Understanding the money flow within the cryptocurrency market is crucial for investors to maximize gains and plan strategic entries and exits. Here's a breakdown of the typical money flow cycle, using examples and historical trends.
1️⃣ Fiat to Bitcoin: The Entry Point 💸 → ₿
Investors usually start by converting their Fiat currencies (e.g., USD, EUR) into Bitcoin, which marks the beginning of a bull run. Bitcoin is the gateway to the crypto market due to its large market cap and stability.
Example: During the 2020 bull run, companies like MicroStrategy and Tesla invested heavily in Bitcoin before exploring other assets.
2️⃣ Bitcoin to Large Caps: The Next Step 💡
As Bitcoin stabilizes or slows down, investors shift their focus to Large Cap Altcoins, which have market caps over $10 billion, such as Ethereum (ETH), Binance Coin (BNB), and Cardano (ADA). This phase typically follows a significant Bitcoin rally.
Example: In 2020, Ethereum surged from $300 to over $1,000 as Bitcoin’s growth plateaued.
3️⃣ Large Caps to Mid Caps: The Momentum Continues 💪
With Large Caps gaining momentum, attention moves to Mid Cap coins, which have market caps between $1 billion and $10 billion. These coins, like Polkadot (DOT), Chainlink (LINK), and Solana (SOL), offer higher growth potential but also come with increased volatility.
Example: In 2021, Solana soared from under $10 to over $200 within a year.
4️⃣ Mid Caps to Low Caps: The Parabolic Phase 🚀💥
At the tail end of the cycle, investors look for high-risk, high-reward Low Cap Altcoins (market cap below $1 billion). These coins can see explosive growth but are also the riskiest investments.
Example: During the 2021 bull run, coins like Shiba Inu (SHIB) saw returns in the thousands of percent as speculative investing surged.
5️⃣ Low Caps Back to Bitcoin: Profit Taking 🤑↩️
As the market peaks, savvy investors start taking profits from Low Caps and move back into Bitcoin or stablecoins, signaling the end of the bull market.
6️⃣ Back to Fiat: End of the Cycle 🔄💵
Finally, some investors cash out completely, converting their holdings back to Fiat. This usually marks the end of the cycle and the start of a bear market.
Timing and Historical Trends 📅⏳
Bitcoin typically goes through four-year cycles, with a bull market often following its halving events. After Bitcoin rallies, profits tend to flow into Altcoins, leading to significant gains across the market.
Historical Cycles:
2013-2014: Bitcoin surged, followed by Litecoin and other Altcoins.
2017: Bitcoin hit $20,000, Ethereum reached $1,400, and smaller Altcoins rallied.
2021: Bitcoin reached $64,000, followed by massive gains in Ethereum and Low Cap Altcoins like Solana.
How to Use the Crypto Money Flow to Your Advantage 🎯💡
1. Accumulate Bitcoin early in the bull phase.
2. Rotate into Large Cap Altcoins as Bitcoin stabilizes.
3. Move into Mid and Low Cap Altcoins during the late bull market.
4. Take profits and move back into Bitcoin or stablecoins before the peak.
With the next Bitcoin halving expected in April 2024, now is the time to position yourself in this cycle. Are you ready for the next Altseason? Let's discuss your target Altcoins!