quiet….for a while anyways.
Most crypto enthusiasts that are still in the game know about the 4-year cycle and a lot of long term crypto diehards like to link this cycle to the “Bitcoin Halving” event that coincides with it. It is true that Bitcoin often leads the market UP and then DOWN again so there is probably some merit in this theory, but I think that it is feeding into a (now) self-reinforcing psychology of the markets generally and the signs are pretty obvious if you know where to look. Today I want to have a look at the previous two completed 4-year cycles and show just how similar they are – not so much from a price action perspective but from a timing perspective.
Above is a chart from the peak in December 2013 to just before the insane run of late 2017. I’ve truncated that last part of this 4 year cycle to emphasise the chart features of the first 3 years of the cycle. You can see that after the peak there is some devastating Bear Market action that culminates in a Capitulation Low in January 2015 which is just over 1 year after the peak. Then there is about a year worth of Consolidation where the mainstream pretty much forgets about crypto and it’s a very boring time to be trading. The 3rd year is where there is a resumption of uptrend although it is pretty gradual. I call this the Recovery Phase because what typically happens here is that the price recovers to reach the Previous High. Then of course in the 4th year things get crazy and if you’re here reading my blog you already know all about year 4 of the cycle...
Now have a look at the 2nd cycle, from the peak in December 2017 – nearly exactly 4 years from the previous peak. Again we have a savage Bear Market for almost exactly a year, reaching a Capitulation Low in December 2018. From there we have Consolidation for about a year and then the Recovery Phase kicks off and runs for another year with the Previous High being cracked almost exactly 3 years after the previous peak. This is where I get the title for this post. History didn’t exactly repeat in this cycle, but it certainly rhymed.
So, what’s the point of all this? Well the big question is – Where are we NOW in the current cycle? Well, lets have a look at the chart since the last peak in November 2021 and see if there are any similarities. If you have a look below you can see that we’ve had the savage Bear Market and hit a Capitulation Low about a year after the peak in November 2022. From there it’s bounced around a bit for the last 6 months….
That means I am putting us about half way through the Consolidation Phase of this 2021 cycle, which means that month to month price movements could be up or down (or neither) but if you are a long term accumulator and looking to buy into crypto for a longer term HODL then the Consolidation Phase is THE time to do it. I reckon we’ve got maybe about 6 months more of this phase to play out and I am personally hoping that I can rebuild my crypto portfolio over this time. For those who have been around the block a few times and have waited out the Bear Market this is a really exciting time to be involved in the crypto space. Cherry picking those crypto projects which are going to go for a wild ride in the next bull run can literally set you up for life. The last cycle was great for me and I’m looking for this cycle to be even better!
DISCLAIMER – This is not financial advice. Do your own research!
